World Bank and UN launch initiatives to strengthen states’ capability to confiscate ill-gotten wealth.
 

It used to be that a corrupt leader and human rights violator could easily stash his ill-gotten wealth in Swiss banks and be welcomed with open arms in a Western country if removed from office. Today, the global environment isn’t as friendly to bad leaders.

Last month’s extradition from Chile of Peru’s former President Alberto Fujimori was a sign of the changing tide in foreign policy of many governments toward corrupt officials. Chile’s Supreme Court approved Peru’s request for Fujimori’s extradition to face corruption and human rights charges, and the former Peruvian strongman was sent back September 22. Swiss authorities froze $48 million in ill-gotten wealth linked to Fujimori after he left Peru in 2000.

In case a hostile opposition government takes over in 2010, President Gloria Macapagal-Arroyo, who is similarly accused of corruption and human rights violations, will find that finding a safe haven abroad won’t be as easy as it was in the 1986 when then President Marcos and his family left for the US after a people power revolt.

Arroyo may even be refused entry in the US, said international law expert Harry Roque, director of the UP-based Institute of International Legal Studies. In January 2004, President Bush signed Presidential Proclamation 7750, his “no safe haven” policy denying entry into the US of individuals involved in public corruption.

This order was the rationale for the cancellation of the US visa of Jocelyn ‘Joc-joc’ Bolante, Arroyo’s former agriculture undersecretary alleged to have illegally diverted public funds to the 2004 presidential campaign. Likewise, in 2003, the US government informed then Philippine Ombudsman Simeon Marcelo about the unexplained wealth of former Armed Forces of the Philippines comptroller Gen. Carlos Garcia.

Roque said that it is to President Arroyo’s interest that “she stay in power or that the next government will be her ally.” An unfriendly new administration can easily ask other countries to immediately freeze bank accounts of officials who may have engaged in corrupt practices and stashed ill-gotten wealth abroad. Due to the compelling need for political protection, he said Arroyo may even choose to support the opposition candidate in 2010.

Global Treaty

The new global attitude toward corruption is best symbolized by the UN General Assembly’s adoption in 2003 of the United Nations Convention against Corruption (UNCC), the first global anti-corruption treaty. (see UNCC’s website here)

The agreement has been signed by 140 countries and ratified by 99. It entered into force on December 14, 2005. The US, United Kingdom, Philippines, China have signed and ratified the agreement. Switzerland signed it in December 2003 but hasn’t ratified it yet.

In support of the UNCC, the World Bank and the United Nations also launched last September 17 the Stolen Asset Recovery Initiative (StAR). (see World Bank’s website here)

Among others, StAR seeks to develop the capacity of victim-states to “respond to and file international mutual legal assistance requests” and “adopt and implement effective confiscation measures.”

Under the UNCC, state parties agree to strengthen measures and promote international cooperation to fight corruption, “including in asset recovery.”

Plus for PCGG

Former Presidential Commission on Good Government (PCGG) Commissioner Ruben Carranza, who was a member of the UN Ad-Hoc Committee which drafted the treaty, told Newsbreak the UNCC has a “strategic value” in the campaign against corruption.

“Before 2003, there was no international legal instrument for the freezing and recovery of ill-gotten wealth from corrupt government officials that would be obligatory for other states to enforce when invoked by ‘victim-states’ like the Philippines,” said Carranza, now a staff of the US-based International Center for Transitional Justice. “Since 1986, the recovery from the Marcoses and their cronies of ill-gotten assets in Switzerland, the US and other countries has been largely dependent on the domestic law of those countries and only very recently, on a few bilateral agreements.”

He said that under the Aquino government, the PCGG’s “initial success at freezing Marcos and Marcos-crony assets in Switzerland was more of a diplomatic than a legal accomplishment.”

“With the UNCC, the PCGG would be able to ask the governments of countries in which ill-gotten assets are believed to be invested to investigate the provenance of those assets, freeze them while we prepare for litigation, and assist us with access to evidence and police powers in compelling their production for the litigation itself,” Carranza explained. “The difference between these asset recovery mechanisms in the UNCC and what we could avail of previously is the binding and specific character of the steps that foreign governments have to provide a victim country.”

