By Bill Waite and Martin Stone
A by-product of the type of regime changes seen recently in Tunisia and Egypt, and appearing likely in Libya, is a wave of overseas asset traces.
Once change comes, business relationships with politically exposed persons and their web of companies can be unwound but can never be undone. The past relationships are always discoverable by determined investigators. That’s what many will soon discover when they’re hit with information requests from the prosecutors.
Long-time rulers such as Mubarak and Ben Ali accumulated power over a long period of time, and they, their families, and associates used that power to accumulate enormous wealth, often illegally. When they do fall, the new regimes move to recover national wealth, both to boost their treasuries and to discredit their predecessors.
The asset tracing can move quickly. Once a regime falls, evidence immediately becomes identifiable and accessible by prosecutors. And new governments leverage their investigation and prosecutorial capabilities by bringing in third parties to help.
Since Ben Ali’s departure from Tunis, for example, the new government has set up an independent panel to investigate corruption. It seems inevitable that the investigations will uncover irregularities that will at least embarrass – and at worst inculpate – some of his family’s foreign partners.
The situation in Egypt is more complex. In an apparent attempt to distance itself from some of its most controversial supporters, the outgoing Mubarak regime froze the assets of several former ministers and senior ruling National Democratic Party members, banned them from traveling abroad and placed most of them under investigation for theft of public money, profiteering, fraud and corruption.
In Libya, meanwhile, Gaddafi clings to power but his hold there looks increasingly fragile. The U.S., EU, and U.N. have already reimposed sanctions including travel bans and asset freezes.
The most obvious lesson from recent events? Know your foreign partner, agent, or intermediary’s political or ruling-family connections before you enter the market, and know about any allegations of corruption concerning them that might emerge after a local regime change.
Bill Waite is a founder of The Risk Advisory Group and an expert on anti-bribery and corruption legislation. He formerly practiced as a criminal barrister before joining the Serious Fraud Office in 1991 as a prosecutor. Bill is frequently called upon to comment in the media and is a regular speaker in Europe and the US.
Martin Stone has more than 20 years due diligence, intelligence and investigations experience in the Middle East and North Africa and divides his time between Risk Advisory’s London and Dubai offices.
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