When Should Governments Keep Stolen Assets?

The Swiss government agreed in early March to return $321 million to the Nigerian government that was stolen by the late Sanni Abacha during his kleptocratic reign as the country’s president.   The agreement provides that the funds will be used for programs to benefit the Nigerian people in “an efficient and accountable way” and, to ensure the funds do indeed go to such programs, the World Bank will monitor their use.

World Bank oversight is one way to ensure returned assets are not again stolen, and in the case of Nigeria — a relatively open society with an elected government, a lively, unconstrained media, and a vibrant civil society – World Bank monitoring, when coupled with these conditions, may be sufficient to guarantee the funds are put to good use.  But what about in closed societies?  Those without elections, free media, an independent civil society.  Countries where the same tight-knit, authoritarian group which stole the assets in the first place remains in power?  Is there any way to ensure stolen assets returned to these countries will be used to benefit the nation’s citizens rather than going straight back into the pockets of the thieves?

That was the question explored at a March 10 conference sponsored by the Open Society Foundations, and while speakers suggested a number of mechanisms, principally variations on the Kazakhstan model — distribution through a non-profit foundation independent of government and managed by an international NGO – it was clear that no method is foolproof.  Where a government controls all the levers of power and quashes all dissent, there is always the risk that it will frustrate outsiders’ efforts to see returned funds go to citizens.  The issue then is how much risk a government holding stolen assets is willing to bear to return them.  Clearly there are some countries, North Korea was the example conference attendees cited, where the risk the assets will again be stolen is 100 percent and return thus makes no sense.

But what about those countries where the risk is less?  What if there were a 75 percent chance the money would be used well? A 50 percent chance? A 25 percent chance?  Where should a government considering the return of stolen assets draw the line?  At what point should it decide it best to keep the money?

That was the question was put to those attending the Open Society Foundations conference.  Participants were a mix of civil society representatives, many from international human rights groups, a handful of personnel from different governments, and the diaspora of highly corrupt countries.  The latter were from countries where, thanks to the work of the Department of Justice’s Kleptocracy Unit, the U.S. government may soon have to decide whether to return stolen assets to their governments and risk they will again be stolen or keep them.

About 60 percent of attendees would repatriate funds if the chance they would go to benefit citizens was 75 percent.  Some 40 percent would return them if the chance was 50 percent, and less than 10 percent said the funds should be returned if the chance they would benefit citizens was 25 percent.  Interestingly,  those who were most reluctant to see the money returned, even where the chances were three in four the money would be used to benefit citizens, were from countries where the U.S. government may soon have to decide whether to keep or return funds.  The view from the diaspora was that the harm that would result from the money again being stolen would be so great that it best to avoid any significant risk of misuse.

What about you readers?   What do you think?  And why?

6 thoughts on “When Should Governments Keep Stolen Assets?

  1. Pingback: When Should Governments Keep Stolen Assets? | Anti Corruption Digest

  2. A close observer of international corruption issues whose position does not allow for public statements on the issues asked that I post this insightful comment:

    “In brief, I believe that the Governments should not consider at all the future corruption risks when they make a decision whether or not to repatriate stolen assets – for the following reasons:

    1. Stolen money is stolen. Period. Money should not be stolen; and if the police investigates a theft or a robbery, they do not – and should not – ask the question “was this money stolen from a criminal” and “if we return the money to this drug addict, would he/she use it to purchase drugs”. If a state has been robbed, it has every right in the world to receive its money back – no matter whether this state is an authoritarian dictatorship or an oasis of liberal democracy. Basic property rights, stemming from the Roman law tradition and now a part of every civilized legal system.

    2. Because the money was stolen, it is a duty of every person –or entity — that recovers it to repatriate it (return to rightful owner). Otherwise this country, government or entity becomes an accomplice; it is keeping stolen assets for itself; it illegally benefits from these assets. The rightful owner, no doubt will usually be the state (most of the looted funds come from procurement kickbacks, stealing money from the state budget directly etc – not petty bribery). Money was stolen from the state through inflated procurement tenders, fraudulent contract implementation etc. One may argue it belongs to the people – but this is just only a figure of speech – in reality it was the state budget that was looted. Yes, ordinary people suffered too – but indirectly.

