Stolen Asset Recovery in Ethiopia: Critical Legal Issues and Challenges
Staling public money hurts the poor disproportionately by diverting funds intended for development, undermining a Government’s ability to provide basic services, feeding inequality and injustice, discouraging foreign aid and investment, fundamentally distorts public policy and leads to the misallocation of resources. What makes things worse is that the offence is usually committed by political parties. Political parties are often seen as actors who abuse their powerful position to extort bribes, to supply members and followers with lucrative positions in the public sector, or to channel public resources into the hands of party leaders or supporters. In this regard, the 2016 Republican Presidential candidate Dr. Ben Carson once made a statement, “We have been conditioned to think that only politicians can solve our problems. But at some point, maybe we will wake up and recognize that it was politicians who created our problems.”
Party corruption is especially problematic in developing and transitional countries where political and economic institutions are not yet fixed. This is highly prevalent in most fragile states including Ethiopia. The real problems of corruption in developing countries like ours are highlighted by the then UN Secretary-General, Ban Ki-moon in his 2009 speech for the international anti-Corruption day as:
“When public money is stolen for private gain, it means fewer resources to build schools, hospitals, roads and water treatment facilities. When foreign aid is diverted into private bank accounts, major infrastructure projects come to a halt. Corruption enables fake or substandard medicines to be dumped on the market, and hazardous waste to be dumped in landfill sites and in oceans. The vulnerable suffer first and worst.”
In Ethiopia, corruption is perceived to have significant adverse effects and that public sector red tape is the biggest hurdle in the way of improved government-citizen relationships. Currently, what makes things worse is that beyond the corrupted officials deposited their stolen asset in foreign country like Singapore and Dubai bank, the government allows corrupt officials to stay in power.
It is a euphemistic way of saying to corrupted individuals as, “Hi folks, you are in safe heaven now as long as we are in power and as long as you support our government policies no matter what.” The result of all this makes Ethiopia among the fragile state and aid dependent, in which the poor and the vulnerable suffer first and worst. To overcome the aforementioned problems, a strong legislative and regulatory framework with multiple legal tools to detect criminal activity and illicit financial flows, rapidly freeze assets, and conduct effective investigations and court processes is necessary. Off course, some Ethiopian officials starting to make a statement in various spots that Ethiopia had been doing its best and committed to the implementation of international agreements, stolen asset recovery. Accordingly, in this paper the author tries to analyze the international legal instruments on stolen asset recovery, showing the barriers of stolen asset recovery and identifying the legal lacunas witnessed under the Ethiopian legal frameworks regulating stolen asset recovery.
- Stolen Asset Recovery at International Level
- Overview of the International Legal Instruments
One of the pioneer international conventions is the United Nations Conventions against Corruption (here in after called convention). In the context of the Convention, asset recovery means the identification, freeze, seizure and confiscation of illegally derived assets and, where authorized by law, the return of confiscated property to the prior legitimate owner of a confiscated asset or to those victimized by corruption, which in some instances might be a State party. The convention is serving as a spring board for several organs to recover the stolen asset of developing countries.
For example, United Nations Security Council Resolutions 1970 (2011) and 1973 (2011) imposed an asset freeze against Gaddafi and his family members, as well as all funds, financial assets, and economic resources owned or controlled by the Libyan authorities (e.g., Central Bank of Libya, the Libyan Investment Authority, and the Libyan National Oil Corporation). Moreover, several countries have undertaken multilateral efforts to strengthen asset recovery policies, standards, and actions, in particular through the UN Convention against Corruption (UNCAC) Asset Recovery Working Group, the Financial Action Task Force, the G20 Anticorruption Working Group, and the G8 Deauville Partnership (an initiative of the G8 to support countries in the Arab world in democratic transition). Besides, the European Union adopted EU Council Decision 2011/72/CFSP (January 31, 2011) and EU Council Decision 2011/172/CFSP (March 21, 2011), directing member states to freeze the assets of persons responsible for misappropriation of Arab Republic of Egypt and Tunisian state funds and directing member states on conditions for release.
- The Experiences of Foreign Countries
Several countries including Ethiopia ratified the Convention, which devotes an entire chapter to the area of asset recovery, addressing the identification, freezing, seizure and confiscation of proceeds of corruption and the return of confiscated assets to the prior legitimate owner or to those victimized by corruption. Besides, most countries enacted domestic laws to prevent corruption in general and for the purpose of recovering the stolen asset in particular.
