Return of confiscated assets

There is today universal agreement to the principle that confiscated funds originating from corruption should be returned, as enshrined in Article 51 of UNCAC. Specifically, UNCAC foresees that such assets are returned to their prior legitimate owner, which, in the case of corruption and misappropriation of state funds, would be the state from which such funds have been stolen (after taking into account the rights of bona fide third parties12 and possibly the deduction of expenses incurred by the foreign jurisdiction).

In addition, UNCAC foresees that where appropriate, countries involved in returning stolen assets may conclude agreements for the final disposal of confiscated property. Further, there is also a great degree of convergence over the need to put returned assets to good end-use and to ensure that they are not stolen again. Against this background, there are a number of roles that civil society can play in the stages immediately before and during the return of confiscated assets originating from corruption and related crimes.

These include providing input to the decision-making process over end-use. CSOs are well placed to represent the voice of potential victims of those that were affected by the corruption; they can initiate and contribute towards a national dialogue on the potential end-uses of returned assets.

Participation by CSOs in oversight and monitoring of the use of returned assets can be an effective way to ensuring an adequate level of transparency in the use of returned assets, which in turn should help ensure that confiscated assets are used for their intended purpose and in line with internal legal or otherwise agreed procedures. In turn, Governments increasingly understand that they have an interest in engaging with CSOs in these matters as such a partnership enhances public trust in the recovery effort.

Methods

Objective: Targeted use of returned assets

Method of engagement

Promoting appropriate legal procedures and arrangements for the management of assets

Possible actions

  • Identify potential institutions, agencies and stakeholders responsible for the coordination and the management of repatriated assets
  • Identify legal mechanisms/ ways to compensate the determined victims of the crime with the confiscated assets.
  • Working concertedly with national asset management/asset recovery units on planning the treatment to, and allocation of confiscated assets
  • Propose wide consultation with stakeholders comprising local authorities and CSOs, to define the use of returned assets.
  • Liaise with CSOs in requested countries during the asset recovery process to request their assistance to lobby for a dialogue between requested and requesting countries on the use of repatriated assets.

Best practices to increase success and mitigate risk

  • Identify good practices in other jurisdictions
  • Minimize bias and conflict of interest when determining how to manage repatriated assets
  • Refer to national development plan objectives and similarly widely accepted development goals
  • Consider the long-term sustainability of projects funded through returned assets

Resources

CSO example 1: BOTA Foundation Kazakhstan

In 2007, Switzerland, the US, Kazakhstan and the World Bank signed agreements regarding the restitution of USD 84 million of funds through the ‘BOTA Kazakh Child and Youth Development Foundation’ (BOTA) for projects that benefit the Kazakh population, notably in the domains of youth development and energy efficiency. BOTA’s board of trustees is composed of five local Kazakh citizens and one representative each from the governments of the US and Switzerland; its duty is to monitor the expenditure of the money. The foundation is administered by an international NGO set-up by the concerned parties, which operates independently of the Kazakh authorities. The frozen assets are to be transferred in tranches to this foundation and deployed by it under the supervision of a consortium of two internationally recognised institutions (IREX Washington and Save the Children) and with the advice of the World Bank.

More information at http://www.bota.kz/en/index.php/pages/index/1

CSO example 2: Libera and FLARE Network - Italy

Libera Terra is a non-profit organisation whose mission is the fight against organised crime and mafia-type criminal organisations in Italy. They are involved in several initiatives to transform confiscated assets into social projects and to re-use confiscated assets for the local communities by creating jobs for young people or creating agricultural centres. In cooperation with FLARE Network they contributed to the establishment of a national Asset Recovery Agency and shaped policy reform and legal procedures in the proper monitoring and management of confiscated assets. As a result more than 4500 real estate properties have been used for social purposes in Italy.
More information at: http://www.libera.it/flex/cm/pages/ServeBLOB.php/L/IT/IDPagina

Objective: Transparent use of returned assets

Method of engagement

Monitoring the management of assets

Possible actions

  • Ensuring that proper audit, reporting and oversight mechanisms on the management of confiscated assets are put in place by the authorities in charge of the repatriation effort
  • Monitor and track the projects funded by repatriated assets, and collaborate with concerned (local) populations on this.
  • Audit financial statements and reports of repatriated assets to verify the accuracy of information about their use and ensure appropriate protocol was followed.
  • Try to formalize an official role or mandate for CSOs in the management of returned assets and/or the monitoring and oversight process.
  • Make publicly available information regarding the receipt of assets, the declaration of the intended use of assets, actual expenditures, and the results achieved.

Best practices to increase success and mitigate risk

  • Ensure that you have the technical capacity available for managing and/or monitoring projects (e.g. financial accounting/audit expertise, engineering, etc., depending on project).

Resources

CSO example: Monitoring of Abacha funds to Nigeria

In 2005, and based on an agreement on restitution modalities signed by Switzerland, Nigeria and the World Bank, USD 700 million of asset stolen by former Nigerian President Abacha were restituted from Switzerland into the Nigerian central budget. Nigeria agreed to use the repatriated funds for specific projects designed to alleviate poverty and to undertake a comprehensive Public Expenditure Management and Financial Accountability Review (PEMFAR), to be conducted by the World Bank. Following pressure from both Swiss and Nigerian CSOs, some civil society participation in the monitoring of the expenditure of the restituted assets was also introduced. The Nigerian Civil Society Network on Stolen Assets, including Integrity and the Zero Corruption Coalition participated in the monitoring and implementation of the projects funded with the returned Abacha funds with a view to ensuring greater transparency and accountability of the returned assets.

More information at http://www.evb.ch/cm_data/Report_Abacha.pdf