The United Nations Convention against Corruption (UNCAC), adopted on 31^st October 2003, entered into force on 14^th December 2005. To date, 143 States have ratified the instrument. Most of the Member States of the European Union are State parties.

UNCAC is the first international instrument that provides a comprehensive response towards tackling public and private corruption worldwide. The main purpose of the Convention is to combat important manifestations of corruption at the global level. Corruption affects all countries, but, in particular, presents a serious obstacle to economic and social development and undermines the work of the legal and administrative institutions of the developing countries.

One of the fundamental principles of this Convention is the call for the recovery and repatriation of embezzled assets (Chapter V, Articles 51-59). The articles demonstrate the commitment of the international community to allow these proceeds to be returned to their country of origin. They offer a coherent set of rules, according to which this return should take place. In the context of UNCAC, the term “recovery” entails the entire confiscation process as well as the return of the stolen assets, whereas in a classical interpretation it may only be used for the confiscation of the proceeds of crime.

In the fight against economic crime in general and against corruption in particular, the seizure and confiscation of the proceeds of crime as well as the recovery of assets can be considered as essential. It is no coincidence that the Stockholm Programme, that sets the future priorities of the EU’s policy in the area of justice, freedom and security for the period of 2010-2014, explicitly pays attention to the subject. In order to reduce the number of opportunities available to organised crime as a result of the globalised economy, the European Council calls upon the Member States and the European Commission to identify and seize the assets of criminals more effectively. The Council also recommends mobilising and coordinating sources of information in order to identify suspicious cash transactions and to confiscate the proceeds of crime.¹

Asset recovery in the UNCAC context sends a strong signal that high-level corruption does not pay. It contributes to repairing damages to the victims, hence providing an incentive to set up the necessary legal and operational conditions required to facilitate action as well as an adequate framework for stronger cooperation.

This contribution not only intends to provide an overview of the asset recovery provisions pursuant to UNCAC. It also wishes to pay attention to recent initiatives with regard to asset recovery in general, that were launched at the time when the Convention entered into force. The authors will consider especially the CARIN network and the so-called ARO Council Decision of the Council of the European Union. We will examine if and in what measure these new initiatives can offer support in the practical implementation of the Convention.

Before 2003, it appeared easier for States to recover the proceeds of corruption through civil action than through mutual legal assistance. Moreover, the return of assets to a foreign country with the assistance of the criminal justice authorities depended on the goodwill of the State where the assets were found.

Some cases can be considered as successes. In the case of the identification, confiscation, and repatriation of the proceeds of crimes of the family and associates of General Sani Abacha ─ who took power in Nigeria through a coup in 1985 and who died of a heart attack in June 1998 ─ about US$ 2 billion in ten jurisdictions was seized, most of which has been recovered by Nigeria through mutual assistance, forfeiture, or settlements.

In the case against the family of the former president of the Philippines, who, together with his accomplices, looted an estimated amount of more than US$ 10 billion dollars (most of which was deposited in Swiss banks) during the twenty years of his presidency, the Philippine government was given permission by the Swiss Supreme Court to dispose of the assets, worth some US$ 683 million. In the case against Vladimiro Montesinos Torres, the main advisor to former Peruvian president Alberto Fujimori from 1990 to 2000, an amount of US$ 175 million could be recovered from three jurisdictions in a three-year period.²

In a decision of February 2009, the Swiss government ordered that US$ 6 million be paid to from the frozen bank accounts of former dictator Jean-Claude ‘Baby Doc’ Duvalier. In this case, even though criminal charges were never proven in , the Swiss judicial authorities found that there was sufficient evidence of criminal conduct by the Duvalier family that the burden of proof was reversed.

However, by a decision on 21 April 2009, the Attorney General of Switzerland decided not to follow up the criminal charges in the case against the entourage of the former Zaire (now Democratic Republic of Congo, DRC) dictator, Joseph-Désiré Mobutu Sese Seko, who was in power from 1965 until his regime was overthrown in May 1997.

