THE ROLE OF INTERNATIONAL INSTRUMENTS IN
ASSET RECOVERY: WHAT CAN WE LEARN SO FAR?
Novriady Erman
Abstrak
Tulisan ini mendeskripsikan peran instrumen-instrumen internasional yang digunakan dalam upaya membantu berbagai negara dalam pengembalian aset-aset curian. Selanjutnya menjelaskan bagaimana berbagai instrumen dapat menjadi manfaat bagi negara korban dalam proses pengembalian aset sebagaimana telah diperlihatkan dalam beberapa praktek terbaik internasional. Seyogyanya, belajar dari pengalaman, Indonesia dapat menggunakan beberapa contoh yang bisa bermanfaat untuk upaya dalam pengembalian aset dan untuk mempertimbangkan pembelajaran dari kisah-kisah kegagalan dan sukses.
Kata kunci: asset recovery, UNODC, World Bank, StAR Initiative, UNCAC
“People prefer to be put behind bars and keep their money than to stay free without the money."
-The former Mafia Don Gaspare Motolo-
I. INTRODUCTION
International community considers 3 (three) major imminent problems that threaten the life of their nations, namely: corruption, drugs and terrorism.1 They may not share same value as to the nature and
1
distinct character of each crime but concur similarity on the vast amount of money involved within each circle of crime and the need to conceal the proceed of crime. Above all, they pose as threat to security, economic and social developments of which no single country can find itself capable to stand alone to fight against those cause in absence of international cooperation.2
A conclusion drawn from a report produced by the United Nations Office on Drugs and Crime (UNODC) and the World Bank demonstrates that corruption serves in the first place amongst the aforementioned three causes for its total loss entailed to society.3 It, therefore, requires no
prolonged argument to eventually come into conclusion that corruption has been the single greatest obstacle to economic growth.4 On the other
head tells Security Council. Accessible at
http://www.unodc.org/unodc/en/frontpage/2011/November/organized-crime-and-drug-trafficking-major-threats-to-international-peace-and-security.html
2
Gary Lewis, Responding to the Security Threat Posed by Transnational Organized Crime in East Asia and The Pacific, Speech to the International Serious and Organized Crime Conference, Melbourne, Australia, 8 October 2010. Accessible at
http://www.aic.gov.au/events/aic%20upcoming%20events/2010/~/media/conferences/201 0-isoc/presentations/lewis_address.pdf; For further detail please see the 2010
Transnational Organized Crime Threat Assessment Report on the Globalization of Crime (TOCTA) prepared by United Nations Office on Drugs and Crime (UNODC). Accessible at
http://www.unodc.org/documents/data-and-analysis/tocta/TOCTA_Report_2010_low_res.pdf; Also see remarks by Ajit Joy, UNODC Indonesia Country Manager, on Global Corruption and International Fight Against Corruption, accessible at
http://www.unodc.org/documents/eastasiaandpacific/2009/11/youth-conference/Global_Corruption.pdf
3
See Stolen Asset Recovery (StAR) Initiative: Challenges, Opportunities and Plans, the World Bank, Washington: 2007.
4
Global Study on the Transfer of Funds of Illicit Origin, Especially Funds Derived From Acts of Corruption” (report presented to the Ad Hoc Committee for the Negotiation of a Convention Against Corruption, January 13–24, 2003). Accessible at
hand, the World Bank affirms that countries which tackle corruption and improve their rule of law can increase their national incomes by as much as four times in the long term. However, this is a number which, unfortunately, has never been materialized by any international aid project in developing countries.5
The government and civil organizations produce a remarkable US$100 billion value of foreign assistance for third world countries annually. However, such number is much less compared to the total annual money extorted and stolen from such countries which reaches US$1 trillion.6 This may have been the reason that 54 countries, out of 193
countries, have actually become poorer than they were 15 years ago despite of the presence of such billion dollars aid.7 In consequence, more
countries are collapsing and more donors are discouraged to pursue its aid which eventually becomes the wake-up call for those countries in need.