    3. Moreover, because the money in question does not belong to the recovering state, the recovering state has no right to decide to whom to return the money. Yes it can — in practice — make such a decision because it has the physical control over them, but it is not its money and it has no right whatsoever to say “we will return the money stolen from you if you spend it for XYZ”. The money should be returned to its rightful owner: the state from which it was stolen.

    4. In more practical terms, allowing for a discretionary decision on whether or not to repatriate stolen assets – or whether to give it to NGOs or under the WB control – from the side of the recovering state in practice would undermine the willingness of looted states to seek assets recovery. Indeed, why bother with lengthy and cumbersome procedures if the money will not come to the state budget but instead will go to an NGO or under the WB control? This will inevitably lead to further undermining the sovereignty of already weak states and will strengthen the positions of the corrupt ones.

    5. Finally, there is a good chance that if assets are repatriated on an (in practice) discretionary basis, asset recovery will become a political tool and will be used in the political games (just like extradition is). You know that some countries become a safe haven for criminals and money launderers from other countries – it is well known that they will never be extradited and prosecuted; simply because of the political disagreements or even animosities.

    I understand why many activists are against the unconditional asset recovery. It is a very moral position. But the debate here is the same as the debate on whether the developmental agencies should provide assistance directly (prioritizing effectiveness, saving people’s lives) or through the institutions of the beneficiary country (allowing for the risk that there will be less effective implementation, even fraud, but also a chance for capacity building, while more people die). In brief, this is the same old capacity building vs. capacity substitution debate; where a group of enlightened activists believe that they have the right to tell a sovereign country what to do. Again, while this may very well be the most moral position, but in the long run I doubt that undermining the willingness of states to pursue assets recovery and thus strengthening the positions of the corrupt is what we intend to do.”

    • I must disagree with this position. first of all, property rights are not absolute and can be balanced with a state’s right to uphold law and order. E.g. in UK law stolen assets may not be returned to their “owners” if it can be proved they were the product (even indirectly) of crime or the owners were not of “good faith”. Secondly, while from a formalistic legal point of view, your points are totally valid, unfortunately in practice they would lead to gross injustices. States are not the representative, legitimate entities they are supposed to be under international law. There is an emerging international legal consensus on what constitutes state legitimacy, democracy, and respect for universal human rights, different states fall on different points of this scale. If conditions on the restitution of stolen assets give us the opportunity to demand respect for these universal values, then we should use this, rather than hiding behind legal formalities in order to shirk our moral responsibilities regarding this issue. I completely agree that in practice, the danger is that this leads to political discretionality and pressure on already weak developing states, that’s why the issue must be addressed at the international level (UN, or WB) and until then, confiscating states have no right to impose conditions without putting in place capacity building measures, admitting their part in the original theft of the assets and taking measures to prevent this in the future. This is because any right to place conditions is based on the right of confiscating states to ensure respect and enforcement of international law (UNCAC) and any conditions, in this way, must be proportional to these ends – a principle already applied accordingly to the similar and equally thorny issue of conditions on international aid; a debate more advanced than the one going on amongst the anti-corruption community at the moment and from which we may be able to learn a thing or two.

  3. Thanks for raising these interesting questions Rick. I agree with Nata in that, I think there are several other wider issues that must be taken into account, such as state sovereignty, before we can answer such questions as, how much loss is acceptable. The first of these is, in the case of the assets not being repatriated, what right does the confiscating state have to keep them? This is especially relevant in cases where the confiscating state is complicit in the original theft (even passively through lax anti money laundering laws / prosecution) as, firstly it is not fair they keep these assets which they should have prevented being stolen in the first place and secondly, we create an incentive for confiscating states to avoid tackling the root causes of corruption. We also must take into account the question of, at what point, if at any, is it acceptable to drop charges in order to facilitate a restitution? This is a case in point regarding the Abacha assets, which I’m surprised you hold up as a positive example, where charges were dropped in a secret agreement that we only learnt about through a leak. Furthermore, the repatriation agreement seems very vague, I see no details on what this world bank supervision might involve, and it is really disappointing that this time, unlike in the 2005 – 2006 repatriation, there is no civil society participation. Worrying is the fact that the civil society audit in 05 found many cases of corrupt use of the repatriated funds, can we expect this to multiply in the absence of civil society oversight? Maybe you have more information than me…?

  4. Pingback: Monday News Muse 04 April 2016 | Arconn Consult

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