The Attorney General attempted to do what had been accomplished in the Duvalier case: convince the court that the Mobutu family had been operating as a criminal network, thereby maintaining the criminal charges that cannot be subject to statutes of limitations and forcing the Mobutu family to prove that they had obtained the funds legitimately. Ultimately, without the necessary legal assistance from the government of the DRC, the action failed.

The Swiss government was obliged to inform the Swiss banks that accounts belonging to the family of Mr. Mobutu be unfrozen.

In relation to the court decision cited above, the Swiss Federal Court ruled on 10 January 2010 that the assets of the clan of Jean-Claude ‘Baby Doc’ Duvalier, president of from 1971 until 1986, kept in Swiss bank accounts and frozen since 1986, could not be returned to . The seizure of the assets was nevertheless maintained. With a view to addressing future cases similar to the Mobutu case, the Swiss Federal Commission has tasked the Federal Department of Foreign Affairs with formulating a new law that will enable Swiss courts to return stolen funds to the victims of corruption.

This highlights the complexity of the legal challenges and pitfalls that both requesting and requested countries have to face while attempting to repatriate proceeds of corruption.

It is hoped that a successful implementation of UNCAC will improve the success rate of asset recovery actions in corruption cases, especially because it provides the legal groundwork to make rapid action possible. In the past, one of the strategic weaknesses of formal mutual legal assistance in criminal matters as a tool for the tracing and recovery of assets was its slowness.

I. Recovery of Assets in the 2003 Convention against Corruption

The importance of this chapter for the treaty as a whole is underlined immediately by Article 51. This article puts first the return of assets as a key objective of the Convention. State Parties shall afford one another the widest measure of cooperation and assistance in this regard.

1. Prevention and Detection of Transfers of Proceeds of Crime (Article 52)

Article 52 of UNCAC obliges the State Parties to establish a preventive system against money laundering of the proceeds of corruption. Such a system must facilitate the tracing of suspicious transactions linked to corruption. Many of these provisions provide an international legal basis for the newly updated recommendations of the Financial Action Task Force (FATF).

Financial institutions are required to take a number of preventive measures against money laundering. They must pay special attention in determining the identity of the beneficial owners of funds deposited into high-value accounts and in conducting enhanced scrutiny of accounts of persons entrusted with prominent public functions as well as those of their family and associates (so-called PEPs or Politically Exposed Persons) (Article 52.1).

The State Parties themselves also have a role to play in the process of assisting financial institutions in complying with this comprehensive regulatory framework. Compliance can be achieved by issuing advisories regarding the types of persons whose accounts must be handled with enhanced security, the types of accounts and transactions to which particular attention should be paid, and which appropriate account-opening, maintenance, and record-keeping measures to take concerning such accounts (Article )) as well as which lists of natural or legal persons to apply for enhanced due diligence. They shall, at the request of another State Party or on their own initiative, notify financial institutions of the identity of persons to whose accounts the institutions will be expected to apply enhanced scrutiny (Article 52.2 b)).

Furthermore, State Parties need to ensure that financial institutions maintain adequate records (“paper trail”), which may later be needed as proof of corruption and the laundering of money from the proceeds of corruption, and to prevent the establishment of “shell banks” (Articles 52.3 and 4).

Two non-mandatory provisions concern the establishment of disclosure systems for certain types of public officials as well as the possibility for State Parties to share at their discretion this information with the competent authorities in other State Parties. A State’s own public officials can be obliged to report their interest in financial accounts in a foreign country (Articles 52.5 and 6).

Another key preventive measure is the consideration in Article 58 of establishing, a Financial Intelligence Unit to act as central entity for the receipt, analysis, and dissemination of information regarding possible money-laundering.

2. Direct Recovery of Property (Article 53)

Under UNCAC, cooperation among the State Parties might be mandatory, even in the absence of a request for mutual legal assistance.

