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Wednesday
Jul192017

Martin Kenney: Why isn't asset recovery on the international enforcement agenda?

I have long advocated that Grand Corruption should be considered a crime against humanity, under Article 7(1)(k) of the Rome Statute establishing the International Criminal Court.

Given my prior interest and area of professional expertise, the recent announcement that the UK’s National Crime Agency (NCA) will be heading up and hosting a team of specialist investigators to target Grand Corruption from countries such as Australia, Canada, New Zealand, Singapore and the USA grabbed my attention.

The initiative will be called the International Anti-Corruption Coordination Centre.

Grand Corruption is one of the greatest scourges the world faces, and it is showing few signs of abating. The Cambridge Dictionary defines kleptocracy as "…..a society whose leaders make themselves rich and powerful by stealing from the rest of the people.” This captures the essence of Grand Corruption as a crime perfectly.

The people worst affected by Grand Corruption are the ordinary people in the country concerned: the same people who have no voice, or whose voice goes unheard. Grand Corruption is extremely difficult to investigate and to deal with. In many instances it is those in the higher echelons of government perpetrating the crime. Invariably the corrupt network will have tentacles reaching into the police, courts and judiciary.

This fact renders those who would investigate the crime "from within" almost impotent. International sanctions may put pressure on the rulers, but again it will be the poorest who are worst affected. Add to this that sanction busting is itself a growing business, and the problematic nature of addressing this insidious crime becomes even more apparent.

The NCA is effectively the UK’s equivalent of the FBI. Its reputation with other UK law enforcement agencies is, at best, mixed as is its track record.

The NCA oversees asset recovery in the UK on behalf of law enforcement agencies, empowered by the Proceeds of Crime Act 2002 (POCA). In effect, a hard working police force whose investigators recover significant assets from a drug trafficker will see their figures swallowed up by the NCA, which then effectively publishes as its own.

The National Audit Office’s most recent figures indicate that the NCA oversaw £155 million ($202 million) collected by law enforcement agencies between 2014-2015. This figure includes confiscations in respect of all acquisitive and POCA-qualifying crime. The NCA itself states that drug trafficking alone cost the UK £10.7 billion ($14 billion) in 2015.

This puts into perspective the £155 million collected, especially when the NAO also indicates law enforcement has secured £1.61 billion ($2 billion) in confiscation orders in terms of value, all of which is outstanding and hasn’t been collected. Presumably this money remains with the criminals. Could this be construed as being a successful confiscation regime?

If we put this into the context of the new International Anti-Corruption Coordination Centre (IACCC), who will it be pursuing and what will be its objectives? Having read the NCA press release, the founding members all make admirable statements of intent and of bringing the “corrupt elites to justice.”

So why have I mentioned the NCA in the context of POCA and its questionable results in the area of confiscation?

Well, when you read the IACCC press release there is a glaring omission in terms of its ambition and those extolled by its partners. Each organization’s spokesperson talks in soundbites. How they are going to bring culprits to justice in the context of a corrupt state where they have no jurisdiction is debatable. This brings me to the case in point.

Nowhere is it mentioned that there is any plan in place to recover the value in terms of assets lost to the people of the corrupt state. How can you launch an initiative such as this and not mention asset recovery? What is the point of point of setting up a flagship initiative directed at the problem of Grand Corruption, with no apparent remit or ambition to recover the assets stolen in the crime?

Historically such failings have seen the culprits incarcerated, but their families allowed to live the high life, living off illicit proceeds. And, when the convicted are eventually released from jail, their luxury houses, cars and fat bank balances are still in situ awaiting their return. Meanwhile, the poor have all gotten poorer.

Confiscation, forfeiture, call it what you will, is vital to ensuring that the shysters do not get to enjoy the fructus corruptio (the fruits of corruption). When criminals are subjected to confiscation, others see them stripped of their ill-gotten wealth. It serves as a warning to those who may consider following in the crook’s footsteps. In effect, you remove the incentive to commit crime by removing the assets -- and thereby the negative role model.

