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Corruption and Asset Recovery

January 10, 2010

Corruption is an ongoing theme in my research. In the case of today’s post, the issue is what happens to the money that was gotten through corrupt means. It turns out that the UN Convention Against Corruption (UNCAC) deals with this problem by allowing funds to be repatriated to the country of origin. This is termed asset recovery. (See this article from U4 for more information.)

In the case of Nigeria, Sani Abacha acquired billions of dollars through corrupt means while he was the head of state in the 1990’s– much of his money was hidden in banks outside of Nigeria, in property, etc. Through UNCAC measures, almost half of what he is estimated to have taken (about US $1 billion) has been repatriated back to the Nigerian government– primarily from Swiss bank accounts.

This is a good thing for several reasons. 1. The people who took the money don’t get to keep it. 2. The country it belongs to gets it back. 3. Corruption will be taken more seriously by politicians. 4. The average person on the street gets a (very small) sense of justice at seeing a former head of state (and family) punished. 5. Foreign companies considering bribes will think twice in case their name is dragged through the mud (see BAE).

Now, the question of what happens to this money once it ends up back in the coffers of the country of origin is another matter. In this case, this money might very well find its way back into some other politician’s back pocket– albeit through a more indirect route. If only there was a way of ensuring that the general population benefited from these funds…. but that is something that needs to be worked out between a government and its citizens.

What is noteworthy about the article below is that the Swiss judge also targeted an intermediary who helped the Abachas with hiding their money. This sends the right sort of signals out, even if it is on the weak side.

Action by a Swiss judge to order the confiscation of bank accounts held in countries outside Switzerland set a legal precedent that will help in the international fight against corruption, legal experts said.

Yves Aeschlimann, a magistrate in Geneva, found Abba Abacha, son of Sani Abacha, the late Nigerian dictator, guilty of graft, sentenced him to a suspended prison term and ordered confiscation of $350m in funds held in Luxembourg and the Bahamas. The funds had already been frozen in the course of the investigation.

… Enrico Monfrini, a Geneva lawyer who acts for the Nigerian government, said the demand for seizure of funds outside Switzerland was a legal first for the country. The Swiss government has already handed over to the Nigerian authorities about $700m that the Abacha family stashed away in Swiss bank accounts….

In the same judgment Mr Aeschlimann also fined an unnamed Monaco-based financier for helping the Abacha clan hide its gains and ordered him to pay SFr10m ($9.8m, €6.6m, £6m), equivalent to the illegal commissions he received, to the canton of Geneva.

The move marks a further step in international efforts to tackle theft by corrupt rulers by going after intermediaries as well as principals. Full story.

I’ll be writing more on this in due course since Mora Johnson (Canada, DFAIT) and I are planning to write a paper on recovering assets through UNCAC in the peacebuilding context. Also, thanks to Bruce Broomhall for the link to this article.

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