G20, China, corruption and asset recovery

G20, China, corruption and asset recovery

Behind the headlines at the G20 conference, the first such meeting hosted in China, is a new proposal by the Chinese on fighting corruption.

China, which is in the middle of an anti-corruption campaign that has seen hundreds of thousands of arrests and court cases in the country, wants to spread the net wider. Not only should money be returned by the people who stole it, but so should the people themselves.

China is now proposing world leaders adopt new High Level Principles on Cooperation on Persons Sought for Corruption and Asset Recovery, arguing that international cooperation is required to ensure the return of corrupt individuals to face justice.

In the Chinese context this raises a red flag: China scores just 37 on the 2015 Corruption Perceptions Index, indicating a serious problem with corruption, a score that has barely changed since the start of its anti-corruption campaign primarily because of its methods. These include forced confessions and a lack of an independent judiciary, which means that it is not possible to know if those arrested are political targets.

Given its push to win business around the world, China could have more impact on the G20 anti-corruption agenda if it took its commitment to investigate and prosecute Chinese companies that bribe foreign officials more seriously.

Stopping the tide dirty money

Trillions of dollars of illicit wealth are pushed through the financial system annually and they end up funding the luxury lifestyle of the corrupt, many of whom have fled their home countries. China’s well-known Operation Foxhunt has sought to locate and return corrupt officials now residing in a number of countries overseas, several of which are G20 members.

Transparency International believes corruption is a cross-border problem requiring cross-border collaboration between governments and law enforcement globally, and welcomes the fact that anti-corruption remains on the G20 agenda. But is the return of corrupt the only approach?

The G20 must realise that most of the world’s corrupt money is sitting in member countries. The buck stops with them to end the system that allows them to benefit from corrupt wealth.  We need real progress on forcing out the enablers of corruption: the secret companies that hide the wealth and the people who set them up. And the welcome mat should not be out for ‘investors’ – without doing the right checks to make sure their money is clean. – Cobus de Swardt, managing director, Transparency International

Denial of Entry v. Extradition

The new principles may seek to place emphasis on facilitating the return of people accused of corruption who have fled overseas and thus deny them safe haven. This approach would be a shift away from the current preventative approach the G20 has taken, adopting a Denial of Entry network in 2012 which seeks to ensure that corrupt individuals are denied the right to enter into countries in the first place, should there be conviction or sufficient other information.

Another preventative approach G20 countries should take is to strictly monitor the “golden visa” policies offered by certain jurisdictions (including G20 countries Australia, France, the UK and the US) that offer residency and/or citizenship to people who proffer significant investment sums.

We support a preventative approach. Our positions are here and we have run campaigns to promote denial of entry. The trouble is that not enough countries are doing the due diligence required to stop the corrupt from gaming the system.

The G20 should focus on stopping the instruments used to hide corrupt money – secret companies – and getting countries to enforce strict policing of the enablers of corruption that use these instruments: bankers, lawyers and real estate companies.

Extradition can take years and legal costs are high. Having extradition as a second option will add a weapon to the arsenal of corruption fighters. But stopping the corrupt from finding safe havens to enjoy their wealth comes first.

Editor's note: Later on 2 September, the fifth paragraph was amended to correct an error.

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