The New York Times ran a very nice piece last week (with a GAB mention!) about the U.S. Department of Justice’s Kleptocracy Asset Recovery Initiative, and its ongoing efforts to seize foreign assets held by corrupt foreign leaders (and their cronies) in the United States. We’ve already had a lot of blog commentary on some of the issues associated with the Kleptocracy Initiative (see here, here, here, here, and here). But I wanted to pause for a moment to consider a question raised in the NYT piece: Is the effort worthwhile, given its resource costs and the relatively modest successes to date? The answer is not obvious; as Rick (quoted in the article) put it: “In terms of really helping the global anticorruption struggle, I wonder if this is the highest use of resources.” (Rick further suggests that the DOJ’s resources would be better spent on assisting countries pursuing their own anticorruption and asset recovery cases.)
Rick is right to raise these questions about the Kleptocracy Initiative—but my instincts are different from his. Even if it is the case, as the NYT reports, that the DOJ has so far only been able to recover around 8% of the assets it has gone after under the Kleptocracy Initiative, this still strikes me as a good use of DOJ resources. Here’s why:
- First, though this is more of a quibble, expressing the recoveries in terms of percentages of money sought may be somewhat misleading, for two reasons. One, the DOJ may start out with the most ambitious target it thinks it might be able to achieve, much as a private civil plaintiff will file a law suit seeking hundreds of millions in damages, even if her lawyer knows she realistically might only be able to recover a few hundred thousand at best. Two, a lot of these cases are still in the pipeline—the Kleptocracy Initiative is still relatively young, and the cases take a long time—and so perhaps the denominator ought to be not the total amount sought by the DOJ, but the total amount of assets whose ownership has been finally resolved.
- Second, as the article points out, one of the reasons the recoveries take so long, and are sometimes relatively modest, is because the targets hire big teams of top-notch (and very expensive) lawyers to fight the seizures. But these legal costs (and the costs associated with not having access to the assets while they’re tied up in court proceedings) are also costs for the asset owners, and so should be factored into the deterrent effect of the Kleptocracy Initiative. (Of course, this also raises concerns about potential abuse or overreach—not everyone targeted is always necessarily guilty, though so far the Kleptocracy Initiative’s targets don’t appear to have been close cases.)
- Third, as noted above, the Kleptocracy Initiative is still relatively young, and there’s likely to be a lot of learning-by-doing, such that I would expect that the success rate will improve over time.
- Fourth, and related to several of the above points, I think that the right way to evaluate a program like the Kleptocracy Initiative is not so much in terms of assets seized (and returned), but in terms of its deterrent effect. Asset seizures are nice and generate big headlines, and in some cases returned assets can be used to do some good in the victim country, but I actually think there’s probably too much attention to seizures and returns as the measure of success. The real measure of success should be the extent to which the DOJ’s approach (and other measures, such as greater financial transparency) make it harder for corrupt leaders to reap the benefits of their ill-gotten wealth. A big part of that is to make hiding those assets in places like the United States a riskier proposition. Unfortunately, it’s very hard to measure the deterrent effect of the Kleptocracy Initiative directly, and indeed the deterrent effect is only likely to emerge gradually, as kleptocrats start thinking twice before parking their money in the U.S. So I’m mainly going on instinct, but I tend to think that a high profile initiative like this, with at least a few high-profile, headline-grabbing seizures (Obiang, Abache, etc.) will have an effect.
- Finally, Rick offers as an alternative approach providing greater DOJ assistance to countries going after assets themselves. Of course, these aren’t mutually exclusive, though I recognize that there are trade-offs at the margin. It’s really a question of degree—I don’t think Rick believes the U.S. should not devote any effort to seizing illicit assets held in the U.S., and I certainly would strongly favor devoting more resources to mutual legal assistance. But perhaps I’m somewhat more skeptical than Rick about the effectiveness of other countries’ efforts to go after stolen assets themselves, even with U.S. assistance. Many of the victim countries will be plagued by a lack of capacity (these cases are very complex and expensive), a lack of will (especially when the owners of the illicit assets are still in power), or both. The best-case scenario would be for the victim country to take the lead on going after the stolen assets, with the U.S. and other countries providing support. But when that can’t or won’t happen, something like the Kleptocracy Initiative seems like a valuable backstop.
GAB | The Global Anticorruption Blog 
A Global Practitioner’s Perspective……
As is often the case, I agree with many aspects of both Matthew’s and Rick’s analyses and conclusions. However, I want to briefly add a few of my own personal insights after having seen first-hand how some of these issues have played-out in various developing countries I’ve worked in over the years. I’ve learned over the years that some of the issues being discussed here, not unlike many other global anti-corruption issues, are more complex and inter-connected than might be readily apparent within developing world context. While I know the focus is primarily on the U.S. Kleptocracy Initiative, I think its also useful for to more closely examine, for lessons learned and forward-looking purposes, some of the issues raised through the prism of its global cousin, the Stolen Asset Recovery Initiative (StAR).
