Confiscating assets acquired through corruption is a critical part of the fight against corruption. If those who would profit from corruption know they will be denied the benefit of their wrongdoing, there is no incentive to be corrupt.
As Justin explained Monday, Russia’s invasion of Ukraine has given asset confiscation a major boost. Many of Putin’s superrich backers, oligarchs or kleptocrats, became wealthy through corrupt deals, and the seizure of their mega-yachts, mansions and other properties now located outside Russian territory offer the West a way, albeit indirectly, to pressure Putin to end the aggression. Italian, German, and other Western prosecutors are thus now aggressively invoking domestic forfeiture statutes to confiscate them.
But as the Washington Post reports today, with the help of pricey lawyers and other enablers (here and here), the oligarchs have hidden their assets inside complex legal thickets of offshore companies that make confiscation hard if not impossible. In response, last Thursday President Biden asked Congress to give U.S. prosecutors new powers to cut through this underbrush (here).
The President’s initiative is welcome. But it also invites the obvious question: Why shouldn’t other Western nations follow suit? All are united in their opposition to the war and desire to make Putin’s associates suffer consequences. Why shouldn’t every Western state ease the task their prosecutors face to the rapid seizure of oligarchs’ assets? And indeed to the seizure of any asset corruptly obtained or unlawfully possessed found in their territory?
The most straightforward way to realize this goal would be to amend the OECD Antibribery Convention.
Forty-four countries have ratified the convention, the 38 members of the OECD plus six non-OECD member states: Russia (ironically) plus Argentina, Brazil, Bulgaria, Peru, and South Africa. Russia could not block such an amendment, for unanimity is not required for convention amendments. Indeed, the article governing the amendment process provides a variety of procedures for putting an amendment before member states. Tabling an amendment that would require state parties to make it easy to confiscate any kleptocrat’s assets, an “antikleptocracy amendment” if you will, would give convention parties’ governments a way to demonstrate their support for a more just international order. Or to explain to their citizens why they oppose it.
Alternatively, as with several human rights treaties the amendment could add an optional protocol to the convention. As the name suggests, an optional protocol is an addition or annex to a treaty, one that parties can choose to adopt or not. The law of treaties provides that, whatever a party opts to be bound by the protocol or not, their existing obligations under the treaty remain unchanged.
Creative legal minds in the convention’s secretariat and member governments could surely find ways to eliminate the roadblocks OECD prosecutors are confronting in seizing corruptly acquired assets — without endangering rights to lawfully acquired property. Many OECD countries have laws allowing actions to be brought against the assets themselves with those claiming a right of ownership required to show up and prove their right. These “non-conviction-based forfeiture” laws are rooted in the laws of ancient maritime states, many of whose descendants are now OECD member states. In other OECD nations, once the prosecution has presented evidence that the asset was acquired through unlawful means, the burden of persuasion (though not the burden of proof) shifts to the putative owner to show the asset was purchased with money earned legally (here and here), a process often employed in the United States to nail tax evaders (here).
As the experience with the adoption of the convention itself demonstrates (here), international norms become “hard law” when they both embody strongly-held notions of justice and serve the interests of a broader community. Putin’s unprovoked war of aggression against a peaceful, democratic neighbor has produced just such conditions for a stolen asset, antikleptocracy law. The OECD nations should move swiftly to capitalize on the opportunity his aggression has created.
The answer to the question “Why shouldn’t every Western state ease the task their prosecutors face to the rapid seizure of oligarchs’ assets? And indeed to the seizure of any asset corruptly obtained or unlawfully possessed found in their territory?” can simply be: because we are western democracies governed by the rule of law and all of us (without exceptions) with problematic public administration and law enforcement mechanisms; existing safeguards cannot be subject to adaptation and modification following every crisis. We are indeed all (with certain exceptions like Turkey, UAE etc) united in their opposition to the war in Ukraine and desire to make Putin’s associates suffer consequences but by no means risking our institutional framework with a la Carte measures.
Appreciate the concern but forcing policymakers, enforcement authorities, and civil society to think through how to seize unlawfully acquired property in ways that observe rule of law values can itself be an important exercise. And ensuring those values are observed in any seizure an even more important one.