draining development.pdf - Khazar University

The Kleptocrat’s Portfolio Decisions 417The chapter considers four cases from Africa, and one from SoutheastAsia. It addresses the acts generating the corrupt funds and the mechanismsand techniques by which corrupt funds were transferred and thenheld and managed. It identifies where the corrupt funds ended up in thedeveloped world and examines the assistance provided by financial institutionsand professional advisers in the transfer and maintenance of thefunds and assets. The chapter then details mechanisms by which some ofthe corrupt funds have been recovered and looks at some of the hurdlesfaced and why recovery efforts sometimes end in failure.The importance of understanding the issues involved was recentlyunderlined in the United States by the work of the Levin Committee,which, in February 2010, released a 330-page report on four other casehistories (U.S. Senate 2010), all relating to African PEPs who “used gapsin U.S. law and the assistance of U.S. professionals to funnel millions ofdollars in illicit money into the United States.” The report makes a seriesof recommendations, for, as Senator Levin says, “Stopping the flow ofillegal money is critical, because foreign corruption damages civil society,undermines the rule of law, and threatens our security.” 3The case studies considered in this chapter now follow.Sani Abacha, Head of State of Nigeria, 1993–98OverviewIt is estimated that Abacha stole between US$3 billion and US$5 billionduring his four and a half years in office. To date, approximately US$2.3billion has been or is in the course of being recovered. Of this sum,approximately US$750 million was handed over voluntarily by the Abachafamily following Sani Abacha’s death in June 1998. Contrary totheir assertion that everything that had been stolen had been handedback, it was discovered that there were substantial additional funds inbank accounts situated mainly in Europe. Thus, protracted litigation inSwitzerland ultimately resulted in a judgment in favor of Nigeria, andover US$500 million worth of assets were repatriated to Nigeria. Proceedingsin the United Kingdom, in England, resulted in a payment ofUS$150 million. 4 Funds held in Jersey by Abubakar Bagudu, who wasthe right-hand man of Mohammed Abacha, the eldest son and mastermindof the entire enterprise, amounted to about US$160 million.