The UK’s anti-money laundering armory will soon include the Criminal Finances Bill, due to be enacted in September this year. This legislation will enable easier information sharing in respect of money laundering, and require suspects to justify their financial means and lifestyle via Unexplained Wealth Orders. In addition, it will enable the authorities to seize money via forfeiture held in bank accounts suspected of having its derivation in serious crime and terrorism.

Again, there is not one mention of this forthcoming legislation by the National Crime Agency. This could be a groundbreaking law and it will be at the disposal of the new team. One clearly compliments the other.

I have no doubt that the International Anti-Corruption Coordination Centre will look at the issue of asset recovery when the time comes, because a lowly investigator will see to it that it does, and wholeheartedly welcome its arrival. But until then, the National Crime Agency and its partners in the IACCC have done themselves no favors in trumpeting their initiative and missing out any reference to asset recovery.

_____

Martin Kenney, pictured above, is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI and focused on multi-jurisdictional fraud and grand corruption cases www.martinkenney.com |@MKSolicitors. He was recently selected as one of the Top 40 Thought Leaders of the Legal Profession  in 2017 by Who's Who Legal International.

Reader Comments (3)

Dear Martin
Thanks for this post. Yes, we agree with you that there are still too few jurisdictions that give asset recovery the prominence it should have, though I would argue that the UK has shown significant commitment to asset recovery, and I am confident the IACCC will do so too. The UK has been a founding donor - and continues to be one of our three key donors together with Switzerland and Liechtenstein - of the Basel Institute's International Centre for Asset Recovery (ICAR) which, established in 2006, was the first and continues to be one of only two international centres specialised in asset recovery (the other is the StAR initiative, with a slightly different portfolio from ours). If you don't know ICAR then I invite you to contact me and I give you the run down. We work with countries from around the world in a very hands-on way, assisting them from A to Z with the effort of recovering stolen assets through the investigation and prosecution of large scale international corruption and money laundering cases, and we are still alone doing this work in the particular way we do it. It’s bearing fruit: Just recently we have successfully supported Peru in having a number of final confiscation orders confirmed in the very old cases surrounding the Fujimori regime, ditto for a recovery from Jersey to Kenya (Windward trading, we just held an event to explain the case at Chatham House some ten days ago). In many of our other partner countries we see similar successes at the horizon, amazing increases in conviction rates, new legislations being used for the first time etc. So there is movement in the asset recovery world and we are excited to be part of this. That being said, we wish there were more countries that supported such efforts, ours or that of other organisations that work in our field. We are overrun by requests for assistance and there is simply not enough funding for this work. In my view there are more than just Liechtenstein, Switzerland and the UK who have a role to play in this due to the importance of their financial centre, many of which European jurisdictions. It would be great to see them join the fight, and if your article brings more attention to this matter then thank you for that!
Kind regards
Gretta Fenner
Managing Director
Basel Institute on Governance
July 19, 2017 | Unregistered CommenterGretta Fenner
Great article and I agree with your point. It was my idea - the International Anti-Corruption Coordination Centre. As former joint head (I was the detective part, my counterpart being the civil servant from the NCA) of the UK's International Corruption Unit I managed to secure Prime Minister Cameron's support for the Centre, it was one of the headline commitments at the UK Anti-Corruption Summit and something I sought international support for over a number of years. The idea I had was to try and join-up and work collaboratively with those across the globe taking this ABC work on, after all grand corruption is a truly transnational crime.

Well what's gone wrong? The old boss retires from public service and a year later it looks different. I hope the spirit of working with developing countries (especially those wishing to try and take action against their corrupt elites) is followed through, I fear it won't be as at present it looks very '5 eyes' - the trusted community with which intelligence agencies share their work. The IACCC was about empowerment and trust, that has to be at the very core. We've worked with the 5 eyes for years and to be frank there isn't much grand corruption in New Zealand! Let's look at South Sudan. A man-made famine along with millions displaced or killed in the most cruel and barbaric manner whilst what little money there is leaches out of the country disguised as phony contracts to banks in Uganda, Kenya, South Africa and beyond. The precious resources in this area should be working - right now -collaboratively so that Kenyans or others can/do take action; instead millions in aid money is poured in, the elites get richer and their people die.

