This month the world saw the impact of one of the first major asset recovery cases brought by a new "Arab Spring" government: the High Court in London ruled a £10 million London mansion purchased by the eldest son of deposed Libyan dictator Moammar Gaddafi rightfully belongs to the people of Libya. With the help of the British government, a Libyan legal team established Saadi Gaddafi purchased the mansion with ill-gotten assets, which were held by a shell company in the "secrecy jurisdiction" of the British Virgin Islands (BVI).
One High Court justice said the case was relatively easy to decide, given that prior to the fall of his father's regime, Saadi Gaddafi reportedly earned a mere £34,000 a year as a military commander in the Libyan Defense Ministry, and yet was linked as the owner the luxury residence. Anti-corruption group Global Witness is encouraging the Libyan investigators to uncover other illicit personal assets likely held by Saadi Gaddafi in the UK; a Libyan lawyer has indicated the team is currently tracking other potentially recoverable properties in London.
The British judgment is the first major successful recovery of what is estimated to be billions in personal assets the Gaddafis and their associates allegedly obtained during regime's nearly forty-year reign. It is a small step, but symbolic step towards stemming and deterring financial corruption in the developing world.
In the past decade, the international community has come together to develop mechanisms to detect, punish, and deter financial corruption and fortify the rule of law. Since 2005, the United Nations Convention Against Corruption (UNCAC) has provided a legal framework within which institutions and governments can work together to recover stolen assets. Nearly all UN member-states, including the US, UK, and most European Union nations have signed and/or ratified the Convention. Ironically, the former Gaddafi regime had also ratified the UNCAC.
About two years after the Convention came into force, and about two months after he came into the presidency of the World Bank Group, Robert Zoellick helped launch the world's first Stolen Asset Recovery (StAR) Initiative to support developing nations' efforts to help expedite the return of stolen assets from former dictators and grand corruption cases. Since its 2007 launch, the joint World Bank-United Nations Office of Drugs and Crime initiative has become an important global player in the anti-corruption and asset recovery movement, no doubt adding to the outgoing World Bank president's legacy.
Asset recovery typically proves challenging because corrupt regimes often hide their ill-gotten gains in anonymously-owned shell companies that operate in safe havens known as "secrecy jurisdictions." The young Mr. Gaddafi, for example, hid his ill-gotten assets in a shell company in the safe haven of the BVI. Thus, it is not surprising that anti-corruption and transparency groups such as Global Witness have called upon on the UK and other UNCAC signatories to put pressure on nations to "stop allowing the set-up of anonymous companies that allow corrupt politicians to hide their assets." In Saadi Gaddafi's case, the Libyan team was able to obtain the evidence needed to recover the mansion because, to its credit, the British government intervened to help compel the release of documents identifying Saadi Gaddafi as the owner of the shell company that had purchased the London property.
Though the continued existence of secrecy jurisdictions threatens to stall the end of impunity trend, cooperative measures like the UNCAC, the StAR Initiative, and joint efforts of governments and financial institutions have nevertheless paved the way for important asset recovery successes over the last few years.
Following the launch of the StAR Initiative, Swiss and Haitian officials worked, in conjunction with World Bank and UNODC officials, to help secure an order to return millions of dollars of Jean-Claude "Baby Doc" Duvalier assets back to Haiti. More recently, Tunisia recovered two executive jets linked to the Ben Ali family -- and in the UK -- former Nigerian governor James Ibori, who is accused to stealing between £160 million and £250 million from the oil-rich nation, plead guilty to ten counts of money laundering and conspiracy to defraud. Thus, the judgment against Saadi Gaddafi is just another example how contemporary efforts are helping reduce impunity of corrupt officials, thereby fortifying rule of law, and stemming financial corruption.
The search for the Gaddafis' illicit assets and the assets of other corrupt actors deposed during the "Arab Spring" have propelled and strengthened the decades-long anti-corruption movement and demonstrated the importance of international cooperation in asset recovery operations. Libya's recovery of the mansion may be just one step in Libya's fight against impunity -- but a first step is how every journey begins.
Mark V. Vlasic, an adjunct professor of law at Georgetown University Law Center and senior fellow at Georgetown's Institute for Law, Science & Global Security, served as head of operations of the World Bank's StAR Secretariat and worked on the "Baby Doc" Duvalier/Haiti and Charles Taylor/Liberia asset recovery teams. A former member of the Slobodan Milosevic and Srebrenica genocide prosecution trial teams at the UN war crimes tribunal in The Hague, he is now a principal at Madison Law & Strategy Group PLLC, where he leads the international practice.
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