Particularly, some developed countries give their hands for developing countries on the recovery of stolen asset by former political officials. For example, the United States passed the Preserving Foreign Criminal Assets for Forfeiture Act of 2010, to permit the freezing of foreign assets before or after the initiation of proceedings in the foreign jurisdiction. Accordingly, the United States was issued executive order 13566 to block assets related to Libya (February 25, 2011).
Switzerland, in 2011, passed the act Federal Restitution of Illicit Assets of Politically Exposed Persons Obtained by Unlawful Means, to overcome a number of barriers that had emerged in high-profile cases (e.g., Mobutu, Duvalier). It governs the freezing, forfeiture, and restitution of the assets of politically exposed persons (PEPs) and their close associates in cases where a request for mutual assistance in criminal matters cannot succeed because of the failure of the judicial system in the requesting state. There is no need for a conviction of the PEP in his or her jurisdiction of origin, and the law provides for a presumption of the illicit nature of assets in cases where the enrichment of the PEP is clearly exorbitant and the degree of corruption of the state or the person in question is notoriously great. Besides, Switzerland issued ordinances requiring banks to identify and freeze the assets of targeted individuals suspected of misappropriation in Tunisia (January 19, 2011), Arab Republic of Egypt (February 2, 2011), and Libya (February 21, 2011).
Canada adopted the Freezing Assets of Corrupt Foreign Officials Act and the Freezing Assets of Corrupt Foreign Officials (e.g. Tunisia and Egypt) Regulations, requiring banks, companies, and other entities to freeze the assets of named individuals. Australia has been also introduced laws permitting the confiscation of “unexplained wealth” in circumstances where a person’s total wealth exceeds the value of their wealth that was lawfully acquired.
- The Legal Framework of Stolen Asset Recovery in Ethiopia
In Ethiopia, corruption related offences are regulated by several international, regional and domestic corruption related laws. For example, the Federal Ethics and Anti-corruption Commission Establishment Proclamations No. 235/2001and No. 433/2005 (Anti-Corruption Law) criminalize attempted corruption and extortion, while the Criminal Code 2004 criminalizes active and passive bribery, money laundering and bribing a foreign official. The assets and property registration law calls for government officials and their relatives to register their assets and properties. The law also requires government officials to not accept any gift in connection with their duties. Facilitation payments are also illegal.
- The Barriers of Stolen Asset Recovery in Ethiopia
Asset recovery faces many challenges in practice, including legal, operational and institutional challenges. Let us see some of the main barriers or challenges.
- Gaps on the Domestic Laws
Successful asset recovery requires a solid foundation of comprehensive policies and strategies, a legal framework that offers a variety of tools for practitioners, and well-resourced institutions. However, there are clear gaps and loopholes on the aforementioned laws of Ethiopia. Let us suppose that an official who is suspected on stolen asset in his former official capacity exiled from Ethiopia. How the case is entertained? Of course, we may argue that as per Art. 161(2) of the criminal procedure code the proceeding is continued in his absence (trial in absentia) as the case would fall on the category of serious crime. Here, the critical problem is that in case where the official is died because as per Art.39 (1) (a) of Criminal Procedure Code the public prosecutor is forced to close the file. Consequently, how the asset stolen by him/her could be recovered? Additionally, let us suppose that two or more countries are interested on the suspected individual asset (property), particularly if the suspected individual has dual nationality. For clarification, we can look at the case of Ethio-Saudi billionaire, Sheik Mohammed Hussein al-Amoudi. The Saudi government confined Sheik Mohammed Hussein al-Amoudi as suspected of corruption and there is no doubt that the Ethiopian government put his name on the list of Ethiopian corrupted persons. In this case, how can be the case entertained?
- Loopholes on the Domestication of International Legal Instruments
Ethiopia ratified the United Nations Convention against Corruption; the African Union Convention on Preventing and Combating Corruption; and the IGAD Convention on Mutual Legal Assistance in Criminal Matters. Besides, Ethiopia has been attempted to domesticate these conventions via, for example, revised its domestic anti-corruption laws. However, the prevailing corruption law of Ethiopia, which is Proclamation No. 815 /2015 have not a single provision as regards “recovering stolen asset”, is concerned.
