No Nonsense
Repatriation of stashed assets
I start my day with the TV news broadcast at 8:00 a.m. (ET) while still in bed, hoping to see some dark faces -- dark, not in complexion, rather faces of guilt darkened by acts of misdemeanours -- charged with extortion, bribery, and all forms of self-aggrandising behaviour.
I watch the news again at 10:00 p.m., hoping for a sound sleep after watching some of those dark faces handcuffed and booked in prison van. It has been my routine since 1/11, more distinctively, since Hasan Mashhud Chowdhury became the ACC chairman -- one of the country's most trusted officials, administering a one-time most ineffective corrupt institution.
Despite all the good things about the ACC and its chairman -- hopelessness besieges many of us whenever Chairman Hasan tell reporters that he will quit if he feels his job is being hindered by deliberate bureaucratic tangles. Although, his premonition that combating corruption will depend on future political leadership is true -- I don't see any future political leadership daring to intervene in the affairs of the ACC.
Chairman Hasan, the path to combating corruptions, in mathematical term, is non-linear -- everything won't be laid out straight -- it never did for other countries who faced similar situations. The debilitating bureaucracy and its promoters will form layers of barriers to protect their friends and sponsors who helped them crawl in ranks and status in public service and politics.
Chairman Hasan. we urge you not to think of resignation or to allow bureaucratic tangles to dishearten you, as might be the case if you were serving a political government. The situation is different today and there can be no scope for failure, the stakes are simply too high.
The December 5 editorial of the Daily Star reassures you that we are all behind you to rebuff all evils of meddling and bureaucratic distractions.
The editorial writes: "The worries of the chairman of the ACC are also ours … Hasan Mashhud Chowdhury informs us that owing to an absence of official arrangements with other countries vis-à-vis investigating corruption, it has not been possible so far for the money stashed away to be brought back to Bangladesh. Besides, an inadequacy of authentic information regarding the money smuggled out abroad has also impeded a prosecution of those responsible for such unlawful conduct."
As you know, repatriation of stolen and illegally diverted assets by public officials and politicians is a chronic problem in many developing countries. However, success in repatriation has been scanty. The following three examples explicate the partial success stories and impediments in the way of recovery efforts.
Abacha case
The government of Nigeria succeeded in recovering about $1 billion of the estimated $4-5.5 billion looted by late dictator Abacha through stealing directly from the Central Bank and cashing on inflated public procurement projects. After assuming power, the Obasanjo's government received assistance from Liechtenstein, Luxembourg, Switzerland, UK, and US. Despite cooperation from these countries, particularly Switzerland, the following obstacles delayed the recovery initiatives: * The mutual legal assistance channel, although proved successful in some jurisdictions, has stalled prompt recovery in many others, including UK. * The case has shown that civil remedies can be a more potent weapon against the perpetrators of corruption. * The malefactors have reneged on the agreements, hoping that the regime will be replaced by one less inimical to their interests. Montesinos case
Vladimiro Montesinos, former head of Peruvian National Intelligence Service, fled Peru in September 2000 (later extradited to Peru and imprisoned), soon after the evidence of his ill-gotten assets became public. The repatriation of over $75 million in August 2002 of the $113 million stolen was possible primarily because of the establishment, in both jurisdictions, of the criminal origin of the monies. Other factors that fostered the recovery included: The "spontaneous information" system in Switzerland that allows the law enforcement authorities to act on behalf of a country without prior request. * The media coverage of the case threatened legal and reputation risks for Swiss financial institutions. * The public discussions held in 2000 regarding the participation of the Swiss financial institutions in the Abacha scandal. * The Peruvian legislation that allows evidence-gathering by means of bargaining. * The role of the well-trained public officials. * Understanding the network of corruption and corrupt officials before progress could be made on identifying stolen assets. Marcos case
Nearly 20 years after Ferdinand Marcos left office, allegations of his misappropriation and looting of at least $5 billion couldn't be fully resolved. A Presidential Commission of Good Government (PCGG) was formed three days after he fled the country in 1986 to recover the stashed assets in the Philippines and abroad. In a rare move in March 1986, the Swiss Federal Council imposed a unilateral freeze order on Marcos's assets. In December 1989, the PCGG entered into a "finder's fee (10%) contract" with an Australian investigator, Reiner Jacobi, to search for undisclosed and suspected accounts held by Marcos in Switzerland. Among many obstacles that held back successful recovery includes: * Missing records and non-cooperation of corrupt lawyers and officials sympathetic to Marcos family. * This cooperation between PCGG and Jacobi ended with mutual allegations. * Critics of PCGG suggest that it had hidden interest and motives for not acting upon the information. * Other constraints included issues with criminal conviction and delays caused by judicial loopholes in the system well exploited by Marcos family's legal representatives. The December 9 issue of the Daily Sun reported that cross border flow of global proceeds from criminal activities, corruption and tax evasion is estimated to be between $1 trillion and $1.6 trillion annually -- African countries are estimated to lose about 25% of their GDP, nearly $448 billion, to corruption. While launching a new initiative known as the "Stolen Asset Recovery (Star)" recently, both the UN secretary general, Ban Ki-Moon and the World Bank president, Robert B. Zoellick, stressed that the Star initiative "will foster much needed cooperation between developed and developing countries to ensure that looted assets are returned to their rightful owners." Although, our looters look petty thieves compared to the likes of Abacha, Montesino, Marcos and others, nonetheless we want the looted wealth back to where it belongs. However, ACC's success will not be measured by the amount of stashed dollars repatriated -- the country will survive without them. What the people will remember mostly, among other successes, is what Chairman Hasan recently told the press, of a new dimension of investigations of alleged corruption and irregularities of the public service related organisations. Mr. Chairman, thank you -- we all wish your ACC every success. [Thanks to Noora Al-Hashimi, graduate student from UAE, who provided research support for this article.] Dr. Abdullah A. Dewan is Professor of Economics at Eastern Michigan University.