Article 53 of the Convention obliges State Parties to take measures to permit another State Party to initiate civil action in its courts in order to establish title to or ownership of property acquired through an offence, established in accordance with the Convention. The courts must also be able to order the payment of compensation of damages to another State Party that was harmed by such offence, and, when the courts have to decide on confiscation, they must be able to recognize the claim of the other State Party as the legitimate owner of property acquired through such offence.

This provision is essential in a context where no prosecution could be pursued. Based on the evidentiary standard, either civil or criminal measures are left at the discretion of the State Parties.

Although Article 53 of UNCAC can certainly be called unique, it is unclear whether it will be applied in practice,³ particularly due to the economic costs of such measures.

3. Recovery of Property through International Cooperation in Confiscation Matters (Article 54)

UNCAC requires in Article 31 the implementation of a domestic system of freezing and seizure and confiscation as a prerequisite to international cooperation as enshrined in Articles 54 and 55.

a) General

Article 54 obliges State Parties to take measures to permit its competent authorities to give effect to an order of confiscation issued by a court of another State Party and to permit its own authorities to order confiscation on the basis of proof, delivered by the requesting State Party (Article 54.1).

Along the same lines of thought, measures must be taken to freeze or seize property upon the freezing or seizure order of a court or competent authority of a requesting State Party, or to permit a State’s own competent authorities to freeze or seize property on the basis of proof, delivered by the requesting State Party (Article 54.2).

b) Non Conviction Based Confiscation

According to Article 54.1 c) of the Convention, each State Party must consider taking the necessary measures to allow confiscation of property without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight, or absence, or in other appropriate cases. Thus, the Convention makes reference to non conviction based asset forfeiture. Nevertheless, the establishment of such a legal system is not a positive obligation for the State Parties.

Non conviction based forfeiture (NCB forfeiture) is a form of confiscation that differs from criminal confiscation because it does not require a prior criminal conviction of the offender, but a trial before a civil tribunal or court. The objective is similar, namely forfeiture by the State of the proceeds and instrumentalities of crime. The underlying rationales are also the same for the two types of forfeiture: getting across the message that crime does not pay and deterring unlawful activity by means of forfeiture.⁴

There are important differences between criminal confiscation and NCB forfeiture. Criminal confiscation is the result of criminal prosecution and therefore implies an action against the prosecuted person (action in personam). NCB forfeiture is aimed against an object (action in rem). Criminal confiscation is part of the criminal charge against a person, and it is imposed as a penalty as part of a sentence in a criminal case. NCB forfeiture is filed by a government against an object, before, during, or after a criminal conviction, even if there is no criminal charge against a person or even in case of acquittal.

The standard of proof might differ as well. A criminal confiscation requires a criminal conviction. A crime must be proven “beyond a reasonable doubt” or according to the conviction of the court. For an NCB forfeiture, a criminal conviction is not necessarily required. The evidence of unlawful conduct might be obtained on a civil “balance of probabilities” standard, the result of proof to the contrary in civil cases.

In accordance with domestic principles of law, NCB is considered useful when a criminal confiscation is impossible. This can be the case when the violator is a fugitive, is unknown, is dead or dies before conviction, when the person is immune from criminal prosecution, or has been acquitted of the criminal offences, or is even so powerful that a criminal investigation or prosecution is unrealistic or impossible. Furthermore, NCB forfeiture can be useful in cases when the property is held by a third party without a bona fide defence.⁵ Article 54 recognises the challenges in obtaining a confiscation order and encourages State Parties to contemplate creative solutions.

4. International Cooperation for Purposes of Confiscation (Article 55)

If mutual legal assistance is conditional to the existence of a treaty, Article 55 of UNCAC provides the legal basis by which to grant such assistance. The article in fact contains obligations to facilitate cooperation to “the greatest extent possible,” either through the recognition of a foreign order and its immediate enforcement or by requiring the competent authorities to take a domestic order on the basis of information received from another State Party.

Article 54 describes how the international cooperation is to be effected, both when a State Party receives an order of confiscation issued by the court of another State Party (Article 54.1) and when property has to be identified, traced, seized, or frozen (Article 54.2). The content of a request for mutual legal assistance is also described in detail (Article 55.3).