First, I’ve had global technical capacity concerns all along. I confess I was a somewhat of a skeptic that of the StAR Initiative from the beginning and I expressed my concerns to some of those who helped launched this global project. Time has now shown us just how resource intensive it has been to global institutions and to our international efforts and that it has captured many of the best minds and anti-corruption practitioners to a money-laden door that has predictably proven very hard to identify and unlock.
Second, I’ve had political, overall mission and technical capacity concerns at the country level all along. When launched by the World Bank and UNODC, before the related “Kleptocracy Initiative” was birthed by DOJ, a few of us were concerned that while well-intentioned, StAR was likely to result in countries placing too much or almost all of their resources and efforts on trying to legally recover the hidden assets of present or former government officials — rather than on trying to address and prevent endemic corruption on a range of important fronts. This includes rooting out endemic corruption within the public procurement process and endemic corruption within key government institutions, such as the judiciary and law enforcement communities, and key sectors, such as oil and gas. We had certainly learned by then that a global initiative like StAR had little chance of success in many countries if for no other reason that the justice and law enforcement communities were endemically corrupt. That fundamental foundational institutional problem was one almost no country was ready to make a high priority anti-corruption priority. It should have been made a precondition to receiving international assistance, at least with regard to any cooperation related to asset recovery.
After working on anti-corruption strategies with the anti-corruption commissions in over six developing world countries, I could see that some policymakers and even NGOs quickly became preoccupied with the elusive goal of trying to recover stolen state assets in other countries, often at the urging of the international community. I could also see that more than a few were quite ready to focus on this mission because they saw it as good ammunition for convincing the public and international community that they were really serious about addressing and preventing high-level corruption.
And third, I always questioned why any global initiative like StAR did not include clear policies and procedures to make ensure that any recovered assets were not returned to corrupt governments or dictators without strings attached. I had learned as an anonymous whistleblower in a high profile FCPA case myself that simply recovering assets and returning them to the hands of corrupt officials without conditions or close monitoring and oversight would serve no sensible or public purpose.
After having said all of that, I can now more clearly see that StAR and its close cousin, the Kleptocracy Initiative, have at least served a good purpose in promoting more public anti-corruption awareness in some and that it has helped forge new and deeper relationships and capacity within the international law enforcement community. It has also helped open the door to more serious and deeper reform dialogue and action — at least in some cases. More recently, these efforts have actually resulted in some asset recovery settlements that includes conditions on how the recovered assets are returned and spent (Obiang/Equitorial Guinea case).
Finally, as to the question as to how to best measure success, my own view is that key measurements should include: (i) whether either the StAR project or the Kleptocracy Initiative has resulted in enhanced strategic efforts to address and prevent corruption on a range of important fronts; (ii) whether either has helped promote international cooperation, public trust or public good and broader implementation of the UNCAC and (iii) whether either has helped globalize the rule of law. In short, I guess I end-up more where Rick comes out wondering whether DOJ or the international community should continue to make either initiative such a high priority, particularly to the exclusion of others. I say let a thorough assessment begin!
Matthew, I definitely agree that the Kleptocracy Initiative has important value. For many reasons, the program is worth more than the mere dollar amount recovered. As one of the few mechanisms to realistically combat grand corruption perpetrated by public officials, it performs an innovative and fairly unique function in the global fight against graft. American policy interests in these cases are bolstered by the facts that the ill-gotten gains are public funds and that the launderer depends upon U.S. havens. Furthermore, Articles 51 and 52 of UNCAC urge the “widest measure of cooperation and assistance” in the return of assets, and, specifically, “enhanced scrutiny of accounts sought or maintained by or on behalf of individuals who are, or have been, entrusted with prominent public functions.”
If the current problem is that foreign enforcement actions are lacking, then there must be few demands for legal assistance and MLA would not be an equal, credible alternative to the Kleptocracy Initiative. Envisioning a future in which countries do pursue cases against their own corrupt officials, the DOJ will benefit from having the legal infrastructure in place to assist in the recovery of assets. In fact, I think that the Initiative has the potential to significantly advance cooperation across borders. Far from being mutually exclusive, the Kleptocracy Initiative and legal assistance seem mutually reinforcing. In order to freeze and seize assets, authorities must show that the targeted assets are connected to illegal activity. To oversimplify, the U.S. has the information about the assets, and the country of origin has the information about the illegal activity. Even if the kleptocrat’s home country initiated a suit, it would still eventually have to find and attach the assets in the U.S., assuming it wanted the funds repatriated. Given the case complexity and the sensitivity of private information, this step would, at the very least, require a formal request for legal assistance. Absent an order against the particular asset in question, the foreign government would even need the U.S. government to act as the confiscating party. Thus, from assistance in tracing funds to management of the confiscation itself, the DOJ’s role would be functionally similar to what it is now.
Now, if the DOJ is currently unresponsive to many foreign demands for MLA (as Rick has argued), or if foreign enforcers/policymakers/NGOs would legitimately choose not to pursue stolen assets (as Keith suggests), or if the practical barriers to cooperation are just too great (as the NY Times posits), then my argument is certainly weakened. Nevertheless, UNCAC, policy interests, and the long-term potential to grow cooperation are important factors that may override detractors’ concerns.