BOTA was the first foundation established to restitute assets associated with an FCPA prosecution to victims of corruption. What were its key lessons that could be relevant to future foundations established for the same purpose?
1. The concept is proven: BOTA successfully spent down over $115 million dollars from the frozen Pictet and Cie account associated with James Giffen in about a five-year period efficiently and effectively. There is no reason that the “BOTA model,” adjusted to different country circumstances, couldn’t be replicated.
Not every country with assets to restitute would need to start a new foundation from scratch. In Kazakhstan, the US Department of Justice didn’t trust that existing local foundations could maintain independence from the Nazarbayev government. But in Ukraine, for example, it’s likely that an existing local foundation, with international supervision and guidance, could be designated to restitute the hundreds of millions of dollars stolen by ex-politicians Lazarenko and Yanukovych once these monies are recovered.
Workshops have already been held for Ukrainian civil society and government officials on ways to restitute their country’s stolen assets which featured the BOTA experience.
2. BOTA’s mission helped it succeed: BOTA’s mission, to assist poor children and youth suffering from poverty was easily understood and non-controversial. There was no “political will” directed against the foundation’s success: indeed the foundation enjoyed widespread official and public support. In future cases, recovered assets could be used for similar purposes, or for other urgent priorities. In Nigeria, for example, recovered funds could be used for anti-poverty programs or girls’ education, and in Arab countries, to promote employment opportunities for youth.
3. Civil society should have a seat at the table: BOTA was created for several reasons, including “pressure” felt by Kazakhstan’s President Nazarbayev from civil society activists, to return money associated with corruption to benefit the country’s poor.
Subsequently five representatives of civil society were nominated by BOTA’s three founding countries to be on the board of trustees. This was not a transparent or “organic” process. That is, several members of BOTA’s local board (and, in fact, its legal founders) were not child welfare experts that had an interest in creating a new organization to help poor children, but rather individuals nominated behind closed doors to help monitor the spending of the restituted funds.
BOTA’s governance suffered as a result. It was a struggle to get several local board members to read briefing materials, attend meetings, etc. BOTA’s experience shows that transparency at every level is critical (including selecting board members) and the question of maximizing the effectiveness of civil society’s involvement is the critical one, rather than whether it’s possible or sensible to involve civil society in the process of asset return and its oversight.
4. There should be strict oversight, but not bureaucratic overkill: Due to a concern that BOTA’s funds might be misused, not only did the World Bank and the Foundation’s Board of Trustees (which included the representatives of the US and Swiss governments and five local members) have to approve all major decisions, but bureaucrats from Switzerland, the U.S. and Kazakhstan had to give their own written approvals. This was an unwieldy, painstakingly slow process, which almost led to temporary shut-downs of BOTA on more than one occasion. A much more efficient oversight system should be instituted for future foundations.
5. The idea of using foundations to restitute corruption assets to benefit victims of corruption should be replicated: There are literally billions of dollars that are being tracked down, or have already been frozen, as part of on-going investigations into assets stolen from public treasuries by corrupt politicians. One of the particularities of BOTA’s money was that it was considered “disputed” rather than “stolen” (because the government of Kazakhstan disputed that the money was dirty in any way) but the effectiveness of mechanism used to return bribe money is not in dispute: BOTA, a local foundation supervised by an international NGO, achieved and surpassed all of its program targets, at the highest levels of fiscal integrity.
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What is the future for new foundations based on corruption money? Andy Spalding and I will will discuss this in the next (and penultimate) post in this series.
Aaron Bornstein was the Executive Director of BOTA Foundation, employed by a Washington, D.C. based NGO called IREX, from 2011 until its close in 2014. He is a foundation and international development professional who has worked in 8 different countries on a variety of civil society strengthening, poverty alleviation, and other projects. Aaron is interested in receiving institutional support for the more extensive documentation of the BOTA experience that he is working on. Please send your suggestions, along with your feedback on the BOTA series, to [email protected].