Ironically, while this looted asset is filling the bank account of certain group of corrupt leaders and enrich their wealth formed as shares in blue-chip companies, refined yachts and private jets, da vinci-decorated villas and flats, and a line of fancy and super cars, it leaves millions of their people to live less than US$2 each day which put them in
http://conferences.wcfia.harvard.edu/sites/projects.iq.harvard.edu/files/gov2126/files/seld adyo_determinants_corruption.pdf
5
J. Smith, M. Pieth and G. Jorge, The Recovery of Stolen Assets: A Fundamental Principle of the UN Convention Against Corruption, 2 CMI U4 Brief, February 2007, at 1; See publication by United Nations Development Program entitled Corruption and Development: Anti Corruption Intervention for Poverty Reduction, Realization of MDGs and Promoting Sustainable Development, New York, December 2008; Also see
Democracy in Caribbean and Latin America at
http://www.usaid.gov/our_work/democracy_and_governance/regions/lac/index.html 6
J. Smith, M. Pieth and G. Jorge, The Recovery of Stolen Assets: A Fundamental Principle of the UN Convention Against Corruption, 2 CMI U4 Brief, February 2007, at 1; See http://www.fatf-gafi.org/pages/faq/moneylaundering/; Theodore S. Greenberg, et al, Politically Exposed Persons, A Policy Paper on Strengthening Preventive Measures, the World Bank, Washington, 2009; Stefaan Smis and Stephen Kingah, The Effectiveness of International Rules and Efforts in the Recovery of Stolen Assets from Developing Countries. Accessible at http://www.ecprnet.eu/databases/conferences/papers/265.pdf 7Ibid
the lowest group of Human Development Index.8 Nonetheless, it is also
often forgotten that the theft of public funds is only made possible by the involvement, and sometimes active encouragement, of financial services firms in the North and South.9
Previously in 2002, the International Monetary Fund (IMF) study estimated that between US$600 billion and US$1.8 trillion, equal to two to five percent of the total world Gross Domestic Product, is illegally laundered throughout the world each year in which mostly are derived from corruption.10 In addition to this number, more than US$1 trillion is
paid in bribes each year as shown by the World Bank publication and this figure does not even include amounts of public funds embezzled by high rank government officials, which may set higher number should it be included.11 This is not to mention the press reports out of Chile in 2006
which discovered 10 tons of gold stashed in a Hong Kong bank by the
8
For further discussion on this topic, please refer to Michael Nielsen, Democracy, Corruption and Human Development, University of Aarhus, Denmark, 2000; Selcuk Akcay, Corruption and Human Development, Cato Journal, Vol. 26, No.1, Turkey (2006); UNDP Report on Tackling Corruption and Transforming Lives accessible at http://www.undp.org.bd/info/HQ%20Publications/RHDR_Full_Report_Tackling_Corrupt ion_Transforming_Lives.pdf; Reference shall also be made to interesting short article published in the Economist accessible at
http://www.economist.com/blogs/dailychart/2011/12/corruption-and-development; 9
See Farzana Nawas, Recovering Stolen Assets: A Problem of Scope and Dimension, Working Paper of International Transparency, Germany, 2011; For further reading, please see Kari Heggstad and Odd-Helge Fjeldstad, How Banks Assist Capital Flight from Africa: A Literature Review, CMI Report of NORAD Project, 2010 at
http://www.cmi.no/publications/file/3750-how-banks-assist-capital-flight-from-africa.pdf. 10
See Christina Jackson, Combating the new generation of money laundering: regulations and agencies in the battle of compliance, avoidance, and prosecution in a post-September 11 world, The Journal of High Technology Law, United States of America, 1 July 2004; Financial Action Task Force on Money Laundering, Basic Facts about Money Laundering (2003). Accessible at
http://www.fatf-gafi.org/MLaundering_en.htm; Also see John Walker, How Big is Global Money Laundering, Journal of Money Laundering Control, Vol. 3, Issue 1 (1999), 25‐ 37, updated by author 2008.
11
See Article entitled The Cost of Corruption published by the World Bank at
former dictator of Chile, Augusto Pinochet.12 It is worth noting as well that Hosni Mubarak’s, Egypt former leader, net wealth is between US$40
billion and US$70 billion, more than that of Bill Gates is worth.13 Thus, it is no surprise that many of the world’s most unstable and least-governed states are also those with the highest levels of corruption.14
The unfavorable derivative impact of corrupt practices is the increased opportunity for crime which requires willy-nilly, anti-corruption measures to cope with this issue. Any meaningful solution to the problem must account for the recovery of the assets derived from corruption. The first notion that might appear on asset recovery initiative can be solely related with economy.15 However, the World Bank and the
UNODC, through its Stolen Asset Recovery Project (StAR) initiative, are of the opinion that the underlying rationale should be to help enforce the rule of law. In addition, asset recovery as a measure of accountability is an essential component to improve global security.16
On the other hand, aside from diligent work in law enforcement agencies, ministries and financial intelligence units, utilization of
12
Supra note xi. 13
Elizabeth Johnson, What do we know about stolen assets in Middle East?, Transparency International, 23 September 2011. Accessible at
http://blog.transparency.org/2011/09/23/what-do-we-know-about-stolen-assets-in-the-middle-east/
14
Mark V. Vlasic & Jenaen N. Noell, Fighting Corruption to Improve Global Security: An Analysis of International Asset Recovery System, Yale Journal of International Affairs, Summer 2010; See Governance, Corruption and Conflict, United States Institute of Peace, Washington, 2010; For a more comprehensive review on this issue, please see Ugur M, Dasgupta N (2011) Evidence on the economic growth impacts of corruption in low-income countries and beyond: a systematic review. London: EPPI-Centre, Social Science Research Unit, Institute of Education, University of London.
15
Ibid; Ivan Pavletic, the Political Economy of Asset Recovery Processes, Working Paper Series No. 07, International Center for Asset Recovery, October 2009; Richard Dubourg and Stephen Prichard, The Impact of Organized Crime in the UK: Revenues and Economics and Social Cost and Criminal Assets Available for Seizure, The White Paper on One Step Ahead: a 21st Century Strategy To Defeat Organised Crime, UK (2004). 16
international instrument is imperative to be expanded to wider field in asset recovery-related field. The present available resource, to this extent, has only managed to recover US$4.9 billion in the last fifteen years. Should this number is considered to be satisfactory, please recall that the amount of money stolen has reached a range in trillion dollars which then makes the recent success of asset recovery constitute only a minor percentage. The process of asset recovery is complex, time consuming and involves multiple countries since the stolen assets are mostly concealed in foreign jurisdictions. As such, there is a clear need for concerted action on a global level.17
In countries with devastating corruption level, there is always a room for challenge on anti-corruption effort through legal and political will.18 The StAR Initiative further notes that many developing countries
lack the capacity to prepare indictments, collect, preserve and present evidence, properly adjudicate cases and obtain convictions, as well as trace the proceeds of corruption and obtain valid freezing and
confiscation orders. More broadly, law enforcement’s limited capacity to
effectively prevent asset theft and recover stolen assets in an internationally accepted manner has proven to be a great challenge highlighting a need for technical and operational assistance.19
In addition to the progress thus far, it is hoped that the international asset recovery movement will continue to follow its multifaceted approach and through this approach, incorporate attention to best assist the practitioner, and thus, best assist the developing world recover its stolen assets. Thus, the question whether the glass is full or half-empty with regards to comprehensive attempt in international asset
17
See Paul L. Lee, A Renewed Focus on Foreign Corruption and Politically Exposed Persons, The Banking Law Journal, Vol. 127 N0. 9, Washington, October 2010; Also see http://www.interpol.int/Crime-areas/Corruption/International-asset-recovery.