It should be noted that Article 55 forces the requesting State Party to engage in a permanent close cooperation. By virtue of Article 55.7, cooperation by the requested State Party may only be refused if the requested State Party does not receive sufficient and timely evidence. The same is true if the property is of a de minimis value.

Cooperation is also necessary when the requested State Party considers lifting provisional measures. Article 55.8 obliges the requested State Party to give the requesting State Party an opportunity to present its reasons in favour of continuing the measure.

5. Return and Disposal of Assets, Property, Equipment, or Other Instrumentalities (Article 57)

According to the philosophy of UNCAC, it is crucial that assets and funds in connection with corruption are returned to the country of origin in order to restore in the best possible way the most serious consequences of the offence. Article 57 specifies the principles that must be applied in practice after confiscation. If the occasion presents itself, these principles will be applied in practice on a case-by-case basis.

In cases of embezzlement of public funds and laundering of embezzled public funds, the confiscated property shall be returned to the State requesting it on the basis of a final judgement, a requirement that can be waived by the requesting State. In the case of proceeds of any other offence covered by the Convention, the property is returned upon proof of ownership or recognition of the damage caused to a requesting State and any similar conditionality of a final judgement.

In all other cases, priority consideration is given to the return of confiscated property to the requesting State, to the return of such property to the prior legitimate owners, or to compensation of the victims.

II. Recent Forms of Cooperation and Assistance

In the last few years, some specific forms of cooperation and assistance between States have been created concerning asset recovery at the bilateral level and through multilateral initiatives such as the UNODC/WB Stolen Asset Recovery Initiative (StAR).

It should be emphasised that these forms of cooperation and assistance are not limited to corruption and money laundering of funds originating from corruption, but are applicable to all crimes.

Successively, we will pay attention to the CARIN network and to the ARO Council Decision of the Council of the European Union.

1. The CARIN Network

CARIN stands for Camden Asset Inter-Agency Network and plays an important practical role in the preparation and execution of measures of seizure, freezing, and confiscation abroad. It is an informal network of judicial and law enforcement expert practitioners for criminal asset tracing, freezing, seizure, and confiscation.

The network was established in September 2004, on the initiative of the Dutch Asset Recovery Office BOOM (“Bureau Ontnemingswetgeving Openbaar Ministerie”), , , the , , and Eurojust. At present, the network counts 45 members, including 39 countries.

CARIN does not replace existing institutions, but is aimed at creating the conditions for enhanced international cooperation between law enforcement and justice officials by facilitating mutual legal assistance and providing support to the judiciary in the execution of international decisions involving freezing or seizure. Support is also provided concerning the execution of confiscation requests.

2. The ARO Council Decision

In the European Official Journal L 332 of 10 December 2007, Council Decision 2007/845/JHA of 6 December 2007 was published concerning cooperation between asset recovery offices of the Member States in the field of tracing and identification of proceeds from, or other property related to, crime (hereinafter “Aro Council Decision”).

a) The National Asset Recovery Offices (“AROs”)

By virtue of Article 1.1 of the Council Decision, each Member State has to set up or designate a⁶ national asset recovery office for the purposes of the facilitation of the tracing and identification of proceeds of crime and other crime-related property, which may become the object of a freezing, seizure, or confiscation order made by a competent judicial authority in the course of criminal or civil proceedings – as far as is possible under the national law of the Member State concerned.

Article 8.1 of the Council Decision stipulates that the Member States must ensure that they are able to cooperate fully in accordance with the provisions of this Decision by 18 December 2008. By 18 December 2010, the Council of the European Union will assess Member States’ compliance with this Decision on the basis of a report made by the Commission (Article 8.3).

The last phrase of Article 1.1. enables the tracing and identification of proceeds of crime and other crime-related property in connection with a procedure of NCB forfeiture or civil forfeiture.

