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Egypt: Recovering Stolen Wealth
AfricaFocus Bulletin
Feb 16, 2011 (110216)
(Reposted from sources cited below)
Editor's Note
As Egypt turns from the gripping drama of the 18 days that brought
down the Mubarak regime, there are multiple issues on the agenda.
Among them not the least important is recovery of stolen wealth
from the assets of former President Hosni Mubarak and his
colleagues. That task will not be easy, requiring political will,
technical competence, and international cooperation among many
countries. But the chances are enhanced by recent international
efforts to increase transparency and government capacity to deal
with such issues.
Much of this new international infrastructure has been directed at
money laundering from drug smuggling and other explicitly criminal
enterprises and at countering financial support for terrorism. But
increasingly international agencies and civil society groups have
stressed the potential for using these mechanisms to fight
corruption, tax evasion, and other illicit financial flows.
This AfricaFocus Bulletin contains (1) a statement on recovery of
Egyptian stolen assets, from the international civil society
coalition of the United Nations Convention against Corruption, (2)
the (Transparency International) Bangkok Declaration on Stolen
Assets Recovery and the Management of Frozen Assets, of November
2010, and (3) a summary tip sheet on the January 2011 report from
Global Financial Integrity on illicit financial flows.
Another AfricaFocus Bulletin released today on the web (at
http://www.africafocus.org/docs11/ar1102.php), but not sent out by
e-mail, contains a 2007 summary briefing from the U4
Anti-Corruption Resource Centre, on the importance of recovery of
stolen assets as well as practical obstacles and suggested policies
to strengthen such efforts.
For news stories on efforts to recover assets of President Hosni
Mubarak, see http://tinyurl.com/45c4cvk
Websites with additional background information include:
Financial Action Task Force (FATF)
http://www.financialtaskforce.org
Global Financial Integrity
http://www.gfip.org
Middle East & North Africa Financial Action Task Force (MENAFATF)
http://www.menafatf.org
International Centre for Asset Recovery (ICAR)
http://www.baselgovernance.org/icar/
U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute
http://www.u4.no
United Nations Convention against Corruption (UNCAC) Coalition
http://www.uncaccoalition.org
Previous AfricaFocus Bulletins on illicit financial flows,
corruption, and the recovery of stolen wealth include:
Africa: Penalizing Transparency
http://www.africafocus.org/docs11/gf1102.php
Equatorial Guinea: Oil but No Rights
http://www.africafocus.org/docs11/eq1102a.php and
http://www.africafocus.org/docs11/eq1102b.php
Africa: Profiling Cash Drains
http://www.africafocus.org/docs10/fin1004.php
USA/Africa: Two to Tango
http://www.africafocus.org/docs10/usa1002.php
Nigeria: Curse of the Black Gold
http://www.africafocus.org/docs08/nig0807.php
Lesotho: Anti-Corruption Actions
http://www.africafocus.org/docs06/les0611.php
Africa: Stolen Wealth
http://www.africafocus.org/docs06/corr0604.php
Africa: Fix Resource Leaks
http://www.africafocus.org/docs06/abug0602.php
Kenya: Githongo Report
http://www.africafocus.org/docs06/git0602.php
UK/Africa: The Damage We Do
http://www.africafocus.org/docs05/ras0507.php
UK/Africa: Commissioning Development?
http://www.africafocus.org/docs05/act0503.php
Kenya: Corruption Fight Stalling
http://www.africafocus.org/docs05/ken0502.php
Kenya: Anti-Corruption on the Agenda
http://www.africafocus.org/docs03ej/ken0301.php
Mozambique: Corruption and Murder
http://www.africafocus.org/docs03ej/moz0303.php
++++++++++++++++++++++end editor's note++++++++++++++++++++
Call for action on wealth illicitly transferred from Egypt
Cairo, Paris, Berlin, 11 February 2011
United Nations Convention against Corruption (UNCAC) Coalition
http://www.uncaccoalition.org
The UNCAC Coalition, a group of over 240 civil society
organisations in more than 100 countries, including the
Afro-Egyptian Human Rights Organization (AEHRO) and
NADAFA-Egyptians against corruption, is deeply concerned about
public wealth illicitly transferred out of Egypt.