18
Kevin M. Stephenson et. al., Barriers to Asset Recovery, An Analysis of the Key Barriers and Recommendation for Action, World Bank, Washington, 2011. 19Ibid
; Also see publication by the Basel Institute for Governance entitled Capacity Building on Asset Recovery in 2011 at
recovery is no longer a complicated question to answer. This writing is intended to provide reader with brief descriptive information on measures under international instrument which has been undertaken in relation to asset recovery and lesson learnt from two major stages in asset recovery.
II. MAJOR CONTRIBUTION OF INTERNATIONAL INSTRUMENT
The role and assistance as regulated and made available under international instrument on asset recovery must be understood as non law-enforcement initiative and hence involve merely non-coercive measures.20 This leaves room for law enforcement measures such as, inter
alia, freezing and confiscation of the looted asset, fall under the exclusive jurisdiction of municipal law of the respective state and subject to execution by its law enforcement body. The following passage shall
provide brief overview of international instrument’s role in asset recovery
process which is divided into two major phases, namely: asset recovery process and post asset recovery process. While the former phase includes process on tracing the asset, freezing, confiscation and repatriation, the latter process involves role on oversight toward the utilization of proceeds of the asset recovery.
1.ASSET RECOVERY PROCESS
The following role of international instrument is a response toward several major barriers in asset recovery process. In order to obtain a more comprehensive understanding of such barriers, the author would suggest reader to the latest thorough work of the World Bank and UNODC under
StAR Initiative on publication entitled, “Barriers to Asset Recovery: an
20
See Asset Recovery and Mutual Legal Assistance in Asia and the Pacific, Proceedings of the 6th Regional Seminar on Making International Anti-Corruption Standards
Analysis of the Key Barriers and Recommendations for Action”.21 On the other
hand, for the mere purpose of this writing, the author would make reference to one considerable barrier at each stage of asset recovery process and how international instrument plays its role at the following section.
Firstly, it is worth noting that one of the greatest obstacles in asset recovery would be the ability to trace and locate the stolen assets. This type of work involves more than just tracing through paper work but goes beyond to the extent of using financial intelligence to reveal all traces of the flow of money. This investigative work requires diligent and multi-faceted effort since the trail of transactions that channels stolen assets into bank accounts in Northern and Southern financial centers is helped by actions of various skilled actors, knows as gatekeepers,22 in the entire
process. Secondly, due to lack of legal basis and lack of legal understanding on asset recovery, jurisdiction where corruption proceeds are located seems reluctant to recognize a foreign restraint order or forfeiture judgment.
Thirdly, jurisdictions only allow confiscation of assets on the basis of a criminal conviction. As stolen assets are frequently commingled with legitimate assets through certain phases of money laundering, the burden of proof for law enforcement to establish the criminal conviction between the offense and the assets is often difficult. Lastly, some financial centers, regardless of their origins, have been reluctant to repatriate assets to, or even to cooperate with, countries due to concerns that the returned assets will be another subject of corrupt practice hence expectation of its proper utilization would be wasted.
1.1.Informal Legal Assistance
Article 14, Article 23 and Article 31 of UNCAC provide requirements for the domestic regimes of States Parties to detect, identify,
21Supra
note xx. 22
freeze, seize, and confiscate the proceeds, commingled proceeds, instrumentalities, and intended instrumentalities of corruption.23 The
request from other country on such measures can be carried out by law enforcement agencies either through informal or formal mechanism. The former attempt is made through network of the corps be it police institution or office of prosecutor and the latter is made through Mutual Legal Assistance (MLA) mechanism. Therefore, any informal legal assistance from law enforcement agencies outside formal channel of MLA shall be considered as informal legal assistance.
Informal legal assistance request is initially made at the first phase of investigation through direct communications between counterparts such as financial intelligence units (FIUs) and law enforcement agencies on data which are legally available to those agencies in their internal databases. At this stage, the main objective of assistance sought is mostly to collect information and intelligence which will be useful at the later stage of asset recovery. With respect to this measure, international instrument plays an important role to promote the network between law enforcement agencies around the globe and to establish another new network to fill the loop to strengthen the system. Reference to two prominent networks shall be made to the Global Focal Point Initiative and the Camden Assets Recovery Inter-Agency Network (CARIN).
The Global Focal Point Initiative24
Line of bureaucracy and lack of immediate action may cause law enforcement officials to lose a money trail in their investigation hence
23
See Jean B. Weld, International Cooperation in the Recovery of Criminal Assets, the 146th International Training Course, Visiting Experts’ Papers. Accessible at
http://www.unafei.or.jp/english/pdf/RS_No83/No83_07VE_Weld2.pdf; Also see publication by U4 entitled the Potential of UNCAC to combat illicit financial flow.