- Gaps on the Choice of Legal Avenues for Stolen Asset Recovery
Asset recovery is conducted through a variety of legal avenues, including criminal confiscation, non-conviction based confiscation, civil actions, and actions involving the use of mutual legal assistance (MLA). MLA is known to be slow, formalistic, and complicated even for experienced jurisdictions, and more so for developing jurisdictions or those in transition. The Ethiopian government is employing mutual legal assistance. For example, in the case between Alganeh Teshome, prosecutor of MoJ and former Prime Minister Tamrat Layne, Sheik Mohammed Hussein al-Amoudi and Shadia Nadim, the Federal Supreme Court on July 3, 2011 ordered the MoJ to request the stated money from the government of Djibouti by the judicial assistance agreement the two governments have.
In Ethiopia, the process for recovery of stolen assets including asset tracing, collecting intelligence and evidence(domestically and in foreign jurisdictions using MLA); securing the assets(domestically and in foreign jurisdictions using MLA); court process(to obtain conviction (if possible), confiscation, fines, damages, and/or compensation); enforcing orders(domestically and in foreign jurisdictions using MLA); and return of assets. In these long and complex journeys, there are several challenges which will hamper the process for recovery of stolen assets.
- The Existence of Immunity Laws and Lack of Effective Coordination/Political Will
There may also be immunity laws in place that prevent prosecution and mutual legal assistance, or a lack of effective coordination or even political will to prosecute corruption offences and recover assets. Here, I am not undermining the commitment of some developed countries that have produced an interesting works for recovering stolen asset, especially to return the public money stolen by developing country officials. For example, as stated above, the United States passed the Preserving Foreign Criminal Assets for Forfeiture Act of 2010, to permit the freezing of foreign assets before or after the initiation of proceedings in the foreign jurisdiction; In 2011, Switzerland passed the act Federal Restitution of Illicit Assets of Politically Exposed Persons Obtained by Unlawful Means, to overcome a number of barriers that had emerged in high-profile cases (e.g., Mobutu, Duvalier); Canada adopted the Freezing Assets of Corrupt Foreign Officials Act and the Freezing Assets of Corrupt Foreign Officials (e.g. Tunisia and Egypt) Regulations, requiring banks, companies, and other entities to freeze the assets of named individuals; and Australia introduced Australia Proceeds of Crime Act 2002, section 179E which are permitting the confiscation of “unexplained wealth” in circumstances where a person’s total wealth exceeds the value of their wealth that was lawfully acquired . However, the problem in Ethiopia is that suspected corrupted officials transferred/investing/ deposited their stolen asset in those countries those are countries accused of being given “safe havens for stolen asset” such as Singapore, Dubai, Malaysia etc.
- Excessive Banking Secrecy
There is no doubt that excessive banking secrecy is the main hurdles for stolen asset recovery in Ethiopia. Of course, it is the historical problems for Ethiopia to recover the stolen asset of its former officials. For example, we can remember the controversy between the then Ethiopian government (Dergue regime) and Swiss Bank on the asset of Emperor Haile Selassie. The Banking Law of 1934 were made it a criminal act for a Swiss bank to reveal the name of an account holder. Swiss bank secrecy protects the privacy of bank clients; the protections afforded under Swiss law were similar to confidentiality protections between doctors and patients or lawyers and their clients. So, no one could have get client account’s information from Swiss banking system except in case of drug trafficking, organized crime or insider trading.
- Concluding Remarks
In Ethiopia, staling public money is perceived to have significant adverse effects and that public sector red tape is the biggest hurdle in the way of improved government-citizen relationships. Cognizing of this fact, H.P.M Abiy Ahmed and his government give emphasizes to the recovery of asset stolen by former and current higher politicians. However, asset recovery is not an essay task rather backed by several challenges such as the demanding requirements to the provision of mutual legal assistance, excessive banking secrecy, limitations in legal mechanisms, burdensome procedural and evidentiary laws. There may also be immunity laws in place that prevent prosecution and mutual legal assistance, or a lack of effective coordination or even political will to prosecute corruption offences and recover assets. So that H.P.M Abiy Ahmed and his government should have strong political will and commitment to asset recovery, as well as the commitment and involvement of the various domestic stakeholders; adopt and implement necessary legislative and institutional changes, especially Non-Conviction Based (NCB) confiscation and mechanisms to rapidly freeze assets; conduct cases and investigations; engage in international cooperation using both informal practitioner-to-practitioner channels and formal mutual legal assistance; and develop domestic capacity to conduct cases, reaching out to development agencies and international organizations where required.
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