A day of reckoning for corrupt rulers
I WRITE this week from Doha, where an international conference has just concluded, focused on finding ways to recover money taken by former leaders of Arab Spring countries. The Arab Forum on Asset Recovery, probably the first conference of its kind, is the latest step in coordinating international efforts to trace and repatriate money appropriated by former rulers. It was a joint effort by Qatar and the G8, represented by the United States, the current G8 president.
US Attorney General Eric Holder and US Deputy National Security Adviser Michael Froman took part in the Doha meeting, leading a high level delegation with officials from the US State Department, Justice Department, FBI, Department of Homeland Security, and the National Security Council, according to a statement issued by the White House, pointing out that United States, as G8 president, was co-organizing the Forum with Qatar.
In addition to the G8, member countries in the Deauville Partnership with Arab Countries in Transition and international organizations, such as the World Bank and Interpol, were also in attendance. Most visible were of course representatives from the four countries most affected: Egypt, Libya, Tunisia and Yemen. They all sent high level delegations; President Moncef Marzouki represented Tunisia.
The White House emphasized President Obama’s commitment to “fighting corruption worldwide and supporting the democratic transitions that are taking place in the Middle East and North Africa.” It seems to have recognized that “corruption has been a core public grievance in the region,” adding that “the United States has worked closely with the new governments and citizens of Arab countries in transition as they fight corruption and seek justice by recovering stolen assets.”
The US also released a videotaped statement by the president at the occasion reaffirming “American support for Arab Spring nations seeking to recover possibly billions of dollars in assets stashed away by members of the toppled regimes.” He added, “This money does not belong to those who wielded power. It belongs to the people.”
There are several reasons why the US is spearheading this international effort. First of all, most of the rulers in question were US allies, and as such the US was in need of disassociating itself with the corruption they represented. Second, as President Obama said, the funds, when recovered, would help rebuild and “help advance transitions to democracy” after Arab Spring upheavals, thus relieving some financial pressure from donors. Third, the US has significant expertise in tracing illegal funds, as it has succeeded in nearly overhauling the international system of money transfers after 9/11 to dry up financing for terrorists. The same expertise would be extremely valuable in tracing illegal transfers of money by corrupt officials.
However, Michael Froman, the US deputy national security adviser, pointed out some of the difficulties that face the recovery process, warning that, “there is no quick fix to these often complex legal matters.” He advised more opening of the “legal and economic systems” to unmask the complex schemes used by corrupt officials to hide their ill-gotten money, and transfer state assets to private ownership under countless names.
It was clear from the beginning that international cooperation in this area had not been fast enough or thorough enough, and that was one reason for convening the conference in the first place. The Tunisian president made that point at the opening of the conference, without naming names. He said that Tunisia had yet to recover any funds, blaming “legal and political” reasons for this delay. Tunisia’s Islamist leader Rachid Ghannouchi weighed in, estimating the missing funds at around one trillion dollars.
Egyptians have also complained about lack of cooperation from some countries. Egypt’s Legal Affairs Minister was quoted by the BBC in scathing criticism of the UK in particular, for inadequate cooperation, but has also said that his own government had failed to investigate adequately, because “elements of the old regime are still influential.” The Egyptian press went wild with estimates of stolen funds, putting them in the trillions of dollars. One newspaper came up with a figure of $ 32 trillion!
Yemen’s Justice Minister Murshed Al-Arshani pointed out that his country faced a somewhat more difficult situation. Unlike the other three countries, the former ruling party in Yemen is still represented in the transitional government and the Parliament has passed an immunity law that could make it more difficult to recover missing funds.
In a BBC documentary aired earlier this month, the news organization said that the “UK government is failing in its commitment to freeze assets of the regime of former Egyptian leader Hosni Mubarak.” It compared the speed with which Switzerland froze Mubarak’s assets, to how long it took the EU, and the UK in particular, to make a move, partial as it was.
The BBC reported that only $ 135 million of Egyptian assets had been frozen in the UK, but found other property and companies linked to key figures in the Mubarak circle that had been unaffected by sanctions, citing several examples.
By contrast, according to the BBC, Switzerland froze the assets of Mubarak and his associates within half an hour of his resignation last year, assigning tens of investigators to the case. It has been able so far to freeze close to $ 700 million of Egyptian assets. It took the EU more than a month to take the first step.
The Doha conference was a good beginning, but it was clear from the Co-Chairs’ final statement that it had only scratched the surface. It called for technical assistance to help those countries trace and document stolen wealth, and more international cooperation in the freezing of those funds and start the long process of repatriating them to their rightful owners.
There was one lesson that is worth bearing in mind. For a long time, Switzerland was a favorite haven for corrupt officials to hide stolen funds. However, it has recently reformed its banking system to allow for the detection, freezing and recovery of some of those funds. If it can be done in the secretive environment of Swiss banks, it should be possible to emulate elsewhere.
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