Ultimately, the ARO Council Decision leaves at the discretion of any the decision regarding the type of asset recovery office to be established. An ARO can thus be part of an administrative, law enforcement, or judicial authority (comp. Article 2.2 in fine).

b) In Practice

As the title of the ARO Council Decision indicates, the Council Decision pays particular attention to the way in which asset recovery offices should cooperate, both within the Member State itself (Article 2) and internationally (Articles 3 and 4).

It is worth noting that, in the Stockholm Program, the European Council calls upon the and the Commission to facilitate the exchange of best practices in prevention and law enforcement, in particular within the framework of the Asset Recovery Network and the Anti-Corruption Network.⁷

1. Exchanges of Information on Request

For the cooperation of the AROs of the different Member States, a specific mode of operation is prescribed. AROs have to cooperate in the way set out by the Framework Decision 2006/960/JBZ,⁸ also known as “the Swedish Framework Decision.”

For the exchange of information, the use of the forms added to the Framework Decision under annexes A and B is mandatory. The time limits that have to be observed for a response to a demand for information are striking. In urgent cases, the time limit for an answer can be limited to a period of eight hours (renewable). In other cases, the prescribed time limit is one week or 14 days.

According to Article 3.2 of the ARO Council Decision, the requesting asset recovery office must specify in the form the object of and reasons for its request as well as the nature of the proceedings. Details on property targeted or sought and/or the persons presumed to be involved must also be provided. The details must be as precise as possible.

1. Spontaneous Exchanges of Information between AROs

Asset recovery offices or other authorities charged with the facilitation of the tracing and identification of proceeds of crime may, without a request to this effect, exchange information that they consider necessary for the execution of the tasks of another asset recovery office (Article 4).

c) Exchanges of Best Practices

Member States must ensure that the asset recovery offices exchange best practices concerning ways to improve the effectiveness of Member States’ efforts in tracing and identifying proceeds from, and other property related to, crime that may become the object of a freezing, seizure, or confiscation order by a competent judicial authority (Article 6).

3. CARIN and ARO: Similarities and Differences

It is no coincidence that the CARIN network is explicitly mentioned in the considerations that precede the ARO Council Decision. In these considerations, it is explicitly stated that the Council Decision completes the CARIN network by providing a legal basis for the exchange of information between asset recovery offices of all the Member States.

Thus, the CARIN network is at the core of the establishment of a network of asset recovery offices. Europol acts as the Secretariat for the CARIN network and the EC has been a steady contributor to the initiative.

Nevertheless, important differences also exist between the CARIN network and the ARO netwerk. These differences concern not only the concrete way information is exchanged, but especially the dimension of the networks.

The ARO network has its origin in a Decision of the Council of the European Union and is therefore a purely European matter. Since its creation, the CARIN network has been a European-type network, but is extended to worldwide membership.

III. Towards a More Efficient Cooperation

1. Conference of the State Parties to the United Nations Convention against Corruption (COSP)

Pursuant to Article 63 of UNCAC, the Conference of the State Parties was established to improve the capacity of and cooperation between State Parties and to contribute to the effective implementation of the Convention.

The Conference promotes the exchange of information among State Parties to prevent and repress corruption and to repatriate the proceeds of crime. Several ad hoc working groups have been set up to discuss and better enforce various aspects of the Convention. Technical assistance needs of Member States regarding the implementation of the Convention are also being addressed in the framework of the Conference. Thus, an Open-Ended Intergovernmental Working Group on Asset Recovery has been established, which aims to put in practice the measures of asset recovery contained in the UNCAC Convention.

Both the ARO Council Decision and the CARIN network have been recognised as innovative instruments and operations to effectively contribute to asset recovery. This content is mentioned in a background paper written by the Secretariat of the Open-ended Intergovernmental Working Group. The paper was written in preparation for the meeting of the Working Group in on 25 and 26 September 2008,⁹ more specifically under the heading “Assistance to the Conference to identify, prioritize and respond to technical assistance needs for asset recovery.”

During its conference at , held from 28 January to 1 February 2008, the COSP itself argued in favour of the creation of a worldwide network of contact points specialised in confiscation and the recovery of assets.

