Dark Side
Helping Poor Nations Recover Stolen Assets
By Warren Hodge, IHT 17/9/07
Sep 18, 2007 - 11:35:52 AM

"There should be no safe haven for those who steal from the poor," Robert Zoellick, the bank's president, said in presenting the plan with Secretary General Ban Ki-moon.  Zoellick estimated that the overall cross-border flow of global proceeds from criminal activities, corruption and tax evasion was $1 trillion to $1.6 trillion annually, and said that even a small portion of that could provide financing for much-needed social programs.

He said that every $100 million recovered could pay for immunizations for four million children, or provide water connections for 250,000 households, or finance treatment for a year for more than 600,000 people with HIV and AIDS.  The problem of stolen assets is 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. The bank intends to assist countries in devoting recovered money to proper development use "to make sure it is not stolen twice," Leipziger said.

The program is being developed in partnership with the United Nations Office on 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.

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.

Okonjo-Iweala said that at the time that she was working to repatriate Nigerian money in 2005, the campaign had to be conducted with no international backing 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 went into effect in December 2005, obliging countries that ratified it to cooperate.  Still, 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," Okonjo-Iweala said .