The government of Nigeria succeeded in recovering about $1 billion of the estimated $4-5.5 billion looted by late dictator Abacha through stealing directly from the Central Bank and cashing on inflated public procurement projects. After assuming power, the Obasanjo's government received assistance from Liechtenstein, Luxembourg, Switzerland, UK, and US. Despite cooperation from these countries, particularly Switzerland, the following obstacles delayed the recovery initiatives: * The mutual legal assistance channel, although proved successful in some jurisdictions, has stalled prompt recovery in many others, including UK. * The case has shown that civil remedies can be a more potent weapon against the perpetrators of corruption. * The malefactors have reneged on the agreements, hoping that the regime will be replaced by one less inimical to their interests. Montesinos case
Vladimiro Montesinos, former head of Peruvian National Intelligence Service, fled Peru in September 2000 (later extradited to Peru and imprisoned), soon after the evidence of his ill-gotten assets became public. The repatriation of over $75 million in August 2002 of the $113 million stolen was possible primarily because of the establishment, in both jurisdictions, of the criminal origin of the monies. Other factors that fostered the recovery included: The "spontaneous information" system in Switzerland that allows the law enforcement authorities to act on behalf of a country without prior request. * The media coverage of the case threatened legal and reputation risks for Swiss financial institutions. * The public discussions held in 2000 regarding the participation of the Swiss financial institutions in the Abacha scandal. * The Peruvian legislation that allows evidence-gathering by means of bargaining. * The role of the well-trained public officials. * Understanding the network of corruption and corrupt officials before progress could be made on identifying stolen assets. Marcos case
Nearly 20 years after Ferdinand Marcos left office, allegations of his misappropriation and looting of at least $5 billion couldn't be fully resolved. A Presidential Commission of Good Government (PCGG) was formed three days after he fled the country in 1986 to recover the stashed assets in the Philippines and abroad. In a rare move in March 1986, the Swiss Federal Council imposed a unilateral freeze order on Marcos's assets. In December 1989, the PCGG entered into a "finder's fee (10%) contract" with an Australian investigator, Reiner Jacobi, to search for undisclosed and suspected accounts held by Marcos in Switzerland. Among many obstacles that held back successful recovery includes: * Missing records and non-cooperation of corrupt lawyers and officials sympathetic to Marcos family. * This cooperation between PCGG and Jacobi ended with mutual allegations. * Critics of PCGG suggest that it had hidden interest and motives for not acting upon the information. * Other constraints included issues with criminal conviction and delays caused by judicial loopholes in the system well exploited by Marcos family's legal representatives. The December 9 issue of the Daily Sun reported that cross border flow of global proceeds from criminal activities, corruption and tax evasion is estimated to be between $1 trillion and $1.6 trillion annually -- African countries are estimated to lose about 25% of their GDP, nearly $448 billion, to corruption. While launching a new initiative known as the "Stolen Asset Recovery (Star)" recently, both the UN secretary general, Ban Ki-Moon and the World Bank president, Robert B. Zoellick, stressed that the Star initiative "will foster much needed cooperation between developed and developing countries to ensure that looted assets are returned to their rightful owners." Although, our looters look petty thieves compared to the likes of Abacha, Montesino, Marcos and others, nonetheless we want the looted wealth back to where it belongs. However, ACC's success will not be measured by the amount of stashed dollars repatriated -- the country will survive without them. What the people will remember mostly, among other successes, is what Chairman Hasan recently told the press, of a new dimension of investigations of alleged corruption and irregularities of the public service related organisations. Mr. Chairman, thank you -- we all wish your ACC every success. [Thanks to Noora Al-Hashimi, graduate student from UAE, who provided research support for this article.] Dr. Abdullah A. Dewan is Professor of Economics at Eastern Michigan University.
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