Guest Post: Toward a Meaningful “Common African Position on Asset Recovery”

GAB is delighted to welcome back Mat Tromme, Director of the Sustainable Development & Rule of Law Programme at the Bingham Centre for the Rule of Law, who contributes the following guest post:

It’s no secret that kleptocratic rulers in Africa have robbed their countries of substantial assets that could have  otherwise been used to promote development and social welfare. Indeed, the amounts are often staggering: $16 billion reportedly stolen by former Libyan President Gaddafi; $1 billion by Gambia’s ex-President Jammeh; billions by former Congolese President Kabila; and the list goes on. Recently, Nigeria’s Economic and Financial Crime Commission suggested that up to $50 billion has been looted from Africa, and whether or not particular estimate is accurate, there’s little doubt the problem is serious. More troubling is the fact that only a small proportion of these stolen assets have been recovered and repatriated to the country of origin.

As part of the effort to address the challenges of asset recovery—and to give African states more clout in negotiating the terms and conditions of asset return with the states that initially seize the stolen loot—African countries are currently undertaking an effort to develop a “Common African Position on Asset Recovery” (CAPAR). Incidentally, a common african position was the chosen theme of this year’s African Union Anti-corruption day. At this early stage, it seems likely that this effort will result only in a political proclamation (perhaps within the framework of this month’s UN General Assembly), one that will re-emphasize the importance of the speedy and unconditional return of assets, and call for better collaboration across countries. That’s a good start, but not enough! Developing a pan-African position on asset recovery—perhaps similar to the multilateral framework adopted by the Mercosur countries and by the EU—is a worthwhile endeavor, one that will likely produce tangible benefits only if it goes beyond mere statements of intent or general principles, and lays out some concrete steps to translate the vision into reality.

Ideally, CAPAR should seek to streamline policies and resources devoted to recovering assets and developing better investigative and prosecutorial capacity across African states, for example by implementing cross-border investigations and fostering collaboration, experience and information-sharing between countries. There are various ways to achieve this broad objective: Continue reading

Guest Post: It’s Time for Plan B on Disbursing the Obiang Settlement Money to the People of Equatorial Guinea

Today’s guest post is from the civil society group EG Justice, a civil society organization that promotes the rule of law, transparency, and the protection of human rights in Equatorial Guinea. (For a longer discussion of the issues raised in this blog post, please visit the EG Justice website: www.egjustice.org.)

Last month, Professor Stephenson asked: “Whatever Happened with that Charity the Obiang Settlement Was Supposed to Fund?”  Not coincidentally, thousands of people in Equatorial Guinea have been asking themselves that same question for the last five years, and they have yet to receive a satisfactory answer. We are not entirely surprised by the impasse. When one drives into a cul-de-sac, with clear road signs warning ahead of time that there is no exit, one should only expect to return to the entry point. Likewise, when negotiating with authoritarian kleptocrats who consider themselves above the law and who are accustomed to acting with absolute impunity, it would be naïve to expect them to negotiate fairly.

The settlement between Equatorial Guinea and the U.S. appears to anticipate this impasse, laying out several options. The settlement first lays out what we might call “Plan A”:  Within 180 days, the U.S. authorities and the defendant (Teodorin Nguema Obiang) are to jointly select a charity to receive the funds realized from the sale of Nguema’s seized assets, with that charity to use the funds for the benefit of the citizens of Equatorial Guinea. But in apparent anticipation of the difficulties in reaching such an agreement, the settlement goes on to lay out a “Plan B,” according to which, if the U.S. and Nguema can’t mutually agree on a charity within 180 days of the sale of the assets, a three-member panel is to be convened to receive and disburse the funds—with one member of the panel chosen by the U.S., one by Nguema, and one, the Chair, by mutual agreement. Again anticipating the possibility that the parties will be unable to agree, the settlement has a “Plan C” (or a “Plan B-2”): If the parties can’t agree on a panel Chair, within 220 days after the sale of the property, the court retains the discretion to order the parties to participate in mediation, or the court may simply select a panel Chair directly. Continue reading

A Plan To Share FCPA Penalties with Brazil has Been Thwarted… by Brazil: The Supreme Court’s Invalidation of the Lava Jato Foundation

A frequent criticism of how the US Department of Justice (DOJ) enforces the Foreign Corrupt Practices Act (FCPA) is that the fines recovered typically go to the US Treasury, rather than being used to make reparations for the damages caused by corruption in the countries where the bribery took place. Those who hold that view were likely encouraged by the non-prosecution agreement (NPA) that the DOJ concluded with Petrobras, the Brazilian state-owned oil company, in September 2018. The US enforcement action against Petrobras is a development of the so-called Lava Jato (Car Wash) investigation, in which firms paid off some Petrobras’ senior employees to benefit them in the contracts they had with the oil company. Such senior employees also shared a portion of the briber of politicians and political parties. In Brazil, Petrobras (and its shareholders, including the Brazilian federal government) are considered the victims of this scheme, but the US DOJ considered Petrobras a perpetrator (as well as a victim), because Petrobras officials had facilitated the bribe payments, in violation of the FCPA. Thus, the DOJ brought an enforcement action against Petrobras, and the parties settled via an NPA that required Petrobras to pay over US$852 million in penalties for FCPA violations. But—and here is the interesting part—the NPA also stated that the US government would credit against this judgment 80% of the total (over US$682 million) that Petrobras would pay to Brazilian authorities pursuant to an agreement to be negotiated subsequently between Petrobras and the Brazilian authorities.

This unusual agreement was the result of unusually close cooperation between U.S. and Brazilian authorities, especially the Lava Jato Task Force (group of federal prosecutors handling a series of Petrobras-related cases). After the conclusion of the NPA between the DOJ and Petrobras, the Task Force then entered into negotiations with Petrobras and reached an agreement under which Petrobras would use US$682 million that it would otherwise owe to the US government to create a private charity, known unofficially as the Lava Jato Foundation, with the Foundation using half of the money to sponsor public interest initiatives, and the other half to compensate minority shareholders in Petrobras. According to the agreement, the Foundation would be governed by a committee of five unpaid members from civil society organizations, to be appointed by the Task Force upon judicial confirmation. Once created, the Task Forcewould have the prerogative to have one of its members sitting at the Foundation’s board.

This resolution of the Petrobras case seemed to be a win-win resolution and a promising precedent for future cases: The US imposed a hefty sanction for violation of US law, but most of the money would be used to help the Brazilian people, who are arguably the ones most harmed by Petrobras’s unlawful conduct. Yet this arrangement has proven extremely controversial in Brazil, both politically and legally. Indeed, the issue has divided the country’s own federal prosecutors: The Prosecutor General (the head of the Federal Prosecutor’s Office, from which the Lava Jato Task Force enjoys a broad independence) challenged the creation of the Foundation as unconstitutional. She prevailed on that challenge in Brazil’s Supreme Court (Supremo Tribunal Federalor STF), which suspended the operation of the Foundation.

What, exactly, was the legal argument against the creation of the Lava Jato Foundation, and what are the implications of the STF’s ruling for this approach to remediating the impacts of foreign bribery going forward?

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