25 Sep 2007: ISS Today: Africa and the Stolen Asset Recovery Initiative

25 September 2007: Africa and the Stolen Asset Recovery Initiative

 

On 17 September 2007 the World Bank and the UN Office on Drugs and Crime (UNODC) officially launched an initiative called the Stolen Asset Recovery (StAR) initiative, outlined in a report entitled Stolen Asset Recovery (StAR) Initiative: Challenges, Opportunities, and Action Plan. The initiative is presented as a way to help developing countries recover assets that have been stolen by corrupt leaders and deposited in foreign (usually Western) banks.  A follow-up mechanism is provided for as a means to help developing countries, having recovered such assets, invest in effective development programmes.

 

The sponsors of the initiative believe that its development pay-off can be significant. They rightly note that, if well used, recovered assets could provide much needed funding for social programmes or infrastructure.

 

Worldwide, funds looted by corrupt public officials from developing countries are conservatively estimated at US$20 billion to US$40 billion per year. It is estimated that 25 per cent of the GDP of African states is lost to corruption every year, amounting to around US$148 billion. A 2004 report of the global corruption watchdog, Transparency International, considered Mobutu Sese Seko, who ruled the DRC (then Zaire) from 1965 to 1997, and General Sani Abacha, the kleptocratic ruler of Nigeria between 1993 and 1998, to be the top looters of public funds from Africa. The stolen funds of the former are estimated at US$5 billion, while Abacha is said to have pillaged between US$2 billion and US$5 billion.

 

While corruption is not a problem unique to Africa, the continent has suffered considerably as a result of the looting of its public funds by corrupt rulers. StAR is therefore a welcome initiative, and one that reflects a generally clear understanding of how this dirty business works. But there are nonetheless a number of questions to be asked and hurdles to be overcome.

 

First, the initiators state that neither the World Bank nor the UNODC are to be expected to get directly involved in investigation, tracing, prosecution or the repatriation of stolen assets. These activities, which present the greatest challenges in recovering these lost assets, are to be assumed by the states concerned. Although those driving the StAR initiative call upon developed countries to cooperate in the process, and offer to assist the developing countries in identifying legal avenues that can be pursued, everything is left to the will of the parties concerned. But this raises an important question. Given the fact that some of the developed countries concerned are among those that dominate the World Bank, and knowing just how unwilling some of these countries have been in cooperating in previous attempts to recover such funds from their banks, how effective can we expect the initiative to be?

 

Second, how can we be sure that the ‘legal assistance’ being offered to developing countries will not be just a way for the World Bank to control the process, create another bureaucracy of legal consultants, and have a share of the proceeds of any recovered funds, while all along taking the credit for the efforts of the developing countries in question? Also, will the offer of ‘assistance’ not be selective, based on their perception of the regimes in the victimised developing countries and the developed country concerned?

 

Clearly, as the report acknowledges, the main problem is a lack of political will, particularly among the developed countries. We often hear nice-sounding words from the developed countries, especially those of the G8, when they talk about the plight of the developing world. But when it comes to action, the emptiness of those words becomes apparant. For example, in October 2001, in his speech at the Labour Party Annual Conference in Brighton, Tony Blair claimed that ‘Africa is a scar on the conscience of the world’. In February 2005, he set up what he called ‘The Commission for Africa,’ supposedly aimed at helping the continent.

 

It is however noteworthy that Britain has refused to co-operate with Nigerian authorities in their attempts to recover part of the loot Abacha stashed in various British banks before his sudden death in 1998. Did Blair really not realise that co-operating with the Nigerian authorities in recovering the loot would be of more immediate help to Africa than establishing his Commission for Africa? Perhaps it was to cover up this failure that the British authorities agreed in July 2006 to return to Nigeria some US$1.9 million allegedly stolen by Diepreye Alamieyeseigha, governor of the oil-rich Bayelsa State.

 

Nigeria has succeeded in recovering some of the funds deposited in Swiss banks (having received a total of $505.5 million so far), but only after five years of difficult negotiations and thanks to the services of a Swiss law firm. The country also recovered some US$149 million from the Island of Jersey. Abacha’s illicit fortunes are thought to be in several countries, including the UK, Switzerland, Luxembourg, Liechtenstein, Jersey and the Bahamas.

 

After identifying stolen funds developing states are often asked by the developed countries involved to present evidence that the monies were the product of embezzlement, diversion of public property, and plundering of public treasury - as if the corrupt leaders in question were known to have been successful businessmen before coming to power, and might in fact have had these vast sums legitimately!  Another condition that is generally set is that the recovery effort must be accompanied by institutional reform and better governance in the receiving developing country. While this is a justifiable concern, one wonders whether it is not simply used as another means of blocking the return of stolen funds. Fortunately, in the case of Nigeria, a World Bank Public Expenditure Review found that the funds had generally been used in accordance with the stated policy.

 

For all the shortcomings of the developed world’s response to this issue, in the end the biggest responsibility lies within Africa. StAR is a band-aid, not a real solution. Current and future leaders in Africa must have clean hands and good intentions if Africa is really to get beyond the debilitating effects of corruption.

 

Issaka K Souaré, African Security Analysis Programme, ISS Tshwane (Pretoria)