Asset recovery – as outlined in the UN Convention against Corruption (UNCAC chapter V) – refers to the process by which the proceeds of corruption transferred abroad are recovered and repatriated to the country from which they were taken or to their rightful owners.
A precise account of the proceeds of corruption circulating the globe is not possible, but the World Bank estimates that developing countries lose US$20-40 billion each year due to corruption. This money could be spent on tackling poverty, providing decent public services and achieving the Sustainable Development Goals.
This significant injustice often occurs ostentatiously and in plain sight, but due to legal and institutional complexities and lack of cooperation between states it is all too easy for the corrupt to hold on to their ill-gotten gains.
With only US$1.398 billion assets frozen and US$147.2 million returned by OECD countries between 2010 and 2012, there is a huge gap between what goes missing and what is recovered and ultimately returned. We need concerted global efforts to improve asset recovery systems and increase cooperation and coordination between jurisdictions.
The UNCAC Review Mechanism’s focus on asset recovery in its second cycle of reviews (2015-2020) is an ideal opportunity for civil society to work with governments and advocate for fair and effective asset recovery: a process that not only punishes corrupt agents by confiscating the proceeds of corruption, but transparently and accountably returns assets to the states from which they originally came.
Direct recovery of assets
UNCAC (Article 53) provides for direct recovery of assets, whereby a foreign state is able to initiate a civil action in a foreign jurisdiction to establish title and ownership of property. It also means that courts should be able to order compensation or damages to a foreign state and recognise them as legitimate owners of property.
In the case of direct recovery of assets through the use of civil proceedings (Article 53), the defrauded state, represented by counsel, will stand – like any ordinary private plaintiff would do – before the foreign jurisdiction(s) where proceeds of corruption are located and will claim their repatriation to its national treasury. The legal basis for such civil claims are twofold:
- Ownership claims: The UNCAC requires States Parties to take necessary measures to allow other states to initiate a civil action in its courts(Article 53.a)) and intervene as a third party in a confiscation procedure (Article 53.c)) for the purpose of establishing its prior title or ownership over proceeds of corruption.
- Claim for damages: The UNCAC further requires States Parties to take necessary measures to allow other states to stand before their courts and seek compensation or damages for the harm caused by the commission of a corruption offence(Article 53.b); see also Article 35 on “compensation for damage”). This innovative provision departs from the idea that proceeds of corruption should be recovered only on ownership grounds and aims to provide a concrete remedy to states harmed by corruption in situations – such as bribery or trading in influence – where the proceeds of corruption involve funds of private origin to which the state was never entitled. Under this scheme, no public money was ever involved; therefore proceeds of corruption are not returned because they belong to the defrauded state but because it suffered damage as a result of the commission of the underlying corruption offence.
In both cases, once ownership or damage is established, no further step is required to provide the basis for repatriation of those ill-gotten gains to the defrauded state.