Spotlight on Corruption welcomes the UK’s new “Framework for transparent and accountable asset return” as a positive step in the fight against corruption. For this Framework to be effective, the UK government will need to:
- Ramp up asset recovery efforts to ensure more proceeds of corruption can be returned to the countries from which these assets were stolen;
- Guarantee greater transparency and more inclusive stakeholder consultation in how returns are negotiated;
- Appoint civil society organisations to monitor asset returns in a way that is transparent, competitive and fair;
- Avoid portraying the return of assets as an aid-related initiative, and use a tone that recognises the UK’s role and responsibility as a global money laundering centre in the loss of assets in the first place;
- Ensure that future revisions to the Proceeds of Crime Act enable compensation for victims to be granted in complex overseas corruption cases, and consider how NGOs might be allowed to act as official complainants or to act in the public interest on behalf of victims in asset recovery cases.
With the release of its new Framework on asset return last week, the UK became the first country to publish its policy for returning the proceeds of corruption to other countries. The Framework is a welcome precedent that positions the UK as a champion of transparency and civil society involvement in international asset return processes. But if these principles are to be put to good use, it is important that the UK ramps up its enforcement efforts to improve its track record on confiscating these stolen assets in the first place.
The Framework as a global precedent
The issue of how assets should be returned to the countries from which they were stolen has been a source of contention and conflict at an international level for some time. On the one hand, it is important that returned assets are used to benefit the people of the country harmed by the underlying corrupt conduct and are not “re-corrupted” or used to benefit offenders. This flows from the recognition that asset return is not an act of benevolence or an “aid project”; it is an imperative to return stolen assets to their rightful owners and injured victims as required by Article 57(3) of the UN Convention Against Corruption (UNCAC). Effective and accountable asset return is especially important for sending a strong message that corrupt leaders who steal from their people cannot act with impunity.
On the other hand, it is important that destination countries whose financial centres have acted as a magnet for looted wealth do not dictate how origin countries are to spend their resources. In championing international co-operation, the UK should approach asset return processes with humility in recognition of the role that our global financial centre and professional enablers have played in the loss of assets in the first place.
In recent years, considerable progress has been made in finding a way forward through these complexities. This emerging consensus is reflected in the principles agreed at the Global Forum on Asset Recovery (GFAR), which was co-hosted by the UK and the US in December 2017, and the Civil Society Principles for Accountable Asset Return which were developed through an extensive consultative process involving civil society organisations from across the world leading up to the UN General Assembly Special Session (UNGASS) against corruption in June 2021.
The UK’s Framework offers a pioneering model for translating these high-level international commitments into concrete processes for returning assets. It moves beyond rhetoric on asset return to engage with the practicalities of decision-making by outlining: the process for return, the deduction of reasonable expenses, the stakeholders to be engaged throughout the return process, and the mechanisms for return. In this way, the Framework demonstrates how the GFAR principles, such as transparency, accountability and the inclusion of non-governmental stakeholders, can be embedded in asset return processes.
Transparency in negotiations
The government’s press release describes the Framework as setting “a new global transparency standard for asset returns”. The Framework certainly breaks new ground with its commitments to data transparency by requiring that “all memoranda of understanding or other agreements which oversee the return of funds abroad must be published” (para 46) and “all assets must be recorded” (para 46). In this way, the Framework cements the UK’s commitment to recent transparency initiatives such as the Asset Recovery Statistical Bulletin for the financial years ending 2016-2021 and the publication of its most recent MOUs with Nigeria and Moldova.
However, there remains a need for greater transparency in the negotiation of how returned assets will be used, rather than simply an announcement communicating the outcome of such negotiations to the public. So far, these processes leading up to the announcement of MOUs and asset return initiatives have unfolded largely out of the public view and without multi-stakeholder consultation. The NCA’s settlement with Malik Riaz Hussain regarding the return to Pakistan of assets frozen in the UK shows how a lack of transparency and input from non-governmental stakeholders creates a risk that funds are returned in a way that benefits offenders, in breach of GFAR Principle 9.
The Framework offers a welcome affirmation that “CSOs have an important role to play in asset return, in particular providing insight into the most appropriate mechanism of return and ensuring transparency” (para 38). It is also a positive development that the Framework envisages that civil society participation might extend throughout the asset return process, although it stops short of making any definitive commitment to early consultation. Instead, it is merely suggested that the government “should consider engaging relevant domestic and international CSOs promptly once it is agreed in principle that funds should be returned” (para 39, emphasis added).