24
For detail information on this section, please refer to the following site http://www.interpol.int/Crime-areas/Corruption/International-asset-recovery; https://www.interpol.int/Public/corruption/StepsGoingForward.pdf,
initiative to accelerate the tracing is imperative. The Global Focal Point Initiative (GFPI) is established by the Interpol and StAR to respond to this issue. It provides a secure contact database of law enforcement officials available 24 hours a day, seven days a week, to respond to emergency requests for assistance in asset recovery investigations. Its membership consists of law enforcement and prosecutorial agencies, including many anti-corruption bodies. The Interpol and StAR develop this initiative to actively engage national law enforcement bodies in coordinated efforts to trace, seize and return stolen assets to the country of origin and to develop information and evidence of criminal conduct related to offenses as described under UNCAC.
The concept does not merely cope with asset recovery issue but also to wider framework on anti-corruption under a concept known as UMBRA. Under this concept, member countries are enabled to exchange corruption-based information and best practices in the fight against corruption. Furthermore, it develops a network of specialist contact point that member countries can call upon for technical assistance in the area of anti-corruption enforcement and will help liaise, where appropriate, with Central Authorities and other agencies as documents and information are needed in an evidential form for admission in a court or other proceedings.
This communication tool includes comprehensive data from around 100 Interpol member countries on contact details for initial inquiries; key offices involved in foreign stolen asset recovery; the different types of requests required to initiate assistance; the types of assistance available for Mutual Legal Assistance requests (MLA); evidence needed to open criminal investigations or initiate civil action regarding stolen or embezzled assets; the type of information needed to obtain assistance in identifying, tracing, or seizing stolen assets; and the countries that have the authority to enforce foreign forfeiture judgments. African and Asian countries have found this platform beneficial since it successfully contributes to their ongoing asset recovery cases to obtain more information on funds that have been transferred abroad.
help the Focal Point Initiative focus on timely information exchange which will assist in the freezing/forfeiture of the proceeds of UNCAC’s list of offenses. As appropriate, this can include the movement of proceeds of crime through international financial systems, and will include information extracted from Interpol Red and Blue Notices. Among other types of information the Interpol/StAR Focal Point platform will include samples of charging documents, freeze and forfeiture orders, court decisions, StAR and other knowledge products, upcoming training events and resource persons. Focal Point members will be able to automatically post or request information and assistance.
The Camden Assets Recovery Inter-Agency Network25
The Camden Assets Recovery Inter-Agency Network (CARIN) is a European Union network of practitioners and experts in the cross-border identification, freezing, seizure, and confiscation of the proceeds of crime. CARIN was established at The Hague on 22- 23 September 2004 by Austria, Belgium, Germany, Ireland, Netherlands and the United Kingdom and consists of a global network of practitioners, judicial authorities and experts, with several observer status granted to several others, with the intention of enhancing mutual knowledge on methods and techniques in the area of asset recovery.
This organization began in October 2002 with a conference of the Criminal Assets Bureau of Ireland and Europol held at the Camden Court Hotel in Dublin, Ireland. CARIN has become an effective law enforcement tool used among member countries for the expedient sharing of information and use of multiple tools available for each jurisdiction to trace, freeze or seize, and confiscate the assets of international criminal organizations. One of the success stories is the cooperation and coordination between CARIN and the Attorney General Office of the Republic of Indonesia in asset tracing.26
25
For detail information on this section, please refer to the following site http://www.assetrecovery.org/kc/node/baf520a5-fe6d-11dd-a6ca-f1120cbf9dd3.0;jsessionid=BE2F10787754FE5067C7A8C67DB5C692. 26
Such informal assistance can be exceedingly helpful to the process of asset recovery, particularly in the initial identification of other names used by the criminal targets, associates, and properties in the names of these individuals. Informal contacts can often be the starting point for later formal requests and in most cases are more preferred by law enforcement agencies due to its less-bureaucratic character and pace of information flow. Informal assistance creates a dialogue which can produce valuable information, but formal MLA will likely be needed to obtain documents and witness statements to be used in court as evidence. Following the informal assistance, if permitted, a draft of the formal MLA request can be sent to the other country to ensure that the prerequisites are met. This practice can hopefully avoid time-consuming delays resulting from rejections of the request for failure to comply with treaty requirements.
1.2.Mutual Legal Assistance
Formal request of assistance from government to other government in criminal matters is made through one of the following mechanisms: international agreement providing for mutual legal assistance, bilateral mutual legal assistance treaty (MLAT), domestic legislation permitting international cooperation, or a promise of reciprocity through diplomatic channel knows as letter rogatory.27 Amongst these four, it is agreed that
mutual legal assistance mechanism under international agreement and MLA are more expeditious.
Mutual Legal Assistance (MLA) is an indispensable part of international legal cooperation which can be requested at any stage of investigation, prosecution and court proceeding. It differs from the other formal instrument for its flexibility and less-time consuming procedure. Assistances requested through MLA mechanism are of those having certain level of urgency and made to reduce legal pitfalls and obstacles. Three notable legally-binding international instruments which embody measures on mutual legal assistance in asset recovery are UNCAC, United Nations Convention against Transorganized Crime (UNTOC),28
27Supra
note xxv. 28
and the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.29
Article 46 of UNCAC elucidates that State Party shall afford the widest measures of mutual legal assistance in the stage of investigation which shall be afforded to the fullest extent possible under the prevailing laws and regulations of the requested State. Despite of the presence of similar provisions as elucidated under Article 18 of UNTOC, UNTOC goes further by obliging the state party to the Convention to reciprocally extend to one another the widest measure of mutual legal assistance in investigations, prosecutions and judicial proceedings in relation to the offences covered by the Convention.30
The type of assistance made available under both Conventions including, but not limited to, assistance to compel and collect the production of evidence and other relevant documents; service of judicial documents; to issue search warrant, to execute seizures and freezing of assets; examination of objects and sites; to obtain expert evaluations; and the power to summon witnesses. The type of assistance may also include of those that are not contrary to the municipal law of the requested state. Nonetheless, practice of state has shown that MLA request can be submitted despite of the unavailability of pre-existing bilateral or international agreement between the requesting and the requested state, and by taking into account the principle of reciprocity. The case involving Sani Abacha of Nigeria and Alberto Fujimori of Peru are two pre-UNCAC landmark cases on this field.
