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Harry Cassin
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Thomas Fox
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Bill Waite
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Russell A. Stamets
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Eric Carlson
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Peru’s civil asset recovery case has taken 20 years – so why are we celebrating this as a success?

The Basel Institute on Governance recently reported that Peru had secured the recovery of $8.5 million lost to corruption, thanks to assistance from the Swiss authorities.

It noted: 

“The money to be returned is part of a complex of cases linked to Vladimiro Montesinos, Head of Intelligence under former President Alberto Fujimori.

“It is a highly symbolic case for both Switzerland and Peru and sets an important precedent for the use of non-conviction based forfeiture laws to recover illicit assets. Such laws enable the confiscation of these assets without a criminal conviction of the defendant.”

Peruvian prosecutors working with the Basel Institute’s asset recovery lead in Latin America had been able to prove in court that the $8.5 million derived from corrupt contracts for the purchase of overvalued fighter jets from Belarus during the time of the Fujimori government. 

In 2021, after Peru’s courts issued a confiscation order, the judicial authorities sent a mutual legal assistance request to the Swiss authorities to execute the confiscation order and return the money – a process which was recently completed, after legal challenges to the order were overcome. 

This is a step in the right direction in the battle against state-level corruption, but this result is more symbolic in nature than practical, given it has taken 20 years to finalize. While I admire the perseverance of those involved, I am aghast at the incompetence of the systems they have been forced to navigate.

I have previously commented on how freezing oligarchs’ assets is sometimes offered up as “proof” that we are winning the battle against kleptocracy. It is rarely that simple. In fact, governments are failing to spell out the truth about the processes involved in these cases to their public.

Across the globe, there are super yachts and private jets that have been “frozen” by different governments in the economic battle against Vladimir Putin’s regime following Russia’s invasion of Ukraine. These assets are depreciating in value. The public may be led to believe that their value will be quickly realized – that’s unlikely. It’s also unclear if any funds realized from liquidating these assets (after long and drawn-out court battles across various jurisdictions) will benefit the public from whom they were ultimately stolen; or, in the case of Ukraine, to repay for reconstruction.

That’s why I’m sad to say that I don’t believe the Government-to-Government (G-to-G) model of asset recovery will work in its current format. One jurisdiction seeking assistance from another will inevitably be mired in bureaucracy. Even simple G-to-G enquiries will invariably take months, often over a year, to generate a response. And what works in one country will not necessarily work in another. 

If we are dealing with a multi-jurisdictional investigation, then we often see these cases fall by the wayside as simply too complex to justify the public expense. Some jurisdictions simply lack the resources to become entangled in such complex matters. The corrupt and their enablers know this, of course, and are aware that if they make asset ownership structures as complicated as possible (through “layering”), then the likelihood is that they will not face any meaningful investigation.

It is disappointing, therefore, that governments and their law enforcement arms do not make better use of private sector tools of asset recovery. Civil litigation is speedier and more effective than the G-to-G model. Admittedly, it can appear costly to the uninitiated, but would it be as costly and lengthy as a 20-year investigation and collaboration as in the Peruvian/Swiss example? 

The World Bank’s excellent publication Private Actions for Public Wrongs is not only an excellent point of reference here, but also outlines an effective model for dealing with such instances, notwithstanding the potential value of public-private partnerships.

In effect, there are better, more effective tools already available than the G-to-G model. There is reticence from governments to engage with them, though. Perhaps because they are fearful of the public response to the private sector being involved and being paid for their services. But the reality is that the public purse may often be better served by engaging the private sector, and may well be cheaper in the long run.

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