September 17, 2007
Countries to Get Help Recovering Stolen Assets
By WARREN HOGE
UNITED NATIONS, Sept. 17 — The World Bank and the United Nations announced this afternoon that they were setting up a system to help developing nations recover assets stolen and sent abroad by corrupt leaders that amount to an estimated $40 billion a year.
“There should be no safe haven for those who steal from the poor,” Robert B. Zoellick, the bank’s president, said in unveiling the plan with Secretary General Ban Ki-moon.
Mr. Zoellick estimated that the overall cross-border flow of global proceeds from criminal activities, corruption and tax evasion totaled $1 trillion to $1.6 trillion a year and said even a small portion of that could finance a significant level of social programs.
He said that every $100 million recovered could pay for immunizations for four million children, provide water connections for 250,000 households or finance treatment for more than 600,000 people with HIV/AIDS a year.
The problem of stolen assets is widespread but most acute in Africa, where an estimated 25 percent of the gross national product of states is lost to corruption, he said.
The new system will work to build the capacity of developing countries to track stolen money going overseas and to emphasize ways that financial centers can better detect and deter money-laundering.
“This is not just a developing-country issue because the funds inevitably end up in developed countries,” said Danny Leipziger, the bank’s vice president for poverty reduction and economic management.
In addition, the bank intends to assist countries in devoting recovered money to proper development use “to make sure it is not stolen twice,” Mr. Leipziger said.
The program is being developed in partnership with the United Nations Office of Drugs and Crime, whose executive director, Antonio Maria Costa, said the initiative came at a time when the sophistication of financial transactions made recovery an increasingly complex process requiring expert assistance.
“Once stolen assets leave the victim country, they are broken up so cleverly, into so many different bundles and hidden in so many financial vehicles that they are hard to identify,” he said.
Ngozi Okonjo-Iweala, the former finance minister of Nigeria, who oversaw the return of $505 million to her country from Switzerland, said the new plan would help countries like hers by denying corrupt officials a foreign place to hide the money.
“It means that people who are corrupt will know that any money sent out will be sent back to the countries from which they came,” she said.
Ms. Okonjo-Iweala said that at the time she was working to repatriate Nigerian money in 2005, the campaign had to be conducted on a bilateral basis and did not produce timely results. “There are some countries — I don’t want to name them — whose legislation only allows them to freeze the assets if they are discovered, and there is nothing that says they should repatriate them,” she said.
That has changed since the United Nations Convention Against Corruption came into effect in December 2005 that obliges countries that ratified it to cooperate.
However, there are 98 countries that have not ratified it, including Canada, Germany, India, Israel, Italy, Japan and Switzerland. “Part of our advocacy role will be to urge countries that are not parties to become parties,” Ms. Okonjo-Iweala said.
Mr. Leipziger said the bank was setting up contact points so that interested countries could report suspicions about stolen money leaving their countries in a prompt and confidential manner.
He said that there had been cases where countries would make the sensitive political decision to go after the money but then had no way of pursuing it.
“Even if you took the police side of it and said, ‘We know where it is,’ in order to get your hands on it, you have to go through a number of very laborious steps, and we think we can help in that process,” he said.