Recovery of stolen assets

The global institutions in collaboration with the United Nations Office on Drugs and Crimes (UNODC) are working with developing countries and financial centers to stop the laundering of proceeds generated through corruption and other illicit means and recover assets generated through illegal sources.

Transparency International (TI), in its report, Assets Recovery and the Theft of Public Money, writes: “According to a 2010 estimate, each year developing countries lose US$20-40 billion due to corruption”. The Stolen Assets Recovery (StAR) Initiative: Challenges, Opportunities, and Action Plan report, published jointly by the World Bank and UNODC, states that the cross-border flow of the global proceeds from criminal activities, corruption, and tax evasion is estimated at between US$1 trillion and US$1.6 trillion per year.

The report further states that corrupt money associated with bribes received by public officials from developing and transition countries are estimated at US$20 billion to US$40 billion per year — a figure equivalent to 20% to 40% of flows of official development assistance (ODA).

The volume of stolen public funds in developing countries is very high. Corrupt leaders and bureaucrats, military officials as well as judges transfer their proceeds of corruption abroad with the help of their foreign partners or enablers in tax havens in the world financial centers known as secure due to their secrecy laws.

To cope up with these challenges and to curtail the movement of illicit flow of funds and recovery of assets created by illegal means, the Financial Action Task Force (FATF) and the International Criminal Police Organization, commonly known as INTERPOL, have launched a joint initiative to deprive criminals of their dirty money, marking a turning point in global efforts to recover illicit assets.

FATF is trying to focus and make it compulsory for each jurisdiction to implement the beneficial ownership rule that will improve transparency and help to identify true owners of assets or arrangements.

It is worth mentioning that the first-ever FATF-INTERPOL Roundtable Engagement (FIRE) event was held on September 13, 2022. It was attended by 150 high-level experts who resolved to:

• promote national policies and actions that prioritize the tracing, seizure, and confiscation of criminal assets.

• enhance operational cooperation at the national, regional, and international levels.

• increase effective information sharing among public authorities and with the private sector.

It is an undeniable fact that corruption is drying up the resources of developing countries. The StAR highlights that even a portion from recovery of stolen assets can provide enough funds to improve the social sector.

The report further states that recovery of as little as US$100 million can fund full immunization for four million children or help to provide water connection for around 250,000 households. However, if the entire stolen funds are recovered and utilized properly, it can change the living standards of the entire humanity on our planet.

Unfortunately, the developing countries due to poor governance system lack transparency in their affairs. Moreover, their leadership considers itself untouchable. Though these countries have accountability laws, yet their application is mostly lax and/or compromised.

Therefore, due to selective application of accountability laws, the corrupt mafia finds ways to defeat the system. Additionally, majority of developing countries does not have enough resources to improve its legal, financial, and public financial management system.

The United Nations and other watchdogs are trying their best to curtail corruption and corrupt practices and help victim countries recover the assets created by mafias through misuse of public funds.

Chapter V of the UN Convention against Corruption provides the framework for the return of stolen assets, requiring convention signatories to take measures to restrain, seize, confiscate, and return the proceeds of corruption. As per the Convention’s Article 51:“The return of assets under this chapter is a fundamental principle of this Convention, and States Parties shall afford one another the widest measure of cooperation and assistance in this regard”.

Keeping the above principle in view, Pakistan being a member of United Nations is equally responsible to claim recovery of assets created by corrupt public officials, politicians, military officials, judges, and others through misuse of public funds or tax evasion.

However, despite signing various agreements with different jurisdictions and watchdogs including an information-sharing agreement, namely, OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters, our authorities so far seem least interested in recovering stolen public funds.

Rather, on the command of political masters, they are using these for their political benefits, victimizing their opponents. The previous government of Pakistan Tehreek-e-Insaf came into power with an anti-corruption slogan and created the assets recovery unit under the supervision of Shahzad Akbar, appointed as Advisor to Prime Minister. Though he was assigned requisite powers for the recovery of stolen assets, he miserably failed to deliver.

Shahzad Akbar was more interested in political victimization of opponents rather than recovering any stolen assets. Therefore, our pleas before INTERPOL regarding return of the Sharif family as well as Muhammad Ishaq Dar were rejected.

Similarly, due to poor evidence, the National Crime Agency (NCA) of the United Kingdom cleared Shehbaz Sharif and his sons from corruption cases. The poor performance of the National Accountability Bureau (NAB) and the ex-Primer’s team, appointed for assets recovery lost millions in the case filed by Broadsheet in the UK court.

However, no investigation or case was registered against NAB officials and others in respect of their incompetence and recovery of billions of rupees for the national exchequer. In another example, NCA recovered a huge amount from a property tycoon in Pakistan against money laundering charges and returned the same to Pakistan.

However, the sitting government then instead of depositing the same in the national treasury managed to get cabinet’s approval to return it to the property tycoon. The media reports allege that the former premier and his wife got huge benefits out of this deal. However, NAB and other law enforcement agencies are least bothered to start an inquiry/investigation to find out the truth behind this despicable episode.

We are the 5th populous country and 7th nuclear state therefore our actions and dealings do influence the global community. Our ranking on the global perception index at number 140 is an embarrassment for the entire nation.

Our judiciary as well as our law enforcement and security agencies are not at all interested to streamline their affairs. NAB is a prime accountability agency, but it apparently lacks the basic skills for tracing, freezing, confiscating and repatriating stolen assets/funds.

This is evident from the remarks of the Supreme Court about one of its directors stating how he was appointed despite not qualifying for this job. It is high time we streamline our financial crime laws and regulations, improve our international cooperation, and train our law enforcement professionals to apply modern techniques of investigation.

Our courts are bound to ensure the basic right of a fair trial to the accused as envisaged in Article 10A of the Constitution of Pakistan. Unless we mend our ways foreign jurisdictions or financial centers will not entertain our politically-motivated cases or accept our requests, as we have been experiencing in the past.

(Huzaima Bukhari & Dr Ikramul Haq, lawyers and partners of Huzaima, Ikram& Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE). Abdul Rauf Shakoori is a corporate lawyer based in the USA and an expert in ‘White Collar Crimes and Sanctions Compliance’)

Copyright Business Recorder, 2022