In the event a country would just about to submit MLA request for the first time, references can be made to several international instruments
such as the “Model Treaty on Mutual Assistance in Criminal Matters” of
the United Nations,31 and the European Convention on Mutual Assistance
29
Please refer to
http://www.oecd.org/document/20/0,3343,en_2649_34859_2017813_1_1_1_1,00.html 30
See http://www.oecd.org/dataoecd/28/47/37900503.pdf 31
in Criminal Matters on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime.32 Furthermore, UNODC has developed the
Mutual Legal Assistance Request Writer Tool (MLA Tool) to assist States to draft MLA request.33 The tool will guide casework practitioners
through the preparation of Letters of Requests with a series of templates. Caseworkers fill in the various data fields and make selections from drop-down menus in each template in order to prepare requests. The program will not allow users to move from one section to the next until all of the information is fully and correctly entered. This will ensure that requests will not be rejected due to errors or omissions. When completed, the program will automatically generate a correct, complete and effective request. The program will also give access to relevant multilateral, bilateral, regional treaties and agreements and national laws, and include a case management tracking system for incoming and outgoing requests.
Nonetheless, the existence of any guidance should not reduce requesting country to remain sensitive on the distinct character of laws and regulations of the requested state. UNCAC merely serves as the lex generalis and hence the detail regulations vary due to legal requirements set down in each domestic legal system. Failure to identify a responsible central authority to facilitate the implementation of MLA would likely to seriously impede the effectiveness of the process. As state practice shown when France refused to assist Nigeria since the request was made in English, minor language requirement, as an example of detail regulation, also forms as part of critical aspect which may expedite or otherwise hamper MLA request.
Finally, it is good to see the positive trend from state practice which shows countries are not more reluctant any longer to provide assistance subsequently amended by General Assembly resolution 53/112. Full text of the
Resolution is accessible at
http://www.unodc.org/pdf/model_treaty_mutual_assistance_criminal_matters.pdf. 32
Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, Strasbourg, 8.XI.1990. Full text of the Convention is accessible at
http://www.assetrecovery.org/kc/resources/org.apache.wicket.Application/repo?nid=01a5 f3d6-9e9d-11dd-84a1-718cd479e9ee
33
in asset recovery in different type of legal basis. For instance, some countries like France, Liechtenstein and United States may establish MLA request directly based on international agreement. On the other hand, countries like Canada, Cayman Island, and Switzerland provide similar MLA request based on their own prevailing domestic laws and regulations which mostly refer to international convention.34
1.3.Capacity Building
Corrupt practice has been a long-standing issue. Along with that, the disperse effort to curb corrupt practice has been equally in the same status as its cause. However, systemized and advanced method to cope with this issue is still a new matter to law enforcement in developing countries, let alone, measures to recover the stolen asset. While the skilled lawyers, accountants and financial service experts employ sophisticated method to hide the proceeds of corruption, the law enforcement agencies in most developing jurisdictions are far left behind in terms of knowledge and technical support.
It is therefore understandable that, even in recent practice, at least for the purpose of tracing the asset abroad, private law firm or private investigation team often prove helpful as shown in Ferdinand Marcos case and Sani Abacha case. Some victim countries have invested considerable sums without any other result and many others have been reluctant to engage in asset recovery enterprises at high costs with uncertain results. It can be understood since such firm generally charge from US$200 to US$600 per hour.35 It is therefore can be estimated of how
the victim countries which mostly are developing, and not to mention some underdeveloped nations, find even the attempt to recover the looted asset already becomes a lengthy wall of barrier at their first stage of tracing the asset.
Stolen assets are often legally managed by major global players in private and offshore banking centers around the world. A recent report by Global Witness found that despite of the numerous laws that are meant to require banks to perform due diligence on their customers,
34
Supra note xx. 35
especially in the case of politically exposed persons, some of the best known banks in the world have acted as repositories for stolen assets.36
Individuals hiding stolen assets use the same secretive legal instruments and loopholes employed by multinational corporations for tax-dodging and money launderers to make their funds sound lawful.37
Attempts to improve capacity of law enforcement officers have been carried out at various global and regional levels. The first and foremost worth noting is StAR initiative. StAR helps countries put in place the legal tools and institutions required to recover the proceeds of corruption. This includes assistance in legislative reforms, team building, hands-on training and advice on asset-tracing and international legal cooperation. StAR has provided training to over 500 officials in forty countries and helped countries to apply these tools and skills by facilitating contacts between jurisdictions in support of asset recovery cases.38 For instance,
StAR has cooperated with the International Center for Asset Recovery (ICAR) and Thai National Anti-Corruption Commission (NACC) to conduct an eight-day country specific training program on asset tracing and asset recovery.39 StAR, however, does not investigate cases although
it has served as an intermediary to help return assets.
