Tag Archives: United Kingdom

So That’s Why the Kleptocracy Asset Recovery Initiative Was Abolished

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Thanks to Alexis Loeb’s March 26 Lawfare post, another Trump Administration attack on the global effort to curb corruption has been revealed. Buried in Attorney General Bondi’s February 5 Memorandum making the elimination of drug cartels and transnational criminal organizations the Justice Department’s number one priority, she reports, is an order disbanding the Department’s Kleptocracy Asset Recovery Initiative.

Loeb does a fine job of explaining what a loss its dissolution will be to the international fight against corruption, recounting its efforts to help nations around the world battle kleptocracy. Among its successes: Initiative’s lawyers forced notorious kleptocrat Nguema Obiang, Equatorial Guinea’s Vice President, to forfeit nearly $30 million in assets, and their efforts resulted in the return of millions stolen by Nigerian dictator Sani Abacha and former Uzbekistan “first daughter” Gulnara Karimova to their countries. The blockbuster was 1 Malaysia Development Berhad (1MDB). With the Initiative’s assistance, Malaysia has so far recovered $6.5 billion in stolen assets from the thieves (here). Indeed, Jeff Sessions, Trump’s first Attorney General, called the 1MDB scandal “kleptocracy at its worst,” and lauded the help the Initiative provided Malaysia’s government (here).

But Loeb leaves the big question unanswered. Why in the world would AG Bondi disband such a valuable unit? Especially since, when assets are forfeited to the U.S. government, the staff time and expenses incurred were covered.

Thanks to Washington Post reporter Peter Whoriskey’s story in today’s paper, we now have the answer.

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Guest Post: Getting into the Weeds of Victim Compensation in Foreign Bribery Cases

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Today’s guest post is from Sam Hickey, a lawyer and former regular GAB contributor:

Given the Trump Administration’s decision to pause FCPA enforcement and disband the DOJ’s Money Laundering and Asset Recovery Section, the United Kingdom has become an even more important actor in international efforts to remediate those most impacted by foreign bribery, and the global fight against corruption more generally.

Together with the Basel Institute on Governance, I have written a report on the UK’s use of Deferred Prosecution Agreements (DPAs) to compensate the victims of foreign bribery. Given the inherent difficulties in seizing, forfeiting, and repatriating illicit wealth through traditional asset recovery frameworks, DPAs possess immense potential to remediate the victims of corruption in low-income countries. But this practice also raises a number of questions and challenges, which the report seeks to address. Here are some of the more serious ones: Continue reading →

What the Next UK Government Likely to do About Corruption

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If polls are to be believed, on July 4 the Labour Party will take control of the government of the (still!) United Kingdom of Great Britain and Northern Ireland. Professor Robert Barrington (Centre for the Study of Corruption) was one of the architects of the Cameron government’s Anti-Corruption Summit in 2016. Below he reviews a recent speech from Labour MP David Lammy, almost certain to be Foreign Secretary in a Labour government. Given the UK’s role in the international fight against corruption, Lammy’s remarks will be of interest to more than just UK voters.

Somewhat lost in the noise of the UK’s general election announcement was a major speech by Shadow Foreign Secretary David Lammy at the think-tank IPPR.  It was reported here in the Financial Times, but hardly anywhere else.  As Mr Lammy is likely to be the UK’s new Foreign Secretary on July 5th, anti-corruption experts should be paying close attention to what he said.  Moreover, this is the most significant speech made to date by a senior politician in the opposition party, and so gives the best clue as to what might happen should they win the election.  This analysis contains lengthy quotations, as the speech does not seem yet to be easily accessible.

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New Podcast Episode, Featuring John Penrose

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this episode, Robert Barrington interviews John Penrose, a UK Member of Parliament who served as the government’s Anti-Corruption Champion from 2017-2022. Mr. Penrose explains the role and function of the Anti-Corruption Champion position and what he learned from his time serving in that position. He discusses the major developments and drivers behind UK anticorruption policy during this period, as well as his decision to resign from the position during Boris Johnson’s administration. The interview concludes with some discussion of what the UK’s anticorruption infrastructure could and should look like in the years to come. You can also find both this episode and an archive of prior episodes at the following locations: KickBack was originally founded as a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). It is now hosted and managed by the University of Sussex’s Centre for the Study of Corruption. If you like it, please subscribe/follow, and tell all your friends!