Regarding asset recovery it would be difficult and very brave to put a figure out there given how tough this work is; as you say the NCA has a patchy record and the reality is there is no depth of experience to take this work on, just senior managers who know a few soundbites but don't understand how you actually do this work. That said, there should be some mention. The UK has new powers after a group of us lobbied hard for change, please start using the unexplained wealth orders. The US authorities are possibly decades ahead on some of the asset recovery work, the UK prosecutors in this area are on their heels and catching-up, we need the NCA to support them. A key objective for the IACCC should, in my view, be in neon lights above the office door: use all legal methods to get money back ASAP, that should include civil remedies as well as criminal and allowing countries with the most efficient and effective laws to lead the way. History shows us you can't prosecute your way out of this huge problem, it hasn't really worked in any other area of financial crime.
July 19, 2017 | Unregistered Commenterjonathan benton
I suspect very few would object to taking whatever legal remedy may be available, along with proposing and supporting appropriate legislation to attack the problem of Grand Corruption holistically. Pursuing criminals of this nature, particularly in a way that includes sufficient corrective action as meaningful deterrent is critical, and may very well be the largest remaining gap in enforcement activity. Most would likely agree that reducing the impact of this pernicious problem is a priority, or at least very important, and enforcement is one of the methods for accomplishing that objective.

At the risk of stating the obvious, Mr. Kenney's frustration seems to suggest a systemic failure, which I find understandable as an emotional reaction to a critical problem. Having lived in locations where corruption is far more prevalent than correctness, I wonder at the possible effectiveness of solving Grand Corruption by establishing an international entity, it's sustainability, and the introduction of complex questions of jurisdiction and sovereignty.

Few there will be who would not condemn corruption, particularly in countries where its impact is so destructive. However, I believe imposing an externally sourced solution may not present the best opportunity to produce a sustainable outcome. Based on my experiences, I believe the best possibility for sustainable success is in identifying local resources who can be relied upon to embrace anti-corruption, and support them in their efforts to evangelize and implement improvements. In making that statement, I also acknowledge the painfully prevalent problem of deeply embedded corruption within the very institutions normally charged with its prevention.

However, based on my own experiences and observations in countries in the "bottom 10" of the CPI, unless the solution can be sourced from within, criminal behavior will be allowed to make simple adjustments to avoid both detection and correction. Globally, society will likely never be able to completely conquer all crime, but external forces will always operate from a position of disadvantage because of a few inherent weaknesses or handicaps:

1 – There is no long-term ownership of the issue in the society it seeks to protect and defend
2 – They are unable to understand and fully appreciate cultural nuances exploited by criminal enterprises
3 – There is an inherent conflict of interest of "outsiders" whose motives seem disingenuous, or lacking sincerity as viewed by the local population; no matter how much “preaching” an outsider does to convince local residents of their desire to help, locals will always see “money” as the driving force rather than an altruistic interest in their society’s situation

Too many countries repressed by brutal dictatorships have also suffered from international agencies whose stated objectives seem to be genuine and generous, only to be disappointed by shallow and short-lived results. Unfortunately, those programs also provoke an unanticipated and unexpected consequence of increased vulnerability that bad actors then exploit as a new opportunity.

I'm convinced the solution must come from within, if there is any hope of sustainability. For those whose daily lives are adversely altered by nefarious characters, the establishment of an international regulation, legal mechanism, or even law enforcement agency seems almost as damaging as the criminals who drive deeper poverty on those who already suffer desperate deprivation.

It's a very, very difficult problem, one that is likely to require a generation or more of commitment to transform the culture from one dominated by corruption to one where integrity can be expected better than 50% of the time. In the book, "The Power of Positive Deviance", Richard Pascale describes situations where real change takes place in impoverished communities specifically because the change came from within. In fact, the study he references asserts sustainable change can't be reasonably expected any other way.

Grand Corruption presents a more difficult circumstance than might have been encountered in that particular study. However, I believe the same principle applies. It's nearly unthinkable for us to apply the patience and persistence necessary for internal adjustments to be implemented, especially where corruption practiced by a few is the proximate cause of poverty for millions. I'm convinced the answer is not in imposing outside intervention, but rather encouraging and supporting local resources to achieve cultural transformation from within.
July 20, 2017 | Unregistered CommenterPascal Budge
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