UNODC’s work on this field is also critical. UNODC has provided
technical assistance and capacity building to the Government of Islamic Republic of Iran to set up a financial intelligence unit that will analyze suspicious financial transaction which will also contribute to asset
36
See Kari Heggstad and Odd-Helge Fjeldstad, How Banks Assist Capital Flight from Africa: A Literature Review, CMI Report of NORAD Project, 2010 at
http://www.cmi.no/publications/file/3750-how-banks-assist-capital-flight-from-africa.pdf. 37Supra
note xxxv. 38
See http://www1.worldbank.org/finance/star_site/documents/StAR_Update.pdf; Towards a Global Architecture For Asset Recovery, UNCAC Conference Edition. Accessible at
http://www.unodc.org/documents/corruption/Publications/StAR/StAR_Publication_-_Global_Architecture.pdf
39
See
http://www.baselgovernance.org/big/news-single- view/archive/2010/july/article/stolen-asset-recovery-initiative-start-initiative-training-programme-thailand/?tx_ttnews[backPid]=323&cHash=f77a7d7f15; and
recovery process.40 UNODC Indonesia, on the other hand, is of the
opinion that recovering stolen assets is only one part of a bigger puzzle in the struggle against corruption. UNODC Indonesia has conducted in the past and still has ongoing projects focused on strengthening law enforcement agencies in Indonesia encompassing the following efforts. First, UNODC Indonesia has conducted several trainings for law enforcement agencies that directly relate to asset recovery such as training sessions on asset tracing, asset recovery, advanced corruption, investigative interview, computer forensic and financial investigation. Second, in collaboration with Jakarta Center for Law Enforcement Agencies (JCLEC) located in Semarang, UNODC has trained law enforcement agencies on various subjects, inter alia, investigation, fraud prevention and money laundering. Lastly, UNODC Indonesia has made a MoU in cooperation with the Basel Institute of Governance (Basel Institute), which provides expertise on asset recovery matters from an international perspective. UNODC and the Basel Institute have conducted 3 (three) trainings to Indonesian law enforcement agencies in this field.
The World Bank and a number of financial center countries also provide ad hoc training to developing countries upon request. The Millennium Challenge Corporation in Washington, D.C. offers grants to qualifying countries to fight corruption which can include money for training of investigators, prosecutors and judges in asset recovery techniques.41 Moreover, the European Union has established Asset
Recovery Offices in 20 EU countries to allow better information flows and aims to have effective asset recovery offices across the Union by 2014. From the non-governmental side, ICAR, located in Switzerland and launched by the Basel Institute for Governance in 2008, is assisting developing countries to build capacity through training and information sharing to trace, confiscate and repatriate the proceeds of corruption.
40
For further detail, please see
http://www.unodc.org/unodc/en/frontpage/2010/February/unodc-assists-iran-to-establish-anti-money-laundering-unit.html; http://www.unodc.org/islamicrepublicofiran/en/history-and-achievement-sec3.html; and http://www.unodc.org/islamicrepublicofiran/en/the-first-regional-computer-based-training-on.html.
41
Lastly, it is worth noting that some governments have also launched proactive efforts to facilitate the recovery of stolen assets through technical assistance. For example, the UK, Liechtenstein and Switzerland fund training programs for Southern law enforcement agencies on formulating formal requests to recover stolen assets.42
1.4.Research and Knowledge Sharing
UNCAC implementations in the State Party are not uniform since it depends on legal instrument available under municipal law of the respective state, and on top of it is political will from the government to implement UNCAC and adjust its law to be in compliance with UNCAC. At this stage, UNCAC may serve as a tool to reform culture of corrupt practice either rooted from weak law enforcement or from other aspects, as well as to ensure that laws are in place to enforce anti-corruption provisions. All too often corrupt officials succeed in keeping their stolen funds because the laws of the victim country are woefully inadequate. The most basic knowledge of asset recovery therefore shall begin its first step in identifying the gap between the written articles and its field implementation.
Article 63 of the United Nations Convention against Corruption (UNCAC) establishes a Conference of the States Parties with a mandate to, inter alia, promote and review the implementation of the Convention. States Parties agreed that it is necessary to establish an appropriate and effective mechanism to assist in the review of the implementation of the Convention. As a respond to this inquiry, UNODC developed the "Pilot Review Programme" to offer opportunities to test methods for implementation review of the Convention, with the overall objective to evaluate efficiency, information on lessons learned and experiences acquired and effectiveness of the tested mechanisms. The review mechanism is expected to enable decision maker to make informed decisions on the establishment of the appropriate mechanism for reviewing the implementation of the Convention. It is strictly voluntary
42Supra
and limited in scope and time. Sixteen countries formed the initial pilot review group and have expanded to 29 countries.43
In addition, asset recovery is a new field in legal practice and international law. Reference on publication and expert who produce the reference is therefore also less in number compared to other field, i.e. corruption. Research institution such as Basel Institute in Governance plays an important role to conduct research and analysis towards main source of international law related with asset recovery for development of law related with asset recovery and its related field. Some of the notable publications are Tracing Stolen Assets: a Practitioner’s Handbook; Non-State Actors in Asset Recovery; and Capacity Building in Asset Recovery.
