Despot's Guide to Wealth Management

C. Sharman J.

Description

An unprecedented new international moral and legal rule forbids one state from hosting money stolen by the leaders of another state. The aim is to counter grand corruption or kleptocracy ("rule by thieves"), when leaders of poorer countries-such as Marcos in the Philippines, Mobutu in the Congo, and more recently those overthrown in revolutions in the Arab world and Ukraine-loot billions of dollars at the expense of their own citizens. This money tends to end up hosted in rich countries. These host states now have a duty to block, trace, freeze, and seize these illicit funds and hand them back to the countries from which they were stolen. In The Despot's Guide to Wealth Management, J. C. Sharman asks how this anti-kleptocracy regime came about, how well it is working, and how it could work better. Although there have been some real achievements, the international campaign against grand corruption has run into major obstacles. The vested interests of banks, lawyers, and even law enforcement often favor turning a blind eye to foreign corruption proceeds. Recovering and returning looted assets is a long, complicated, and expensive process.Sharman used a private investigator, participated in and observed anti-corruption policy, and conducted more than a hundred interviews with key players. He also draws on various journalistic exposes, whistle-blower accounts, and government investigations to inform his comparison of the anti-kleptocracy records of the United States, Britain, Switzerland, and Australia. Sharman calls for better policing, preventative measures, and use of gatekeepers like bankers, lawyers, and real estate agents. He also recommends giving nongovernmental organizations and for-profit firms more scope to independently investigate corruption and seize stolen assets.

Sujets

• International law
• International relations
• Political corruption
• Public international law

Informations

• Publié par: Cornell University Press
• Date de parution: 07 mars 2017
• Nombre de lectures: 0
• EAN13: 9781501708442
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

TheDespot’sGuideto Wealth Management

TheDespot’sGuideto Wealth Management

OntheInternationalCampaign against Grand Corruption

J.C.Sharman

CornellUniversityPress IthacaandLondon

Copyright © 2017 by Cornell University

All rights reserved. Except for brief quotations in a review, this book, or parts thereof, must not be reproduced in any form without permission in writing from the publisher. For information, address Cornell University Press, Sage House, 512 East State Street, Ithaca, New York 14850.

First published 2017 by Cornell University Press Printed in the United States of America

Library of Congress Cataloging-in-Publication Data

Names: Sharman, J. C. (Jason Campbell), 1973– author. Title: The despot’s guide to wealth management : on the international  campaign against grand corruption / J.C. Sharman. Description: Ithaca : Cornell University Press, 2017. |  Includes bibliographical references and index. Identifiers: LCCN 2016045920 (print) | LCCN 2016049372 (ebook) |  ISBN 9781501705519 (cloth : alk. paper) | ISBN 9781501708435 (ret) |  ISBN 9781501708442 (pdf ) Subjects: LCSH: Corruption—Prevention—International cooperation. |  Political corruption—Prevention—International cooperation. |  Money laundering—Prevention—International cooperation. Classification: LCC JF1525.C66 .S47 2017 (print) |  LCC JF1525.C66 (ebook) | DDC 364.1/323—dc23 LC record available at https://lccn.loc.gov/2016045920

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Cover photograph: Philippine formerfirst lady Imelda Marcos at the opening of the Shoe Museum in suburban Marikina City, 16 February 2001. AP Photo/Pat Roque, FILE

Preface

Contents

Introduction:PowerandMoney

1.TheRiseoftheAnti-KleptocracyRegime

2.TheUnitedStates:ASuperpowerStirs

3.Switzerland:TheUnlikelyCrusader

4.TheUnitedKingdom:Development,orSleazeandtheCity?

5.Australia:InDenial

Conclusion:MakingThemPay

Notes Bibliography Index

vii

1 22 53 86 118 150 178

201 235 253

To my family and Bilyana

Preface

Thisbookexaminestheriseofaglobalnormandassociatedrulespro- hibiting one country from hosting money stolen by senior officials from another country. State leaders, generally from poorer countries, have rou- tinely looted millions or even billions of dollars from their national trea- suries. Where does the money go? All too often, it is spent or stashed in rich countries. Until very recently, rich countries have had no moral or legal obligation to do anything about these inwardflows of dirty money. Now states have a moral and legal duty to screen, seize, and return such il- licit wealth to the victim state. Themainaimofthisbookistoanswerafewsimplystatedbutdif- ficult questions. First, why did this normative and policy change occur? Why did a situation that had long been seen as common and unremark- able come to be viewed as immoral and a policy problem in need of a solu- tion, especially given the powerful vested interests favoring the status quo? Second, how well is this campaign against hosting the proceeds of “grand corruption” working? To what extent are shortcomings in effectiveness a product of a lack of will, because governments are not really trying tofix the problem, or a lack of capacity, given that the problem is hard to solve? Finally, the book concludes with some suggestions on how we could do a better job of holding corrupt leaders to account.

