Compensating Victims of Corruption

That corruption is not a victimless crime is no longer in doubt.  The once fashionable argument that corruption advances human welfare by “greasing the wheels” of clunky bureaucracies has been entombed thanks to a plethora of academic studies, media reports, and first-person accounts showing the undeniable, often enormous, harm corruption wreaks on individuals and society as a whole.  As UN Secretary General António Guterres told this week’s seventh meeting of the parties to the UN Convention Against Corruption, that harm ranges from denying citizens access to such basic rights as “health services, schools and economic opportunities” to undermining the very foundation of the state through enabling “a small elite in positions of power to prosper” thus destroying citizens’ “faith in good governance.”

While the damage corruption does is now clear, how to recompense the losses it causes is anything but.  The definitive legal text, the UN Convention Against Corruption, offers little help.  To be sure, article 35 requires state parties to give those “who have suffered damage as a result of an act of corruption … the right to initiate legal proceedings against those responsible … to obtain compensation and article 57 directs governments that have recovered the proceeds of corrupt acts to give priority to “compensating the victims of the crime.” Nowhere, however, does the convention offers any guidance on how to determine who is a victim of corruption or how their damages should be determined.  As a result, both international and domestic law on victim compensation will have to develop through court decisions, learned commentary, and legislation.

An important step in developing this law is the paper the UNCAC Coalition, a network of some 350 civil society groups from over 100 countries, submitted to this week’s meeting of UNCAC state parties.  “Recovery of Damages and Compensation for Victims of Corruption” draws on international law and emerging law and practice in both developed and developing states to guide the creation of laws governing corruption victim compensation.   The Coalition urges governments to:

“1) Recognise the rights of victims to initiate and participate in grand corruption proceedings and the importance of assessing and representing harm in grand corruption proceedings. To this end, they should ensure that their legal frameworks have comprehensive interpretations of harm and a broad definition of “victim”; that prosecutors develop suitable criteria for identifying victims of and harm from corruption at the earliest possible stage of criminal proceedings; and that the views of victims and evidence of harms are present in proceedings, including out of court settlements.

“2) Encourage civil society organisations, nationally and internationally, to set up and operate corruption observatories to collect information, provide advice to victims, help determine damages and support action for recovery.

“3) Establish mechanisms for civil society and non-governmental actors to report crimes of corruption directly to anti-corruption bodies (in line with UNCAC Article 13 (2)), and be treated as an official complainant.

“4) Permit and encourage courts and prosecutors to recognise and seek civil society and other expert assistance in identifying the harm and potential victims of corruption, and in helping determine how compensation can be used for the public good, in a transparent and accountable manner.

“5) Make public in a timely and accessible form, information on the rights of victims of grand corruption to initiate and participate in criminal and civil proceedings, including out of court settlements and provide full public access to such proceedings and relevant court documents from such proceedings.

“6) Ensure that compensation is based on a full analysis of the broader harm caused by an act of corruption. Sanctions and remedial action, including settlements, should include recognition of collective and social damage.

“7) Ensure that asset return, reparation and compensation of damages will not fuel the same system that caused the damage in the first place, and that their use is transparent and accountable to the people where corruption took place.

“8) Adopt a resolution at the 2017 CoSP [the seventh meeting of the state parties] that specifically urges the Secretariat to continue to share good practices and experiences, working with a broad range of interested groups including with UN and regional human rights mechanisms to learn from and collaborate with them, and to work towards guidelines for the identification and compensation of victims in corruption cases and in particular victims in grand corruption cases.”

As this is written, action on adoption of a resolution on victim compensation remains to be decided.  A follow up post will recap decisions taken on the CoSP meeting on victim compensation and summarize any resolution the state parties adopted on victim compensation.