A report by Global Financial Integrity released in January 2011
finds that Egypt is losing more than US$6 billion per year -
US$57.2 billion in total from 2000 to 2008 - to illicit financial
activities and official government corruption.
Earlier this week, allegations were published about the wealth of
Egyptian President Hosni Mubarak and his family. This wealth should
be thoroughly investigated, and if illicitly transferred should be
immediately frozen and then repatriated
The repatriation of assets illicitly transferred from Egypt could
provide much needed funds for development in a country where 40 per
cent of the population lives on less than US$2 a day.
The return of stolen assets is a fundamental principle of the
United Nations Convention against Corruption, which provides that
States Parties shall afford one another the widest measure of
cooperation and assistance in this regard.
The UNCAC Coalition urges the Egyptian government to follow the
Tunisian example and to take all necessary measures to enforce
their right to restitution.
The Coalition further encourages States where stolen assets are
reported to be hidden to freeze any assets owned or controlled by
persons deemed to be responsible for the misappropriation of state
funds in Egypt and individuals and entities associated with them.
In full accordance with their obligations under the UNCAC,
Governments should also ensure that banks apply "enhanced due
diligence" procedures with respect to transactions involving the
above-mentioned Politically Exposed Persons (PEPs). We call upon
Governments to publish the amounts of assets frozen and the names
of the banks which froze these assets.
Note to Editors:
The United Nations Convention against Corruption (UNCAC) is the
most comprehensive global legal framework for combating corruption.
It is a binding agreement ratified by 141 states on standards and
requirements for preventing, detecting, investigating and
sanctioning corruption.
The UNCAC Coalition was formed in 2006 and is composed of over 240
civil society organisations in more than 100 countries. Its goal is
to promote the ratification, implementation and monitoring of
UNCAC. Further information can be found at htttp://www.uncaccoalition.org. Also, you can follow us on facebook
('UNCAC Coalition' group) and Twitter
(http://twitter.com/uncaccoalition)
In November 2010, Transparency International adopted the Bangkok
Declaration on Stolen Assets Recovery and the Management of Frozen
Assets. Please see:
http://www.transparency.org/news_room/latest_news/press_releases/2010/bangkok_declaration
Media contacts:
Engi M. El Haddad
Afro-Egyptian Human Rights Organization (AEHRO)
engi@aehro.org
Maud Perdriel
Association Sherpa
maud.perdriel-vaissiere@asso-sherpa.org
+ 33 (0) 1 42 21 33 25
Gillian Dell
Transparency International - Secretariat
gdell@transparency.org
Tel: +49-30-343-82017
The Transparency International Bangkok Declaration
Bangkok, Thailand, 9th November 2010.
The (Transparency International) Bangkok Declaration on Stolen
Assets Recovery and the Management of Frozen Assets
We, the representatives of Transparency International (TI) meeting
in Bangkok, Thailand, on 9th day of November 2010 at the 2010
Annual Members Meeting of TI call upon all governments to give high
priority on the international agenda (at the Group of 20, in the
African Union, ASEAN and similar organizations, at the United
Nations and in the World Bank and at other multilateral official
institutions), without delay, to the critical issues related to the
repatriation of stolen assets.
This resolution reflects the fact that despite some asset recovery
successes, several countries are experiencing difficulties today in
their endeavor to trace, seize, recover and repatriate assets and
money illegally appropriated and transferred abroad by their
nationals and other collaborators. Moreover, well over US$ 140
billion has been illegally and corruptly appropriated from Africa
alone, by politicians, soldiers, businesspersons and other leaders,
and kept abroad in the form of cash, stocks and bonds, real estate
and other assets. While the issue of the circulation of criminal
proceeds and money laundering is now being addressed to some
extent, the status of frozen assets for the duration of litigation
or resolution of disputes arising out of the ownership of these
assets is not being directly addressed.
Background and General Considerations:
In determining action-oriented recommendations (see below), leaders
of the TI movement from more than 100 countries affirmed the
fundamental human right to development of all peoples; took note of
the September 2010, United Nations' High Level Summit on the
Millennium Development Goals; and, emphasized the negative role
that corruption has played in undermining fragile democracies and
hindering efforts to sustainable development.
