International corruption is estimated to cost $2-trillion, or 5% of global GDP, each and every year.
In a 2021 report, the UN’s High-Level Panel on International Accountability, Transparency and Integrity calculated that as much as 2.7% of global GDP is laundered by criminals through illicit financial flows. While these opaque transactions occur in all countries, they have a much heavier impact on developing countries.
This data supports the findings of Washington-based organisation, Global Financial Integrity’s findings in its most recent report addressing the impact of illicit financial flows on developing countries.
That report found that from 2004 to 2013, developing and emerging economies lost $7.8-trillion in illicit financial flows. Illicit outflows increased at an average rate of 6.5% per year — nearly twice as fast as global GDP. This is around 10 times more than the sum of foreign aid, including of course aid from the UK, that they received over the same period of time.
These prodigious amounts have continued to grow annually. A substantial proportion of that corruption comprises theft by a nation’s leaders of their state’s funds for their own use — in other words, kleptocracy.
Putting an end to kleptocracy and recovering the assets stolen by corrupt leaders would enable many millions of the poorest in our world to be adequately housed, clothed and fed because their country’s national treasuries would be able to prioritise investment in their people rather being looted to line the pockets of corrupt politicians and their business cronies.
Lip service looters
That so many kleptocrats succeed with their nefarious conduct is not because of a lack of domestic laws. There are 189 parties to the United Nations Convention Against Corruption (UNCAC) — 181 of them are UN member states. Most of them have complied with their obligations under Uncac to have appropriate domestic anti-corruption legislation.
But to facilitate their criminal activities, kleptocrats have gutted their domestic criminal justice systems — they have taken control of the prosecuting authority, the police and frequently the courts. There is no better current illustration than president Vladimir Putin of Russia who, with his oligarch cronies, has looted his country.
Another prime example is former South African president Jacob Zuma who, with his business cronies the Gupta brothers, looted on such an industrial scale and deliberately disabled police and prosecutors, that the country was estimated to have lost fully a fifth of GDP during his infamous “State Capture” decade.
Read more in Daily Maverick: How Jacob Zuma and his dodgy friends captured the SA Revenue Service
Read more in Daily Maverick: Zondo affidavit: Spooks aligned with Zuma enabled State Capture
Read more in Daily Maverick: Eskom: Zuma, Molefe, Koko and Singh branded key players in State Capture
None of these kleptocrats keep their ill-gotten gains at home. There are billions of dollars of stolen assets laundered in a number of countries — they include China-Hong Kong, the United Arab Emirates, Singapore, Monaco, Switzerland, some States in the United States and unfortunately, as we are well aware, also through London.
However, there is no international mechanism to prosecute kleptocrats and to seize and return their illicit funds. This vacuum can only be filled by establishing an International Anti-Corruption Court that can hold accountable kleptocrats and their co-conspirators — the so-called professional enablers in the legal, banking, consultancy, real estate, and other financial service sectors.
Need for international anti-corruption court
If some of the countries where there are laundered funds would join an International Anti-Corruption Court, the stolen assets could be frozen, and then, through orders of restitution, be repatriated to the countries from which they were stolen.
And, if the risk of those funds being misused if returned to a corrupted state are too high, they could be repurposed and repatriated only at a time when they would reach the real victims — the millions in need in those countries.
The envisioned IACC would have jurisdiction over crimes committed by nationals of an IACC member state, and crimes committed in the territory of an IACC member state. It would enforce existing national anti-corruption legislation, alternatively a new international counterpart to these laws, against kleptocrats and their collaborators. For the IACC to succeed it would not be necessary for the countries governed by kleptocrats to join the court — it goes without saying that is the last thing that a kleptocrat would want or allow.
The IACC could be established by Treaty and quickly become effective if it consisted initially of even a relatively small number of representative states, as long as they include some financial centres and other attractive destinations where kleptocrats frequently launder, hide, and spend their stolen assets.
In this way, the IACC would have the potential to prosecute, punish, and recover illicit assets from kleptocrats who rule countries that might not initially join the court. Most importantly, the threat of criminal prosecution at the IACC would deter other potential crimes of grand corruption by leaders who may otherwise be tempted to emulate the example of rapacious kleptocrats.
If the IACC, during its early years, demonstrates that it can work effectively and efficiently, many other countries are likely to join in the endeavour. In the aftermath of kleptocratic government, some developing countries might not have the human and financial resources to fight kleptocracy and could approach the IACC to come to their assistance.
Wheels in motion
A senior federal judge in Boston, Mark Wolf, is leading a campaign to establish the International Anti-Corruption Court (the IACC). Together with others, he launched a civil society organisation called Integrity Initiatives International (III). Its broad mission is to fight corruption and its main project is to establish the IACC.
However, none of its supporters see the IACC as a panacea that will end kleptocracy, any more than the International Criminal Court has ended illegal or genocidal activity by political leaders. But it would be one of the many tools, domestic and international, that are absolutely essential to combat and hopefully defeat kleptocracy.
Since December 2021, there have been significant developments over the project to create the IACC. Almost 300 world leaders, including one current president (Timor-Leste), 45 former presidents and prime ministers, and 32 Nobel laureates have signed a Declaration calling for the creation of the IACC.
Three governments have made the establishment of the IACC an element in their official foreign policy — The Netherlands, Canada and Ecuador. They convened a High-Level Roundtable at the end of November 2022 on the gaps in the international architecture for combatting corruption and potential solutions, including the IACC.
In January this year, Nigeria became the fourth country to publicly state its commitment to working with other states towards the establishment of the IACC. Only a week ago, the President of Moldova, Maia Sandu, made her country the fifth state to commit to joining the emerging coalition of states for the IACC. Additional countries from each region of the world have also expressed their interest in the idea.
The IACC would be subject to the principle of complementarity. That means that the IACC would be a court of last instance and it would acquire jurisdiction only in cases in which the appropriate domestic authorities are unable or unwilling to investigate or prosecute the corruption.
The cost of the IACC would constitute a small fraction of the amount of illicit assets that it could seize and return them to their originally intended purpose for the public good. In addition to orders of restitutions, it could be able to levy fines on those found guilty and these could be used to defray some of the costs of its prosecutions and proceedings.
There are many lessons to be learned from the experience of a number of international criminal courts and especially the International Criminal Court. The IACC would be a leaner mechanism with expert and experienced judges, prosecutors and investigators. It would be able to share that expertise with domestic prosecutors and investigators.
Integrity Initiatives International has convened a number of the world’s top international lawyers to begin drafting a treaty for the IACC.
The United Kingdom and our legal profession has always led in establishing and participating in international courts of last resort. This started with the ground-breaking Nuremberg trials and went on to include the International Court of Justice and of course the International Criminal Court that I have already mentioned.
Our country and this parliament can be proud of its work on the European Court of Human Rights and of our central role in drafting of the Convention, as well as our many judges who work internationally and are often called upon to join either ad hoc or permanent courts or tribunals around the world.
There are many but I would like to in particular note Lord Slynn of Hadley, who worked tirelessly in EU Courts and of course Sir Sydney Kentridge KC, for his inspiring work in the tribunals that followed the fall of the all-white government in South Africa. We must live up to the example that we ourselves have set as a country and not shy away from the good we are now again called upon to do internationally.
I urge the government to ensure that the United Kingdom becomes one of the early and leading supporters of establishing the IACC. I ask that the United Kingdom lend its weight and expertise to investigating the most speedy manner in which to bring it into being and the most appropriate manner in which it should operate. DM