In addition, the implementation of the Framework will be more credible and robust if the government includes a broader range of stakeholders in decision-making about how recovered assets should be used. Both GFAR Principle 10 and Principle 9 of the Civil Society Principles for Accountable Asset Return envisage multi-stakeholder consultations that not only include civil society participants but also community-based organisations, such as victims’ groups. The participation of local civil society organisations and victims’ groups is particularly important to ensure decision-making is sensitive to context and secures local ownership over the outcomes.
Relatedly, the Framework notes that the UK government will “consider returning confiscated assets to prior legitimate owners and/or victims if they are identifiable” but accepts that a recipient country’s central government will often be the “appropriate mechanism for return of funds” (para 21). This does not reflect as strong a commitment to returning stolen assets to the victims of corruption as contained in the French law adopted in August 2021 which mandates that “bien mal acquis” (“ill-gotten gains”) be returned “as close as possible to the population of the foreign State concerned”. The French model is also particularly innovative in giving standing to NGOs as injured parties before the courts, thereby enabling them to initiate criminal proceedings in corruption cases as pioneered in the famous Biens Mal Acquis case. The UK Law Commission’s forthcoming report on the confiscation regime under the Proceeds of Crime Act offers a valuable opportunity to secure legal reforms that enable compensation to be granted in the UK courts more effectively, including in complex overseas corruption cases. It is also an opportunity to explore ways for the UK to introduce new rules that allow NGOs to act as official complainants or to act in the public interest on behalf of victims in asset recovery cases.
Finally, the Framework envisages a prominent role for CSOs to ensure the effective monitoring of asset returns, but little detail is given regarding the process for appointing civil society organisations to act as monitors or how they should perform their duties. Ideally, a CSO involved in the management or monitoring of funds should be appointed after an open tendering process and due diligence checks. In order to provide independent assurance that funds are being used for their intended purpose, CSO monitors should be required to publish regular progress reports and independent audits of the disbursement of funds and make these readily accessible to the public.
Putting the Framework into global perspective
Undoubtedly, the new Framework signals the UK’s ambitions to champion greater international co-operation on asset recovery and return. As the first of its kind, the Framework will hopefully incentivise other countries to turn high-level international commitments into concrete state action.
Yet putting the Framework into global perspective also brings into focus the asset recovery challenges facing the UK. According to the results of the StAR Initiative’s global survey presented at the UNCAC COSP9 in December 2021, the UK lags behind other major financial centres such as the US, Switzerland, Jersey, Singapore and Lichtenstein in its contribution to the $4.1 billion in stolen assets that have been returned internationally over the last decade.
More positively, the survey identifies the UK as the second top performer for the number of asset confiscation cases it has been involved in between 2010 and 2019 (5 confiscations, trailing only the US at 7). Together with three further asset returns underway following confiscations totalling £1.7 million made during the 2020-2021 financial year, this uptick in confiscations is reason to hope for an increasing number of cases for the UK’s Framework to find application in future.
The experiences of other global leaders in asset recovery suggest that setting and funding asset recovery as a policy priority can be a key catalyst for progress in asset return. In the US, the establishment of a specialised team of prosecutors dedicated to the Kleptocracy Asset Recovery Initiative has yielded a reported return of $1.8 billion in proceeds of corruption since 2010. Similarly, the success of Swiss efforts has been attributed at least in part to a clear policy prioritisation of asset recovery combined with leadership in international engagement, such as launching the Lausanne Process which convened a series of international expert seminars involving participants from around 30 jurisdictions and international organisations that culminated in the 2014 Lausanne Guidelines on asset recovery.
Putting the Framework into practice
The UK’s adoption of a new Framework is therefore itself cause for optimism as a proactive prioritisation of asset return and concrete evidence of the UK’s ambition to champion international co-operation in this area. There is considerable scope for improved rates of return, given that current figures for international asset returns are only a small portion of the proceeds of corruption that UK law enforcement have sought to confiscate — which is in turn only a fraction of the estimated proceeds of corruption that find a safe haven in the UK.
To illustrate the scale of the challenge, the £4.2 million Ibori loot returned by the UK to Nigeria during the 2020-2021 financial year represents just 2.7% of the £161.7 million that UK authorities have sought to confiscate from Ibori and his associates in efforts that have been ongoing since 2007. Two judgments are due very soon which will determine whether the remainder of these stolen assets will be confiscated so that they can be returned to Nigeria, where they should be used to benefit the victims of corruption in the Delta state where Ibori was governor.
The new Framework recognises that “due process can take time” but notes that the UK “should seek to return funds within the shortest reasonable timeframe” (para 25). This will be key to reaping the rewards of this promising new Framework as the UK seeks to ensure that justice for corruption does not end with conviction, or even with confiscation, but with the return of stolen assets to the victims of corruption.