The TI membership underscored the significant history of official
statements, declarations and conventions that relate to the issue
of repatriation of stolen assets and the relative failure so far of
official actions to match the official rhetoric. In this regard
TI's Annual Meeting noted the developments in the international
legal framework under the United Nations Convention against
Corruption and the African Union Convention on Preventing and
Combating Corruption; interventions aimed at creating a global
socio-economic order, including, the Extractive Industries
Transparency Initiative and the Stolen Asset Recovery Initiative
(StAR) of the World Bank.
TI recalled the Nyanga Declaration of March 2001 by 11 TI African
chapters, and the Nairobi Declaration of April 2006 by seven TI
chapters and the Recommendations for TI Action on Asset Recovery
adopted in Bali in October 2007. TI emphasised today that the
issues raised in this declaration pertain to the injustices done to
peoples in many parts of the developing world beyond the African
region and that the repatriation of stolen assets is a matter of
great concern to peoples cheated by corrupt leaders in many parts
of Asia, the Middle East, Central and Eastern Europe, Latin
America, as well as Africa.
TI noted that the international community needs to recognise that
institutions, corporations or individuals who agreed to receive or
facilitate the transfer, investment or management of stolen assets
cannot morally be the entities dealing with the same funds during
the period for which the funds are frozen. In addition, agents of
many financial institutions still travel to countries scouting for
investments and assisting with the movement of ill-gotten assets.
Moreover, regardless of the fact that stolen wealth becomes
identifiable, traceable and potentially recoverable, these agents
are comforted by the fact that the freezing of the stolen assets
has no repercussions on the financial institutions they represent.
Recommendations:
Accordingly the TI global anti-corruption movement resolved at its
Bangkok Annual Meeting that:
- Governments across the landscape of the developing world should
take action to prevent assets from being stolen, prosecute those
alleged to have stolen assets and demonstrate the political will to
fight corruption in a meaningful way.
- Countries in which the stolen assets are located should respond
swiftly to requests for mutual legal assistance and develop and
enforce laws and regulations that prevent frozen assets from
staying lodged with the same institution, corporate structure or
individual that accepted the asset prior to the freezing order.
- Financial institutions which do not release frozen assets to the
legally declared owner after a release order has been issued by the
competent jurisdiction should be held legally liable.
- Financial institutions should release frozen assets accrued of
interest calculated on the basis of time elapsed between freeze and
release.
- The World Bank and/or Regional Development Banking Institutions
should create escrow accounts for frozen assets and that all
governments and the international community should, as a matter of
priority, ensure the swift transfer of all frozen assets to these
accounts.
- The international community should act to establish the
necessary regulative framework for mutual cooperation and for such
escrow accounts without delay. Given that the handling of stolen
assets is illegal, it is unacceptable that so much wealth stolen
from Africa and many other developing regions and supposedly frozen
is allowed to circulate freely in the economies of some of the
world's wealthiest nations in Europe, the Americas, the Middle East
and diverse offshore havens.
- International initiatives aimed at the promulgation of a more
just global socio-economic order, including campaigns for debt
cancellation, should include an explicit focus on recovering and
repatriating assets stolen from developing countries as a necessary
condition to the realisation of a more just and fair global
community.
- Countries should tighten their anti-money laundering efforts to
ensure that funds illicitly appropriated from developing countries
are not granted safe havens in banks or non-bank financial
institutions, or through trusts or similar entities operating in
those countries.
Adopted in Bangkok, Thailand, this 9th day of November 2010
Tip Sheet: Illicit Financial Flows from Developing Countries 2000
- 2009: New report updates 2008 Global Financial Integrity analysis
of illicit capital flight out of developing countries, examines
Asia region
Global Financial Integrity
http://www.gfip.org/
January 2011
Report Background:
In December 2008, Global Financial Integrity
(GFI) released "Illicit Financial Flows from Developing Countries:
2002-2006," a groundbreaking report which used World Bank and IMF
data to estimate the quantity and patterns of illicit financial
flows coming out of developing countries. The report found that
illicit financial flows out of developing countries were
approximately $1.06 trillion in 2006.