During the UNCC negotiations, Carranza said the Philippines’ “bitter lessons in going after the Marcoses resonated among the delegates of other developing countries whose own efforts at recovering assets from their former presidents or dictators were only beginning or at mid-stream.”

Recalling how Ferdinand Marcos’ death in 1989, the exiles of his family and cronies obstructed criminal prosecution, Carranza said the Philippines succeeded in including a provision in the treaty that urges governments to take measures that would “allow confiscation [of ill-gotten wealth] without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight or absence.”

Asset Recovery

The UNCC’s chapter on asset recovery was considered a “major breakthrough.” Roque said one of the obligations in the treaty is to “cooperate especially in freezing the fruits of the crime.”

But Roque and Carranza lamented that the Arroyo government has not been taking advantage of the new tools opened up by the UNCC in order to “test the treaty’s provisions.”

“For example, has any mutual legal assistance request been sent by our Department of Justice to its counterparts in the US, European Community members, China, Hong Kong and other countries to ask for an investigation that might be connected to, say, Jocelyn Bolante, Virgilio Garcillano or perhaps Benjamin Abalos?” Carranza said. “Since [corruption] cases happen almost every month in our country, invoking the convention’s mutual legal assistance provisions before foreign countries whose banks and financial institutions might contain ill-gotten assets of Philippine public officials should be keeping our anti-corruption officials busy.”

Weaknesses

Roque said the Arroyo government has been “very selective” in requesting cooperation.

In the case of former Justice Secretary Hernando Perez, he said Switzerland voluntarily gave the Philippines information on Perez’ bank accounts. But the Arroyo government has not moved quickly in investigating Perez and has not yet filed criminal cases against him. He stressed the crucial role civil society plays in pressuring the government to act.

Obviously, Carranza said a corrupt leader will not use the UNCC against himself or his accomplices. However, he said the “beauty of the treaty is that it actually allows someone else, say a foreign government, to pull the trigger—initiate an investigation, freeze the ill-gotten assets, commence prosecution and hopefully, embarrass the victim-state’s government into ‘cooperating’ with the process.” He added the treaty “rests on the paradox of allowing politicians what is effectively a large measure of self-regulation.”

A corrupt official may also choose to hide his ill-gotten wealth in a state that is not party to the UNCC. Switzerland and Liechtenstein have signed the treaty but have not yet ratified it. But since the United Kingdom is already party to it, “notorious British Virgin Island corporations organized to front for corrupt politicians, among other criminals, may become less useful for laundering ill-gotten wealth,” Carranza said.

Use of MLAT

But he clarified that a freeze on assets need not be based on the UNCC. The Philippines may choose to use its mutual legal assistance treaties (MLATs) on criminal matters iwth the US, Switzerland and Hong Kong as the basis for a freeze on assets in those countries.

Another problem is that with globalization, hiding ill-gotten wealth is now being done quite fast. Carranza said the “use of international clearinghouses for foreign exchange transactions among banks, for transfers of securities and for registration of every kind of property from paintings to real estate have made it possible to move assets quicker than a Philippine Ombudsman can flip open a case folder.”

Carranza said the UNCC’s fundamental weakness is its “dependence on the capacity of most developing countries to uncover, document, freeze and recover ill-gotten assets.” As a senior associate of the International Center for Transitional Justice, Carranza said he has seen the extensive damage by dictators and warlords on their national economies and state institutions, thus hampering their capacity to go after ill-gotten wealth.

He said it would also be naive to think that governments and banks in developed states who earn interest and profit from these assets “will wholeheartedly turnover bank records and the assets themselves to the victim countries.”

“The lack of political will to enforce it on those who are supposed to enforce it is, by no means, the most effective way to defeat the intent of the treaty’s asset recovery provisions,” Carranza said.

PHOTO CREDIT: Wikipedia (for Fujimori's photo)

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