A couple weeks back, Rick’s post on the US DOJ Kleptocracy Initiative’s settlement in the Obiang case prompted an interesting exchange among several contributors to this blog (including me) about the use of civil forfeiture proceedings to seize assets–suspected of being the proceeds of corruption or other illicit activity–without a prior criminal conviction. I recently had the opportunity to read the Stolen Asset Recovery Initiative (StAR)’s excellent new report, Few and Far, about recent developments in the asset recover field, and this report prompted me to reflect further on this issue. The Few and Far report is very positive about civil forfeiture, and recommends substantially expanding its use. To quote the report:
Both developed and developing countries need to ensure that they have a broad range of mechanisms in place, such as the ability[y] … to confiscate [assets] in the absence of a conviction. (p. 3)
Confiscation in the absence of a conviction (NCB confiscation) continues to be an effective mechanism for freezing and confiscating assets…. [H]owever, most OECD members have yet to adopt laws permitting the confiscation of assets in the absence of a conviction. (p. 43)
I want to use the Few and Far report to raise again an issue that I noted in response to Rick’s post on the Obiang case: I’m deeply conflicted about the use of non-conviction-based (NCB) civil forfeiture proceedings, and I think that perhaps the anticorruption community should engage in a bit more reflection about this mechanism, and how to ensure it’s not abused.
To be clear, I am not opposed to NCB forfeiture. Indeed, in cases like Obiang, and several of the others discussed in the StAR report, my instinct is to cheer on the civil forfeiture actions and to advocate their more widespread use. And civil forfeiture is an especially attractive tool in dealing with kleptocrats from systemically corrupt countries, because in those cases the likelihood of a domestic criminal conviction may be vanishingly small, even when it seems quite clear that the assets in question are almost certainly the product of corruption.
So why my queasiness? Mainly because the domestic experience in the US with civil forfeiture actions is deeply troubling. (This may be true in other countries as well, but I’m not sufficiently familiar with the practice elsewhere, so I’ll focus on the US.) As extensive exposes in outlets like the Washington Post and the New Yorker have documented, in the US there has been widespread abuse of civil forfeiture proceedings, particularly by local police departments, leading to numerous instances in which possibly innocent people had lost their cars, homes, or large sums of cash. (The satirist John Oliver highlighted–and skewered–this troublesome trend in a recent segment of his comedy program.) The essence of the problem is that most legal systems require a conviction–proof beyond a reasonable doubt–before imposing criminal punishments. And they do this for good reasons, notwithstanding the seriousness of the crimes alleged. Civil forfeiture proceedings seem to do an end run around that fundamental safeguard against government overreaching by adopting the legal fiction that the action is against the property rather than the person, and so only needs to be proved by a preponderance of the evidence, rather than beyond a reasonable doubt.
So I do think this is a bigger worry than many in the anticorruption community seem to have acknowledged. Yes, corruption is a huge problem–just like terrorism, drug trafficking, and other serious criminal conduct. But whenever we hear someone say–in these or other contexts–that the crime is so egregious that we should do away with (or find clever ways to circumvent) traditional procedural protections for the accused, we should at the very least stop and reflect.
All that said, I do think that the uses of civil forfeiture that StAR is advocating in Few and Far are perhaps easier to justify than the kinds of civil forfeiture mechanisms that have been abused in the US. Let me run through what I think are the biggest distinctions, but then also close on a cautionary note.
First of all, the risk of abuse is much less in the international asset seizure context than in domestic civil forfeiture actions. The biggest abuses that have been reported in the US generally involve local police departments, which are allowed to keep any property they seize to add to the department’s budget. International asset seizures are different along two dimensions:
- First, the actions are much more centralized, and pursued by trained lawyers in the national government (for example, the DOJ Kleptocracy Initiative), operating under the close supervision of senior officials. That, coupled with the fact that these cases are high profile and politically sensitive, means that some of the sloppiness and arbitrariness documented in local US police departments is much less likely.
- Second, many of the abuses at the local level in the US may derive from the fact that the local departments can keep the seized property for themselves, and the amounts of money involved are not trivial when compared to the departments’ overall budgets. This is much less likely to be a problem for national-level seizures of illicit assets, for two reasons: (1) In many cases, including, for example, the Obiang settlement, the seized assets are repatriated (if not directly to the source country’s government then through a charity or NGO); (2) even in those cases where the national government keeps the proceeds, the amounts involved are likely to be small enough, and the cases rare enough, that they are not likely to severely distort the judgment and incentives of the key government decision-makers.
On the other side of the ledger, the need for NCB-based forfeitures in the international asset recovery context is probably much more pressing than in the domestic context, because the possibility of obtaining a genuine conviction in the latter context is generally more realistic. If the cops pull over a motorist and find a large quantity of cash in the car, and suspect that it’s drug money, it doesn’t seem like too much to ask that a prosecutor prove before a court that it is, in fact, drug money before allowing the government to take it away. If the government can’t prove it, tough. When we’re dealing with kleptocrats from systemically corrupt countries tough, then–as noted above–part of the problem is that it may simply not be realistic to obtain a conviction, given the lack of cooperation from the host country.