Illicit Financial Flows Report Update:
Updating its 2008 report,
GFI has expanded the range of years analyzed, updated existing
figures based on new data, and included a focus on Asia.
Report Findings include:
- Illicit outflows increased from $1.06 trillion in 2006 to
approximately $1.26 trillion in 2008, with average annual illicit
outflows from developing countries averaging $725 billion to $810
billion, per year, over the 2000-2008 time period measured.
- Illicit flows increased in current dollar terms by 18.0 percent
per annum from $369.3 billion at the start of
the decade to $1.26 trillion in 2008. When adjusted for inflation,
the real growth of such outflows was 12.7
percent.
Real growth of illicit flows by regions over the nine years is as
follows:
- Middle East and North Africa (MENA) 24.3 percent,
- developing Europe 23.1 percent,
- Africa 21.9 percent,
- Asia 7.85, and
- Western Hemisphere 5.18 percent.
- Asia accounted for 44.4 percent of total illicit flows from the
developing world followed by Middle East
and North Africa (17.9 percent), developing Europe (17.8 percent),
Western Hemisphere (15.4 percent), and
Africa (4.5 percent).
Top 10 countries with the highest measured cumulative illicit
financial outflows between 2000 and 2008
were:
- China $2.18 trillion
- Russia $427 billion
- Mexico $416 billon
- Saudi Arabia $302 billion
- Malaysia $291 billion
- United Arab Emirates $276 billion
- Kuwait $242 billion
- Venezuela $157 billion
- Qatar $138 billion
- Nigeria $130 billion
Illicit Outflow Drivers, Trends:
- Trade mispricing was found to account for an average of 54.7
percent of cumulative illicit flows from
developing countries over the period 2000-2008 and is the major
channel for the transfer of illicit capital
from China.
- Bribery, theft, kickbacks, and tax evasion were the greatest
conduit for the illicit financial flows from
the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia,
Saudi Arabia, the United Arab Emirates,
and Venezuela.
- Oil exporting countries, like Russia, the United Arab Emirates,
Kuwait, and Nigeria, are becoming more
important as sources of illicit capital.
- Mexico is the only oil exporter where trade mispricing was the
preferred method of transferring illicit capital
abroad.
- With half a trillion in illicit outflows in 2008 alone, Asia
accounted for the largest portion of illicit financial flows from
the developing world. Over the nine-year period examined, 89.3
percent, on average, of total illicit flows from Asia were
transferred abroad through trade mispricing.
- Financial flows from Malaysia have more than tripled from $22.2
billion in 2000 to $68.2 billion in 2008. This
growth rate, seen in few Asian countries, may be a result of
significant governance issues affecting both public and private
sectors.
- In real terms, illicit outflows through trade mispricing grew
faster in the case of Africa (28.8 percent per annum) than anywhere
else, possibly due to weaker customs monitoring and enforcement
regimes.
- GFI projects that in 2009 illicit flows from developing countries
will total $1.30 trillion. This represents a
significant slowdown from the 18.0 percent rate of growth over the
period 2000-2008. This projected slowdown of illicit financial
outflows is mainly due to a decline in trade mispricing resulting
from a slowdown in world trade in the wake of the global financial
crisis.
Implications for Economic Development Policy:
The illicit outflows measured in this report are approximately 10
times the amount of official development assistance (ODA) going
into developing countries. The ratio of illicit financial flows
coming out of developing countries compared to ODA is 10-1, meaning
that for every $1 in economic development assistance which goes
into a developing country, $10 is lost via these illicit outflows.
Solutions: Increasing transparency in the global financial system
is critical to reducing the outflow of illicit money
from developing countries.
Recommendations for achieving greater transparency:
- curtail trade mispricing,
- require country-by-country reporting of sales, profits and taxes
paid by multinational corporations,
- require confirmation of beneficial ownership in all banking and
securities accounts,
- require automatic cross-border exchange of tax information on
personal and business accounts, and
- harmonize predicate offenses [offenses included by definition in
other offenses] under anti-money laundering laws across all
Financial Action Task Force cooperating countries.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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