v i i i P r e f a c e

Tosketchouttheanswersinbrief,thereisasurprisingdegreeofcon- sensus that change was a result of the coincidence of the end of the Cold War and the need to explain failures in Western development policies in poor countries. Media and policy accounts began to perceive widespread, persistent poverty as theflip side and result of the vast wealth accumulated by corrupt elites. In the 1990s, kleptocratic but reliably anti-Communist client governments in the Third World were subject to new scrutiny and pressure from Western patrons in the name of “good governance.” The change in global standards occurred rapidly, but in a decentralized, uncoordinated way, rather than being the deliberate result of calculated strategy by either self-seeking states or vanguard “norm entrepreneurs.” In countries with the largest banking andfinancial systems, favorable ex- ternal conditions for action were catalyzed by scandals involving foreign despots laundering their ill-gotten gains. Althoughtherearesomerecentsuccessesincounteringkleptocracy, so far only a small minority of corrupt leaders have been held to account through the confiscation of their stolen wealth. Though shortcomings are in part a product of realpolitik, and even more so of banks’ commercial incentives and influence over politicians and regulators, there are genu- ine policy challenges that have been more important in explaining the ef- fectiveness gap. The inherent difficulty of international legal action in a world of sovereign states, the expense and complexity of bringing such actions, and the legitimate protections accorded to private property and those accused of crimes mean that asset recovery is a long shot. Prevention and deterrence seem to be more promising options, with asset recovery a last resort. Thebroaderconclusionsarethateveninanareawherethereismuch room for cynicism about the dominance of money and national self-interest in politics, this is not the whole story. If it were, there would simply be no campaign against kleptocracy. The status quo suited banks and rich and poor governments alike. The interplay of noble sentiments, power politics, andfinancial greed makes this issue typical of messy political life, a messi- ness that demands a detailed exploration of events. Assessingtheincidenceofsecretcriminalactivityisdifficult. Evidence to back up the claims above is drawn from four studies of rich countries that host significant sums of money stolen by senior officials from poor countries: the United States, the United Kingdom, Switzerland, and

P r e f a c e i x

Australia. With varying speed and effectiveness, each of thefirst three states has taken some action to trace, seize, and return these illicit funds to their countries of origin. On the other hand, Australia typifies a larger group of countries that has not matchedfine words with action, instead turning a blind eye to the laundering of foreign corruption proceeds. In concentrating on “host” states, my aim is thus different from fascinating recent studies of grand corruption that focus on “victim” countries from where the money is stolen. I draw on extensive interviews in the period 2006–2015 with those in government, law enforcement, regulatory bod- ies, international organizations, nongovernmental organizations (NGOs), and private sector lawfirms and banks. The book also draws on participa- tion and observation in bodies such as the Stolen Asset Recovery Initiative (a joint enterprise of the World Bank and the United Nations Office on Drugs and Crime, covered in chapter 1), the G20 Anti-Corruption Work- ing Group, the World Bank, the Financial Action Task Force on money laundering, and the Asia-Pacific Group on Money Laundering. To gather evidence for the Australian case study, I engaged a private investigator to analyze corporate and property records to track the inwardflow of corrup- tion funds to specific properties, companies, and banks. Inaddition,brilliantandfearlessinvestigativejournalists,sometimes working with even more courageous whistle-blowers, have provided in- timate detail on particular schemes (the importance of journalists, NGOs, and whistle-blowers in pushing the anti-kleptocracy agenda generally, but also in driving forward cases against particular leaders, is an important les- son of the book). Information from a variety of official sources, from gov- ernment agencies to intergovernmental organizations to courts, has also been invaluable. Finally, though the academic literature on grand corrup- tion is relatively small, there is a much larger body of work on corruption, money laundering, and other relatedfinancial crimes that has strongly in- formed and shaped the argument of this book. AlthoughIhadwrittenonfinancial crime before, I was atfirst reluctant to study corruption because I thought that the hypocrisy might be a little too much. Officials from governments and international organizations de- voted tofighting money laundering and tax evasion are generally sincere and are seldom guilty of the same crimes they denounce. When it comes to corruption, this is less clear. One of the reasons corruption is so insidi- ous is that a fair number of the people preaching against it are themselves