A South African “Abuse of Public Power” Offense? Some Suggestions for Drafting a Proposed Statutory Crime

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South Africa has laws which criminalize various forms of corruption (bribery, embezzlement, and the like), yet officeholders have regularly exploited their positions of power for illicit gains (see here and here). Part of the reason for this is that it often can be very difficult to prove the elements of a specific corruption offense, even when it seems clear that the officeholder abused his or her authority. To address this problem, a prominent judicial commission in South Africa (known as the Zondo Commission) recently recommended that South Africa adopt a statutory criminal offense for the “abuse of public power.” The proposed offense would cover “any person who exercises or purports to exercise any public power vested in such person…otherwise than in good faith and for the purpose for which such power was conferred,” and if the prosecution can prove such abuse of public power, then the defendant can be subject to up to 20 years imprisonment and/or a maximum fine of approximately US$12 million.

If the offense sounds very broad, that’s because it is. The Zondo Commission’s proposal contemplates a low threshold for what would constitute an abuse of public power, with no restriction to officials of senior rank. To illustrate, the Zondo Commission offered a wide range of potential examples of “abuse of public power,” including not only conduct such as the president granting an unauthorized person access to the “national wealth,” but also conduct like a junior official who suspends a colleague due to “envy or revenge.” Continue reading →

New Podcast Episode, Featuring Margaret Hodge

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In latest episode, host Sam Power interviews Dame Margaret Hodge, an MP in the UK parliament who has previously served in multiple ministerial positions. Dame Hodge discusses integrity and corruption issues in the UK, the UK’s role in wider international patterns of corruption, and a number of practical responses to these issues. You can also find both this episode and an archive of prior episodes at the following locations: KickBack was originally founded as a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). It is now hosted and managed by the University of Sussex’s Centre for the Study of Corruption. If you like it, please subscribe/follow, and tell all your friends!

Guest Post: U.K. Court Refuses to Compensate Victims of Foreign Bribery

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Today’s Guest Post is by Dr Helen Taylor, senior legal researcher at Spotlight on Corruption, a charity that shines a light on the United Kingdom’s role in corruption at home and abroad. Helen leads Spotlight’s court monitoring programme, tracking the enforcement of the UK’s anti-corruption law in major court cases and building an evidence base for advocacy and policy recommendations on asset recovery, victim compensation, and other corruption-related issues.

Last week a London court fined commodities giant Glencore for bribing officials in five African oil producing nations in return for getting “special deals” on their oil. While the court ordered the company to pay £280 million (just over $318 million) for its numerous violations of the U.K. foreign bribery law, it refused to direct Glencore to compensate those its bribes injured: the governments and citizens of the five nations. In fact, victims did not even get a foot in the courtroom door — the Serious Fraud Office, which prosecuted the case, refused to put a compensation request before the court, and the court itself rejected the Nigerian government’s application for compensation.

The case brings home the pressing need to reform the UK’s compensation framework to ensure overseas victims are represented and compensated in complex corruption cases.

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The U.K. Must Legislate to Combat Money Laundering in Its Universities

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Parents from developing countries have long sought to provide their children with a world-class university education in wealthy Western countries, such as the US and the UK. There is nothing inherently wrong with this—indeed, universities ought to take pride in their ability to provide an elite education to talented young people from around the world. There is, however, a dark side. In 2021, media reports revealed that nearly fifty UK universities had accepted upwards of £52 million in direct cash payments for tuition and fees from students hailing from countries known to be “high risk” for money laundering—most notably the West African countries of Ghana and Nigeria. A Carnegie Endowment Report on this topic observed that although “[t]he overwhelming majority of West African students in the United Kingdom pose little or no corruption risk, … many West African [politically exposed persons (PEPs)] appear to be using unexplained wealth to pay for UK school and university fees.” Indeed, many of West Africa’s nouveau riche made their money through illicit channels, and they may view an elite UK education for their children as a way to launder their reputations as well as their wealth. As Matthew Page, the author of the Carnegie Report, explained, any university that accepts tuition and fee payments in cash—especially from PEPs in countries with high corruption risk—is essentially “putting out a welcome mat for the world’s kleptocrats and money launderers.”

