Corrupt leaders across the world continue to engage in theft and money laundering of public assets at an alarming rate, causing undeniable and devastating damage to their countries. The report Stolen Asset Recovery (StAR) Initiative: Challenges, Opportunities, and Action Plan, prepared jointly by the United Nations Office on Drugs and Crime (UNODC) and the World Bank, was presented at the World Bank Headquarters in Washington, DC, on September 19, 2007. The report showed not only how corruption can be deterred from the side of developing countries, but also the important role that developed countries can play in combating this transnational crime.
Rick Messick, Senior Public Sector Specialist at the World Bank and contributor to the initiative, acted as moderator to the event. He introduced the event by stating that the StAR Initiative aims to help countries recover assets that have been stolen out of their country by corrupt officials. It intends to do so by providing the technical assistance needed to produce a legally enforceable order in another country. This, Messick said, can be done by helping client countries draft the appropriate laws, training prosecutors on how to make such requests to other countries, and strengthening existing judiciaries. The other part of the initiative, which is particularly innovative, deals with encouraging developed countries to play a key role in asset recovery and corruption prevention by reducing the barriers to such action and rigorously enforcing the appropriate laws.
Brian Pinto, Economic Advisor in the Economic Policy and Debt Department of the World Bank and also a part of the initiative, gave the first presentation. Pinto stated that the basic economic rationale for StAR is the well-accepted fact that corruption is costly. Beyond this, he said, “grand corruption,” or corruption from the highest levels in government, is most costly because it sets a bad example for all segments of the economy. Pinto explained that this leads to the degradation of key economic institutions, and eventually the corruption of social service delivery mechanisms. He stated that the private sector can also be affected by the resulting macroeconomic instability and higher risk of expropriation. Ultimately, corruption at high levels becomes incredibly costly for economic development and poverty reduction.
Pinto explained why the StAR Initiative has suddenly risen to such prominence, considering that this type of corruption has been around for so long. He pointed out how countries that have served traditionally as safe havens for stolen money are now much more conscious of the reputation risks they face. In addition, the United Nations Convention against Corruption (UNCAC) entered into force in 2005, which was a huge milestone for the initiative. The convention is the first international legal agreement that all countries can appeal to in the fight against international corruption. For the Bank, the StAR Initiative is a natural capstone for the Governance and Anti-Corruption Strategy, which was approved by the board last March. Launching initiatives and delivering results are different, and Pinto stated that there are many challenges lying ahead. Among them is the need for political will at the highest levels of those countries looking to recuperate stolen assets, international cooperation, and navigating through the minefield of international law. Finally he said, there is the challenge of ensuring that the money recovered is not once more misused.
Dimitri Vlassis, Chief of the Crime Conventions Section of the UNODC, the second presenter, spoke of the difficulties of negotiating the convention and stated that the breakthrough in the negotiation process for the convention came when there was a balance struck between the various priorities that groups of countries had. The balance that was ultimately struck, he said, when developed countries realized and accepted the high reputational risk at stake for them. Likewise, developing countries conceded to the fact that they had to fulfill their development goals and address popular demands to combat corruption within their countries. Vlassis noted that the UNCAC has been breaking many records, including the record time in which it was negotiated, signed, ratified, and enforced.
Vlassis explained the initiative’s developmental approach for anticorruption and asset recovery. Many development agencies are becoming more convinced that supporting the criminal justice system of a country is a developmental issue, he said. There is a need to look at the long-term needs of a state to prevent assets from being stolen. Vlassis concluded by pointing out that there is a five year window of opportunity that has opened as a result of the UNCAC and other factors, at the end of which people will lose interest in the subject. The initiative must act on the window before it closes.
Ted Greenberg, Senior Financial Specialist of the Financial Market Integrity Unit at the World Bank, was the final presenter. He spoke about the process of money laundering, stating that put simply, this means disguising the origin of stolen money to make it look legitimate. He said those involved in money laundering include banks, brokerage firms, lawyers, and accountants. Greenberg used the example of Ferdinand Marcos, former president of the Philippines, to illustrate the extent to which corrupt officials can go to disguise laundered money. Ultimately he said, when looking at victim countries, transit countries, and destination countries, each one of these presents a point of vulnerability for which governments and agencies can help the victim countries identify and recover stolen assets. A significant deterrent to corruption, he said, is the absence of safe haven for stolen money, in addition to strong anti-money-laundering laws. Although the Bank cannot conduct any investigations, he explained it can make a difference by providing technical assistance to victim countries to build the regulatory infrastructure, investigative tools, and channels necessary to combat corruption.
In the question and answer session, audience members asked about the potential for individuals to engage in money laundering through inflated and illegal governmental contracts and tax evasion, whether a methodology to estimate the potential impact of preventing future theft is under development, and how to maintain political will to combat corruption.
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