Another breakthrough on knowledge sharing mechanism by ICAR since its inception is that the ICAR has been taking steps to address the problem of the lack of easily accessible, comprehensive and practical information on asset recovery. This has been identified as one of the key problems by a number of countries and international organizations. The ICAR launched the first version of the Asset Recovery Knowledge Centre during the UN Convention against Corruption (UNCAC) Conference of States Parties (CoSP) in Bali, Indonesia in January 2008. The Center is dedicated exclusively to asset recovery work and is highly practitioner-oriented by taking into account best practices and methodologies, legislation and treaties, mechanisms for international mutual legal and administrative assistance to facilitate asset recovery. Profiles for over 20 countries have been published that show the legal frameworks and treaties and important official contact information. Furthermore, ICAR also develop e-learning module on interactive corruption scenario. The case involves stolen assets that have to be traced and frozen. The case is purely fictional but certain elements of it are based on a real case to enhance the practical value of this exercise.
StAR, on the other hand, has worked with practitioners to consolidate and disseminate international good practice on cutting edge issues such as non-conviction based forfeiture, managing asset returns,
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income and asset declarations and illicit enrichment. StAR publications are being used to inform the design of forfeiture legislation in countries as far afield as Indonesia, Russia and Guatemala. To this extent, StAR has produced various research publications. Amongst the latest and worth noting are publications entitled: Barriers to Asset Recovery: an Analysis of the Key Barriers and Recommendations for Action; Asset Recovery Handbook: A Guide For Practitioner; Asset Recovery, Politically Exposed Persons: A Policy Paper on Strengthening Preventive Measures; and Stolen Asset Recovery (StAR) Initiative: Challenges, Opportunities and Action Plan.
1.5.Information Technology
As a result of information technology's development, financial activities change to the virtual space from the real world with a new confidentiality and highly effective method to conceal the looted asset. It is a common understanding that fighting corruption cannot be won by merely a collection of knowledge and network, but to gear the law enforcement with information technology system of which is also a part of international instrument role in asset recovery.
The Information Technology Service (ITS) of the United Nations Office on Drugs and Crime (UNODC) specializes in the development, deployment and support of software applications for use by Member States in a range of UNODC's program areas. The products are part of UNODC's strategic response to crime, particularly serious and organized crime. User countries include Finland, Denmark, Morocco, Tanzania, South Africa, Nigeria, and the Netherland. Just last year, the Corruption Eradication Commission of the Republic of Indonesia is listed as one of the users of this IT system.
with each other encourages inter-agency and cross border cooperation and information sharing at the national, regional and international levels.
One of the most relevant IT products for asset recovery purpose is the goAML application. It is an integrated database, intelligence analysis, workflow and resource management system intended for use by Financial Intelligence Units (FIUs) worldwide. goAML provides a "one stop" FIU-specific solution, and is executed in three steps: data collection, analysis (rule-based analysis, risk-score and profiling) and dissemination (escalate to law enforcement and seek feedback). It provides a facility for the rapid and easy online exchange of information between the FIUs, reporting entities, law enforcement and judicial authorities, while ensuring data confidentiality. The goAML system is driven by a security model that specifies the kind of access rights each user has, and which provides an audit trail and log details for every transaction performed by all users. The goAML solution is well suited to both low and high data volume environments.
1.6.Advocacy
The work of international organizations is critical in work of advocacy which includes advocacy work at any stage of asset recovery process. Several of them are as follows. First, in a case involving Jean-Claude Duvalier, President of Haiti, StAR Initiative assisted the Government of Haiti to return the US$6.5 million public funds stashed in a bank in Switzerland. This is the first of its kind that international community in the form of the World Bank and UNODC worked together in asset recovery.
for illegally diverting large sums of public funds to purchase private real estate in Spain.
In a broader forum, StAR has cooperated with the United Nations Convention against Corruption Asset Recovery Working Group, the Financial Action Task Force, and the OECD Working Group on Bribery to promote asset recovery to the top international policy agenda in the G20. The tangible impact produced by the G20 has been significant the last couple of years. The G20 includes specific measures to facilitate asset recovery in its anti-corruption action plan; the Financial Action Task Force is currently reviewing its anti-money laundering standards to strengthen measures against the proceeds of corruption; and the OECD Working Group on Bribery recently started work on the proceeds of
bribery. StAR is working with the OECD to monitor OECD countries’
progress against their commitment in the Accra Agenda for Action to
“take steps in their own countries to track, freeze, and recover illegally acquired assets”. Another significant result of such advocacy are responses from the G8 who has planned “accelerated response teams” of
forfeiture-related mutual legal assistance experts to be committed at the request of victim states whose assets have been secreted abroad, as well as case coordination task forces for specific cases.44
2.POST ASSET RECOVERY PROCESS
2.1.External Oversight on the Utilization of Proceeds of Asset Recovery
Civil society and international non-governmental organizations have an important role to play in asset recovery. Efforts of bodies such as the International Centre for Asset Recovery (ICAR) should be supported and expanded. In the Mobutu case for instance, a Swiss court decision to
accord Mobutu’s US$ 6.5 million assets to his heirs was singularly
challenged by Mark Pieth, founder of the Basel Institute of Governance. Transparency International and Sherpa have also been leading on asset recovery. In May 2009, The French Court held that Transparency
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For further detail on this section, please see
International and Sherpa could bring a case in France against three African leaders. However, it is regrettable that the French Court of Appeal ruled that Transparency International (France) does not have legal standing. Yet, the type of cooperation and work between TI and Sherpa is the one that has to be promoted, especially for those in developing countries to strong force to counter state larceny by leaders.
