Recovering assets corrupt officials have stolen while in government service is a critical part of a government’s fight against corruption. First of all, it deters corruption. If those who would steal from the public while ostensibly serving it know they have little chance of keeping what they take, they will be less tempted to steal it in the first place. Second, a vigorous, forceful asset recovery effort demonstrates a government’s commitment to combating corruption and thus helps bolster citizens’ confidence in its officials.
Lebanon is one of 187 nations that have ratified the United Nations Convention Against Corruption. The recovery of stolen assets is a “fundamental principle” of the convention, and states that parties are obliged to offer one another the “widest measure of cooperation” in the search for and confiscation of stolen assets. In 2007, the World Bank and the United Nations Office on Drugs and Crime created the Stolen Asset Recovery Initiative or StAR to help low- and medium-income countries with asset recovery. StAR’s “Asset Recovery Watch Database,” the most authoritative source of information on nations’ efforts to recoup stolen assets, shows that from 1990 until today Lebanon has not yet initiated a single case to recover assets stolen by a corrupt public official.
Steps in the right direction
The current government took an important step to curb corruption with passage of the anti-corruption law that was published in the Official Gazette early May. It should take a second, equally important one: the launch of a determined effort to recover assets officials of previous governments have stolen and hidden abroad.
The way to begin is with the creation of an office within the newly created National Anti-Corruption Institution (NACI) devoted solely to locating and recovering stolen assets. A handful of professionals, no more than say five to begin, could be hired to focus solely on the recovery of stolen assets. The cost would be modest—salaries plus office support—when compared with the potential benefits.
Member states of the European Union (EU) have been required to have a specialized asset recovery office for over a decade. Some of the larger asset returns since these offices were created are shown in the table below. In addition to these, two non-EU countries with asset recovery specialists, Switzerland and the United States, have between them returned in excess of $3 billion over the past decade plus. The StAR database shows in addition dozens of recoveries in the several hundred thousand dollar to $1 million range. Even one such recovery would more than pay the costs of operating a Lebanese asset recovery office.
There are important advantages to centralizing responsibility for asset recovery. It is firstly a way to build expertise on a complex area of law and international finance. Asset recovery requires an in-depth knowledge of the asset recovery procedures in the UN Convention, the international legal principles governing receipt of information from other nations, methods for tracking cross-border financial flows, and forensic accounting techniques. Assigning responsibility for this work to a small, dedicated team of professionals is the surest way to build expertise in these disciplines.
A dedicated asset recovery office also helps develop the personal relationships with counterparts in other nations. The European experience and elsewhere shows that such relationships are crucial. Key to almost every successful return has been information gleaned through informal channels: telephone calls, emails, and visits with police, prosecutors, or investigating magistrates in other states. Information about stolen assets can be quite sensitive, however, and will only be shared if these sources are sure they can trust it will be handled appropriately. As personnel in a Lebanese asset recovery office meet and interact with asset recovery specialists in other nations, a natural outgrowth should be the trust and confidence that facilitates information sharing.
As relationships between Lebanese authorities and those in countries where assets may be hidden develop, authorities in these asset “holding states” will become more willing to devote time and effort to help recover the assets. A corrupt official who hides money in a foreign jurisdiction inevitably runs afoul of the jurisdiction’s anti-money laundering laws. In the best of circumstances, prosecutors in a holding state will, when alerted by colleagues in an asset recovery office, open a money laundering investigation. Most of the returns by the United Kingdom, the United States, and Switzerland were realized in this way. Working with personnel from the victim state, prosecutors in these countries used the confiscation procedures in their domestic anti-money laundering laws to seize and then return the assets.
Mentorship from outside
The skills required for a successful asset recovery effort are not taught in school. Creation of a specialized asset recovery unit should be accompanied by a plan for training the lawyers, accountants, financial professionals, and other personnel that will staff it. StAR, the UN Office on Drugs and Crime, and the Basel Institute’s International Centre for Asset Recovery (ICAR) all offer asset recovery training. An important complement to a training program is embedding an experienced asset recovery specialist in the new office, a mentor who can bring his or her expertise and contacts to bear on cases the office is pursuing. ICAR has a mentoring program and the U.S. Justice Department has also provided mentors.
The training provided by StAR, the UN Office of Drugs and Crime, and ICAR is usually delivered on-site, but in these days of the pandemic the courses have moved online. They are usually offered at no cost to the recipient country. At most, if participants must travel to another country the sponsoring government may be asked to pay their expenses. The mentoring programs run by ICAR and the U.S. Department of Justice are funded by their governments. The European Union, the U.S. Agency for International Development, and other bi- and multilateral donors also support asset recovery training and mentoring programs.
Between the hands-on assistance prosecutors in holding states can provide to locate and confiscate assets stolen from Lebanon and the training opportunities donor organizations provide, Lebanon need not spend scarce resources on the many law and accounting firms and private detective agencies that can be expected to “pitch” their services. These firms do indeed have a great deal of experience recovering assets siphoned from corporations by fraud, but they are expensive. Moreover, once a holding state’s authorities open a case, they have powers no private firm has to obtain information.
Some private firms have offered to help countries recover assets on a no or low-cost basis by agreeing to work for a percentage of any amount recovered. A return of tens if not hundreds of millions of dollars means the firm will realize an enormous sum, far exceeding a reasonable fee for its work even accounting for the risk it takes that it will receive nothing if no assets are recovered. A Swiss law firm was paid $24 million, 4 percent of the $600 million Nigeria recovered from Switzerland, for little work, and a Nigerian firm with no international experience will receive 5 percent for any recovery on another case. The amount paid to the Swiss firm and the potential amount the Nigerian firm could receive have raised questions in Nigeria about the size of the fees and fuelled citizens’ suspicions that the process itself has been corrupted.
The Lebanese government should create an asset recovery office and launch an asset recovery process without delay. With a strong commitment from it and assistance from the international community, there is no reason why assets stolen from the Lebanese people cannot be found and returned.