Putting those points together, I don’t think I’m necessarily being inconsistent when I join StAR in calling for more aggressive use of NCB forfeiture in international corruption cases, and join John Oliver in calling for drastic limitations (though not necessarily elimination) of NCB forfeiture domestically. But I’m still not 100% comfortable with that position, and part of the discomfort arises because, even though cases like Obiang’s seem like easy cases for NCB forfeiture, easy cases often make bad law. What happens when the accounts belong not to a kleptocrat or his family members, but, say, to Russian oligarchs known to be enemies of the Putin regime? Or when we’re not talking about kleptocrats at the highest levels, but mid-level officials who may be corrupt but where the evidence is less clear? I do think the problem is potentially serious, and one worth thinking about carefully. After all, our commitment to fighting corruption and to seizing kleptocrats’ loot is in large measure about our desire to protect the rule of law — so we should be mindful that we do not sacrifice rule of law values in the process.
Two points to amplify on your post.
1) You say that abuse of asset forfeiture “at the local level in the US may derive from the fact that the local departments can keep the seized property for themselves.” I would drop the word “may.” Everything I have read about the abuse of asset forfeiture laws in the United States arises from the perverse incentive created by allowing agencies to augment their budgets by holding onto some or all of what they seize. I am not sure whether the incentive will be more perverse in a less developed country where police are paid poorly and lack even basic equipment than in local governments in the U.S. where law enforcement budgets are tight. But I doubt it will be less.
2) The risk of abuse of asset forfeiture laws is just one of many possible abuses that may come from strengthening law enforcement agencies to combat corruption. One of the only ways to catch a bribery scheme is through wire-taps or ease-dropping, and many anti-corruption agencies seek sophisticated electronic equipment to tap phones and listen in on what the participants think are private meetings. Once an agency possesses such equipment, there is of course the risk it will be used for ends other than rooting out corruption
Not long after the fall of Saddam the head of Iraq’s newly created anticorruption authority asked me if the World Bank (for whom I then worked) made loans for such items. Although everything about his background suggested the request was sincere, I waived him off. Not long afterwards he was replaced by a thoroughly sectarian leader. The new head used every anticorruption tool at his disposal to purse members of the Sunni minority. Even the requirement that officials file an income and asset declaration annually. Sunni personnel that did not meet the deadline were jailed immediately.
Like many aspects of development, giving law enforcement more tools to fight corruption is a double-edged sword. I know of no way to dull the other side besides ensuring citizens are informed of abuses and willing to act accordingly. .
I completely agree with you and Rick that in domestic sphere Forfeiture would jeopardize the rule of law as well as many of the fundamental guarantees against the abuse of governmental power. I believe before propounding any proposal, one has to consider Robert Hale ‘s question “are the evils to be removed by regulation greater than those that accompany the work of regulation”
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Great post, Matthew. I agree that civil forfeiture has massive potential for abuse and is something we have to be very wary of. I also agree with the reasons you laid out why local police offices have been far too trigger happy in pursuing civil forfeiture. But the problem might not go away as much as you think when the process is centralized. Take a look at this NY Times article from a few weeks ago that talks about cases where the IRS is seizing bank accounts “without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.” http://www.nytimes.com/2014/10/26/us/law-lets-irs-seize-accounts-on-suspicion-no-crime-required.html?_r=0
The one key difference is that the IRS is not taking accounts while believing the owners are probably innocent, while some local police departments may be. Local police departments are also determining what to seize based on their wish lists, which can prompt huge abuses. (http://www.nytimes.com/2014/11/10/us/police-use-department-wish-list-when-deciding-which-assets-to-seize.html) In either situation though, assets are still being seized without proper safeguards and innocent people are being hurt.
Thanks for bringing the NYT article to my attention. I hadn’t seen that, and it is indeed troubling (though I imagine the IRS would be able to articulate a plausible defense of its conduct). In addition to being troubling in its own right, this report makes me even more nervous with the aggressive use of civil forfeiture proceedings in the anticorruption context — perhaps the risks of aggressive overuse are still present even when we’re talking about a centralized, highly professional organization without a direct and immediate budgetary interest in seizing funds. Again, I want to be cautious not to jump to conclusions about the IRS program — it may be that in fact the IRS is behaving appropriately under the circumstances, though the story you cite suggests perhaps this is not always the case. But I do think this is even more of a reason to think carefully about how to ensure that civil forfeiture actions in the anticorruption/asset recover context — which I do think are an appropriate and useful tool under some circumstances — are no abused or overused.
Dear Professor Stephenson:
Thank you for sharing your thoughts. I enjoyed reading this.
The world is grateful for the US and the DOJ’s work in anti-corruption. We are all thankful for some measure of accountability and justice. Yet, in rem forfeitures and NCBs as asset recovery tools could do with some accountability and more transparency. And these are not even my words.
Only last month, the Court of Appeal of England and Wales reversed an injunction to freeze some of the Abacha-related assets. Sharing some of your queasiness and defining forfeitures as penal, the court stated that “[t]he fact that ultimately the US may in its absolute discretion decide (and its current intentions are not transparent, to say the least) whether, pursuant to its treaty obligations or otherwise, to remit monies derived from the forfeited assets to the FRN is irrelevant to the correct characterisation of the US proceedings.”
United States of America v Abacha and others  EWCA Civ 1291;  WLR (D) 423
We all agree that we do not want thieves to retain the benefits of stolen assets. This is not a win. We all lose where thieves retain the benefits of illegalities.
Yet, perhaps this is a good time to look at NCBs again. For example, what happens to a third of the forfeited monies from the Obiang settlement? While it is fair that costs of asset recovery be covered, how is this determined? Is the repatriation discretionary? And would this be replicated for in rem cases?
Thanks again for your reflections.