Although most UK universities acknowledge that they have basic anti-money laundering (AML) responsibilities under Sections 327 and 329 of the 2002 Proceeds of Crime Act, universities are not clearly covered as “regulated entities” under the UK’s Money Laundering Regulations. And while some universities have responded to recent high-profile scandals and government warnings by adding basic AML provisions to their fee-collection and admissions policies, this is not the sort of problem that is likely to be solved through unilateral action on the part of universities. The incentives to turn a blind eye to the provenance of tuition and fees from international students—which many UK universities have come to rely on as a revenue stream—are simply too strong. (It’s worth noting here that international students typically pay more than three times the fees paid by students from the UK or the European Union, and many UK universities encourage advance cash payments by offering international students discounts of 20-30% if they can pay their fees in advance.) Solving this problem will therefore require the UK to amend its AML legislation to address the particular vulnerabilities in the university sector. Three such reforms would be particularly prudent: Continue reading →

The Unfulfilled Promise of the UK’s Anticorruption Innovations

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When it comes to the fight against global corruption, the United Kingdom presents a paradox. On the one hand, the UK has long enjoyed a reputation as relatively “clean.” The country gets good marks on Transparency International’s Corruption Perception Index, and the Financial Action Task Force considers the UK a world leader in preventing money laundering. Yet, at the same time, the UK—and London in particular—is well-known as a popular laundromat for dirty money and a haven for kleptocrats.

It would be tempting to say that the UK cares about suppressing corruption at home but is indifferent (or worse) to how its nationals and its policies affect corruption abroad. But that is too simple, because in some respects the UK has been an innovator in the fight against transnational bribery and illicit wealth, and has often taken the lead in enacting new and more powerful anticorruption and anti-money laundering tools. Over the past dozen years, three such innovations are especially notable: the 2010 UK Bribery Act (UKBA), the 2016 legislation mandating a public registry of the beneficial owners of all private companies registered in the UK, and the 2017 Criminal Finances Act authorizing unexplained wealth orders (UWOs)—court orders that require the owners of UK assets to prove that the funds used to purchase those assets came from legitimate sources, with the assets frozen and eventually seized if the owner is unable to do so.

Yet the paradox continues: While the UK received well-deserved praise for enacting these measures, in practice all three have been far less effective than proponents hoped. The reasons for these failures are different, but they share common threads. Continue reading →

Is the United Kingdom a Corrupt Country? Confronting Parliament’s Conflict-of-Interest Problem

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Prime Minister Boris Johnson recently declared that he does not believe the United Kingdom is “remotely a corrupt country.” And indeed, international indexes (such as Transparency International’s Corruption Perceptions Index) indicate that most observers perceive the UK as having high levels of public integrity. But while the British state may be free from the routine bribery and embezzlement that is common elsewhere, the UK Parliament is awash in conflicts of interest. Such self-dealing by the political class—what many in the UK press have dubbed “sleaze”—suggests that the country suffers more from corruption (albeit a different kind of corruption) than many observers realize.

The most recent “sleaze” scandal—and the one that prompted Prime Minister Johnson’s defense of the UK’s overall record on corruption—involved Conservative MP Owen Paterson, a former Environment Minister. Paterson received hundreds of thousands of pounds consulting for a clinical diagnostics firm and a meat processor, in violation of the UK’s longstanding ban on MPs acting as paid lobbyists. Even more damning, Paterson pressed the government to act against the meat processor’s competitor, and the government awarded the diagnostics testing company a £133 million pound contract despite the company lacking adequate equipment. While this scandal may have revealed especially egregious conflicts-of-interest, it is not an isolated incident. Consider just a handful of additional examples of instances in which MPs earned outside income from positions that would seem to create a serious conflict:

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