In a background paper, written in preparation for the meeting of the Open-ended Intergovernmental Working Group in on 14 and 15 May 2009,¹⁰ the establishment of CARIN-style regional networks of contact points is recommended. A CARIN-Style Network for Southern Africa was launched in March 2009,¹¹ and in December 2009 in South America under the auspices of the Financial Action Task Force (FATF) Style Regional Body, GAFISUD.¹² CARIN is supportive of the development of such regional networks.

Since 2006, three COSPs have been held. During the last conference, which took place in in November 2009, a review mechanism was adopted as per Article 63, paragraph 7. This process, which was piloted for approximately one year, should be transparent, fair, and impartial. It should complement existing international and regional review mechanisms.

2. StAR (Stolen Asset Recovery Initiative)

The Stolen Asset Recovery (StAR) initiative originated in 2007 as a joint initiative of UNODC and the World Bank.

StAR promotes the ratification of UNCAC and the implementation of its asset recovery chapter. The aim is to help States create the conditions for the recovery and return of assets as well as to enhance the understanding of underlying legal and operational issues in relation to the asset recovery process. This can occur through the dissemination of knowledge and tools for practitioners, including knowledge of politically exposed persons (PEPs), non conviction based asset forfeiture (NCB), income and asset declarations, legal barriers to asset recovery, misuse of corporate vehicles, and a global architecture for asset recovery. The goal is to assist developing countries in building legislative, investigative, judicial, and enforcement capacities. In particular, attention is paid to lowering the barriers to asset recovery, building national capacities for asset recovery, and providing preparatory assistance in the recovery of assets.

This means concrete country assessments, gap analyses, legislative drafting, action planning, and training of officials. Partnerships are being developed, e.g., with the Organisation for Economic Co-operation and Development and the Council of the European Union or the Basel Insitute on Governance’s International Centre for Asses Recovery (ICAR).

Finally. StAR supports the development of a global Asset Recovery Focal Point Database with Interpol and Europol. This database was launched in January 2009. It is a helpdesk of contact persons in the State Parties, who can respond to emergency requests for assistance if failure to act immediately may lead law enforcement to lose the trail. Currently, the database includes data on more than 70 countries.

3. The Council of the European Union

Concerning the recovery of assets, the Council of the European Union has adopted a number of Common Positions. The Council explicitly supports the StAR initiative. The Council is also willing to coordinate existing bilateral and multilateral initiatives in the area of asset recovery with a view to avoiding duplication of work and overlap with existing initiatives. No further details are given on the concrete way this coordination is to take place, for instance with the ARO network.

4. Conclusion

All State Parties and institutions involved agree on the necessity of a more efficient application of UNCAC in practice. This necessity has resulted in a series of initiatives by different authorities, each of which acts according to its own list of priorities. This testifies merely to the determination to apply UNCAC in practice and in accordance with the will of the international community.

Nevertheless, this evolution has not taken place without harbouring a few specific dangers. A first problem is that lessons learnt from past asset recovery cases are not sufficiently taken into account. In addition, the key expertise, knowledge, and initiatives of institutions with broader competences going beyond mere corruption should be more closely examined. In this respect, the rapid development of a network of asset recovery offices in the European Union is an example worth investigating. The Council of the European Union has already pointed out the need to coordinate the existing initiatives in the area of the recovery of assets. For instance, within the framework of UNCAC, better use could be made of the fast developing expertise of the ARO network.

A second problem is that we tend to forget that the impressive series of initiatives, which have been undertaken until now with the aim to foster the operational implementation of UNCAC in practice, are often the result of the efforts of institutions that are not State Parties (such as the StAR initiative). These institutions can take and develop initiatives, but, as such, they have no access to the CARIN or ARO networks. The initiatives to access these networks must be taken by the State Parties themselves.

Without strong and sustained political will and commitment on the part of the UNCAC State Parties, greater coordination among existing initiatives and the dissemination of good practices as well as sanitised cases that could benefit the State Parties, the innovative measures set out in the asset recovery chapter will not achieve their full potential.