Furthermore, in Sani Abacha case, the World Bank acted as a neutral party to review the utilization of the US$505.5 million. Through the World Bank, the Swiss government provided a grant of about US$280,000 to co-finance the Public Expenditure Management and Financial Accountability Review (PEMFAR). PEMFAR was initiated as a means of
executing reforms in budget spending, with regard to the Nigeria’s
National Economic Empowerment Development Strategy (NEEDS) priorities in education, health, and basic infrastructure. The World Bank also mobilized a Nigerian civil society to prepare and administer the field monitoring survey of 51 project sites. The participation of the civil society organizations came as an afterthought following pressure from both Swiss NGO coalition and civil society organizations under the umbrella of Nigerian Network on Stolen Assets (NNSA), an organization of groups working on anti-corruption, social and economic rights, public policy, health, and environment.
III.WHAT MAY WE LEARN?
1.Missing link on role of judiciary
While the verdict of most criminal offence is to sentence the guilt party under certain length of imprisonment, the verdict on corruption case must go beyond this by paying a lot more focus on later attempt to recover the looted asset.
Best practice from court decision in Abacha, Marcos and Duvalier cases show that the distinct character of court decision relies on the quality of the following, inter alia: the ability to formulate that there is an established link between the asset and the predicate crime and quality to articulate the exact asset, its quantity (depends on qualification of asset), location and other detail, which will be subject to confiscation. Failure to fulfill to this requirement entails the inability of prosecutor to enforce the law. It is not surprising then to witness that most corruption cases find their obstacle on the inability to execute the asset as form of asset recovery.
It is therefore imperative to bring the new perspective of asset recovery to judges who deal with corruption cases that, especially for those involved in grand corruption trial, that aside from putting a test on the fulfillment of the element of crime presented by prosecutor before a court, the decision must also take into account the attempt to recover the asset.
2.Who is who?
In its recent publication, StAR initiative points out one of the general
barriers in asset recovery as “Too Many Cooks in the Kitchen-Lack of
Coordination”. This barrier does not only occur at the stage of preparing
Furthermore, it is worth noting that asset recovery is a sensitive matter since it deals with politically-exposed person and assets valued for billions to trillions dollar, this is not to mention the classified information involved and flow of enormous funding from a government in attempt to recover the assets. For that purpose, the effort must be conducted strictly based on the prevailing laws and regulations and the most important thing would be to take into account the interest of a nation. At the first stage, a government is required to designate and clarify the specific law enforcement agencies and other government body (if any) specifically designated to involve in asset recovery matter. This is meant to avoid any intrusion from parties who claim or act as if they were representative of a government or law enforcement agencies which will hinder or create distrust amongst these agencies in performing their duty. This is to include that communication from a government to foreign counterpart must be solely performed by the authorized agency.
3.Small, yet, well-trained team
Capacity building for law enforcement agencies involved in asset recovery must be carried out in such an extensive and sustainable manner. It shall cover all rank officers from decision maker to field officer. However, the most important thing would be to ensure that such officer will be put into a real test of asset recovery process in their respective institution once they have accomplished the training. Furthermore, it is a common practice that law enforcement agencies also suffer from rotation and posting system. Therefore, there should be an assurance as well for them on the performance sustainability in their respective unit.
transaction covering subject matters such as corporate law, capital market and derivative, investment and tax. It is therefore expected once they have better understanding on other aspect in asset recovery, they are not only a law enforcement officer but a law enforcement officer who can think like the gatekeeper.
Unfortunately, there has been no reference on such practice internationally. However, in domestic level, the following practice may be taken into account. Paku Utama (former UNODC Consultant), Feitty Eucharisti (in-house legal counsel), and the author begin a small initiative to have a knowledge-sharing class on matters related with asset recovery field by inviting experts and daily practitioners in field related with asset recovery. The class is intended to asset tracing team at one of the law enforcement agencies in Indonesia and recently officers from different units in the institution has also been involved. The class finds its objective to bring new perspective on asset recovery from the perspective of non-law enforcement officers such as non-lawyer, banker and corporate legal counsel. The subjects presented before the class therefore are tailored to cover a more daily-practical knowledge known to the presenter. Therefore, if most law enforcement agencies are made known money laundering based on law enforcement perspective, the presenter would bring different angle on how money laundering is actually performed.
This special asset-tracing unit does not refer to specific model and yet established based on the operating needs of KPK to create a more efficient and effective measures. Nonetheless, there were references made in the creation of this unit such as ICAC Hong Kong, US Marshall, New South Wales Attorney General of Australia and several other institutions.
IV.CONCLUSION
The author finds that it is best to begin the following conclusion by addressing reader with one quotation from Moises Naim that the first
steps to reverse their (threats’) recent dramatic gains must be to treat the
conflicts not as law enforcement problems but as a new global trend that shapes the world as much as confrontations between nation-states did in the past. Customs officials, police officers, lawyers, and judges alone will never win these wars.45 The role of international instrument on asset
recovery has been in place to respond to the weaknesses suffered by law enforcement agencies, especially in developing countries. It covers wide-ranging fields from international cooperation to information technology. The work on asset recovery which was previously scattered and localized in certain region has shown positive trend to gain support from many countries. However, the presence of international instrument would not necessarily ease country in expediting the process of asset recovery. It remains on the political will of country to join the global fight against corruption in which asset recovery forms as one of its fundamental principles and the willingness to utilize the already available international instrument on their advantage to recover the asset.
Therefore, on the question whether the glass is full or half-empty on the role of international instrument on asset recovery, we may answer it as half-full to describe the wide-ranging coverage of its role; yet, we may answer it as half-empty with the expectation that there is still a lot more that international instrument can contribute in the near future.***
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