Gladys Mirugi-Mukundi, research intern, Organised Crime and Money Laundering, ISS Cape Town
Addressing the AU Summit in Kampala in July 2010, Eric Holder, the US Attorney General reiterated that combating corruption generally and in the United States was his government’s top priority. It is in that vein that he announced that the US Department of Justice is launching a new Kleptocracy Asset Recovery Initiative ‘aimed at combating large-scale foreign official corruption and recovering public funds for their intended – and proper – use: for the people of our nations.’ He informed the gathering of Heads of State and Governments of the African Union that his office was ‘assembling a team of prosecutors who will focus exclusively on this work and build efforts already underway to deter corruption, hold offenders accountable, and protect public resources.’
The significance of these words was not lost on curious observers across the continent that have become accustomed to rhetoric from political actors on ending corruption and recovery of stolen national coffers. Indeed, if Holder’s words were translated into real action, it will have an impact not only on governance and development in Africa but also on the numerous asset recovery initiatives on the continent.
The seriousness of recovering assets stolen from public coffers in Africa, most of them stashed away in foreign bank vaults and off shore investments cannot be overemphasised. African policy makers and law enforcement agencies are indeed aware and concede that tracing and retrieving proceeds of crime, tax evasion and corruption is a monumental task. Apart from challenges of limited or total lack of cooperation by suspected culprits – the majority of whom still retain power and political sway in African governments – at a practical level, asset recovery efforts are stifled by money laundering schemes.
Numerous studies have attempted to estimate the sums of money laundered worldwide. However, because money laundering is not restricted to assets corruptly acquired by state leaders, it is not always possible to have a complete estimate of sums of money laundered from Africa.
According to the U4 Anti-Corruption Resource Centre, at least 25 percent of the GDP of African countries is lost annually to corruption. In such situations, the political and economic elites almost always elude the tax authorities. The joint Stolen Assets Recovery Initiative by the United Nations Office on Drugs and Crime (UNODC) and the World Bank summed up the challenges encountered in locating proceeds of corruption by political or economic elites, especially where they have been moved across borders. The challenges include:
- limited legal, investigative and judicial capacity
- inadequate financial resources to pursue complex cases; and
- non-responsive foreign jurisdictions where stolen assets are hidden, often in developed countries, to requests for legal assistance.
Experiences from Nigeria, Zambia, Zimbabwe and Kenya are a clear indication that countries embarking on asset recovery operations encounter legal and practical difficulties as they tread on the thin line between justice and repatriation.
The first challenge they encounter is the immunity from the process of criminal and civil law proceedings vested in sitting heads of states. Heads of states in Africa have a lot of leverage in determining the course that proceedings of such nature take and where political will is absent, recovery efforts amount to nought.
Second, and closely related to the first, is the failure to initiate domestic proceedings or conclude already initiated proceedings by the state. For instance, despite the findings of the Kroll report commissioned to investigate and trace assets obtained by former Kenyan President Daniel arap Moi and his close associates in the infamous Goldenberg scandal, no asset recovery proceedings have been brought to this day.
Third is the role of states to effectively recover assets. Such a role ultimately depends on capacity to support recovery measures, in terms of institutional and legal framework. Asset recovery initiatives are additionally prone to subjective considerations, which can be used as a basis for refusing reparation of assets.
Fourth is the need to obtain and secure cooperation and collaboration among state agencies that have a bearing on asset recovery. Conflict and competition among agencies, perhaps for want of coherent application of the legal framework and procedures, can be a source of the problem pitting various agencies involved against one another. These include customs and taxation agencies, security intelligence agencies, asset forfeiture units and anti-corruption agencies.
Fifth is the need for bilateral and international cooperation and support to effectively trace and recover looted proceeds. Such assets are often stashed away in foreign bank accounts and off shore investments. Accordingly effective tracing and recovery demands bilateral and international legal and political cooperation - the kind announced by the US Attorney General in Kampala.
As Daniel Scher puts it ‘recovery attempts are complicated within African countries, because those who are most implicated in public looting usually have the most power and influence. Yet the potential rewards in the form of the repatriation of money into development-starved countries, make asset recovery an attractive undertaking.’
The US message is that it will not be a safe haven for monies emanating from the plunder of African economies. The recent announcement that the British government will repatriate 43 million pounds siphoned by corrupt Nigerian government officials to offshore accounts is a welcome development. It is expected that the signals being relayed by the US and the UK will send a strong message to other countries in the West not to harbour proceeds of corruption from African states and will do something tangible to return the looted proceeds to where they belong for proper use by African peoples.
The bottom line of Attorney General Eric Holder’s message to African Heads of State and Governments is that they need to put their houses in order by setting up and strengthening legal and policy frameworks to deal with corruption and money laundering. Credible, effective institutions, including financial intelligence units and asset retrieval units have to be created without further delay. The ratification and domestication of the United Nations Convention against Corruption and the African Union Convention on Preventing and Combating Corruption would be a useful beginning.