6 thoughts on “Compensating Victims of Corruption

  1. The lack of direction in UNCAC Article 35 regarding who may be classified as victim or how damages can be determined is important to note. I agree with the statement that case law will need to be developed. The multitude of forms corruption may take impacts the definitions of victims. Various corrupt practices will affect varying degrees of victims. I suppose a good analogy would be throwing a stone in water and the manner in which the water ripples away from that impact. If the corrupt act is that stone and the ripples represent the effects of its impact with the water (the public), there are seemingly endless victims as the ripples reach out to a broader and broader victim base.
    It will be important to watch the developing case law as it defines victims to see how broad, how far away from the initial impact, the definition of victim extends. This will also be important for the issue of standing, how closely connected must a plaintiff be to be eligible to file suit under Article 35. It will also impact allocation of damages, how will courts divide damages amongst varying levels of victims? These are a few considerations to watch for as the ambiguity in Article 35 is resolved by the courts.

    • Very nice comment. Thanks. I can’t help but think this is an area where the courts and legislatures wouldn’t find original work by legal academics of great value. Hint, hint.

  2. Perhaps the best starting point is to adopt from established areas of law that usually require a “damage” that is identifiable and reasonable. For some corruption, the victim will be most analogous to the crime victim, – a direct victim. While crime harms the family, neighborhood and society, the direct victim has the direct damage that a court and jury will be able to measure and award. Other act of corruption will be more analogous to the toxic tort or large scale environmental damage where the community damage can be measured in increased illness/health care cost, loss of property values etc. If we look to what is already accepted in the legal system, we should have a good starting point for how to frame damages from corruption.

  3. I agree that this is an area of anticorruption law that really needs to be developed. The issues are very tricky, though, and I believe many exchanges in previous posts in this blog have revolved around this issue. Areas of contention would most possibly be (1) defining who are the “victims” of corruption. There is certainly an argument to be made that any act of bribery, official misconduct or conflict of interest taints the entire public service of a particular country, and therefore injures the public at large. This issue would become very controversial when different interest groups — governments, civil society groups, associations — start asserting legal standing and compensation rights in a manner that may be incongruous with or hostile to one another, even if they all come from the same country where the corruption took place; (2) identifying who would administer the distribution of the compensation, and how. A great majority of past experiences simply involve the repatriation of funds, received by representatives of governments of origin countries (the BOTA Foundation approach, I believe, was the first and last of its kind so far). But since Item 7 of the UNCAC Coalition recommendations cautions against the reintroduction of repatriated funds to the corruption pipeline, it appears that additional precautions need to be taken. What if the same corrupt regime is still the incumbent? How can we ensure that the compensation will not be stolen again? If an administration agreement will be entered into, to what extent can the destination country monitor compliance with its conditions? And what will be the sanctions in case of violation? (3) treatment of the destination country. If the proceeds of grand corruption in an origin country are laundered in a destination country, should we also treat the destination country as a “victim” of the corrupt act? If so, is its status the same as the “victims” of corruption in the origin country? This issue would be relevant in cases where the recoverable amount is insufficient to cover the amount of the assessed damages that need to be compensated. In those cases, should the origin and destination countries share pro rata? Or will the claims of one be prioritized over those of the other?

  4. I agree that this area is very undeveloped. Article 35 of the UNCAC leaves a lot of ambiguity on the definition of a victim and who should receive compensation. The Coalition mentions “victim” should be defined broadly, but I am not sure I agree with this proposition. I think the costs of a broad definition will cost more than it will benefit. Especially with grand corruption, identifying a victim seems too attenuated. Realistically, a court proceeding identifying a victim for grand corruption would take a lot of time and resources without adequately remedying the situation. I question whether focusing on compensation for victims combats grand corruption. The victims of grand corruption are so far reaching with a varying degrees of harm. Justice is much harder to define with grand corruption. Should the focus be on compensation or should the focus be on eliminating the grand corruption? I think justice is better served with focusing on eliminating grand corruption and legitimizing the institutions that have been harmed. I think this better serves justice, because compensation only temporarily serves justice when institutions continue to be plagued by corruption.

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