Insufficient institutional and procedural safeguards against corruption and lack of cooperation in recovery of stolen public assets
Since the mid-1990s the General Assembly of the United Nations, through multiple resolutions, has expressed serious concern about the problems and threats posed by corruption to the stability and security of societies, undermining the institutions and values of democracy, ethical values and justice, and jeopardizing sustainable development and the rule of law. Corruption attacks the foundation of democratic institutions by distorting electoral processes, by perverting the rule of law, and by creating bureaucratic quagmires whose only reason for existence is the soliciting of bribes. Foreign direct investment is discouraged and small businesses within the country often find it impossible to overcome the "start-up costs" required because of corruption. Corruption corrodes government institutions and starves the economy.
The UN Convention Against Corruption (UNCAC) provides a powerful tool to strengthen anti-corruption programmes in the region. However, while the UNCAC constitutes a major achievement in international law, its potential contribution to the achievement of the Millennium Development Goals remains underutilized. The main challenge is thus to turn the Convention from a mere legal framework into an effective tool for the rule of law.
UNODC's main role under this RPF will be to support partner countries to meet the requirements of the UNCAC, through providing technical support to translate the provisions of the convention into sustainable institutions and procedures.
At present, many countries in the region tend to focus only on the investigation and conviction of corruption. While prosecution of the most egregious cases is certainly warranted, this needs to occur in the context of a much broader agenda towards building capacity and institutions for good governance, enhancing integrity, transparency and accountability of the public sector, improving the management of public resources and official development aid, and addressing the demand side of corruption through strengthening private sector integrity.
Specific provisions of the UNCAC tackle the bribery of national public officials and the criminalization of the obstruction to justice. The provisions on asset recovery - the first of their kind - require Member States to return assets obtained through corruption to the country from which they were stolen. This is a major breakthrough. Judiciaries in countries where corrupt elites have looted billions of dollars are now empowered to implement these innovative provisions to recover the proceeds of crime. Yet they are being called upon to act with little or no prior training. Given the magnitude of corruption and the amounts at stake, there is a serious risk of improper influence and possible misconduct as well as bribery within the judiciary itself.
Corrupt practices at various levels are found in the private sector as well as government-owned and semi-autonomous corporations. Self regulation by industry as well as the creation and implementation of codes of conduct are thus areas which require attention.
Appropriate national legislation and institutional capacity to deal with proceeds of other forms of organised crime is also lacking in the region. While progress is being achieved through the establishment of national Financial Intelligence Units, participation in regional mechanisms for the enhancement of anti-money laundering and anti-corruption capacity still needs to be strengthened via engagement with relevant international regulatory bodies. This is of particular importance in relation to countries in post-conflict situations.
Experience shows that in contexts where corruption is endemic, where political will is weakened by vested interests, where the ability to enforce the law is weak, and where civil society is not well structured to promote transparency and accountability, the private sector can play a key role in initiating and sustaining reform.
There is an increasing body of international experience which highlights the limited success of trying to establish anti-corruption bodies in the absence of strong political will. High-level advocacy - along with other stakeholders and UN agencies - will thus be a key objective of the RPF. While a few countries have recently declared the fight against corruption to be a national priority, implementing educational programmes on corruption prevention starting at the primary and secondary school levels, other countries in the region still avoid using the term "corruption" in official venues.
East Asia and the Pacific remain vulnerable to money laundering. Money laundering is the means by which organised crime figures are able to disguise the proceeds from criminal activities through investing these moneys into 'legitimate businesses' and subsequently generating apparently 'clean' money that can be used to further their criminal enterprises. Money laundering enables criminals to remove or distance themselves from the criminal activity which is generating the profits, thus making it more difficult to prosecute key organisers and to confiscate the assets of those criminals. This is equally applicable no matter what the crime types are: for example, drug manufacture and trafficking, trafficking in persons, kidnapping, extortion, fraud, corruption, environmental crime, smuggling, piracy to mention those most relevant to East Asia and the Pacific. In extreme cases money launderers can destabilise the economies of small developing countries by taking control of key financial and other insitutions in the country. The IMF estimates the world scale of money laundering transactions is a staggering 2 to 5% of global GDP, much of which is believed to be reinvested in further criminal activity. Criminal groups seek to move their money laundering operations to countries with limited financial and economic control systems. East Asia is one of the fastest growing economic regions in the world. Within this region, many sectors are experiencing phenomenal growth and attracting significant investments. These include real estate, import and export businesses, securities trading, casino, gold and other commodities trading. Nevertheless, for a number of countries in the region, cash transactions still predominate. Given the relatively weak financial and economic monitoring and control systems present in some countries in the region, it is often difficult to follow money trails - which is an essential element for the investigation of this form of crime.
While ineffective anti-money-laundering (AML) systems and controls in a country or region can act as a catalyst for money laundering, a sound AML regime, with strong enforcement and regulatory frameworks will act as a deterrent to money launderers and organised crime groups. While many jurisdictions are working to adopt AML laws, the level of effective implementation remains very low. Countries require expertise to develop their respective AML systems and UNODC is well placed to deliver such assistance. There are a number of key areas that could benefit from a regional approach to capacity building of AML systems. Two such areas are: (i) training and development of investigators, prosecutors, judges and customs officials in relation to identification, investigation and prosecution of money laundering and the confiscation of criminal assets; and (ii) the development of mechanisms for more effective international cooperation in money laundering investigation and prosecution of money laundering cases.
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- Transparency International's 2012 Corruption Perception Index identifies all but one of the countries that UNODC is working with in the region as 'significantly corrupt'.
- 'Good Governance' is at the core of social progress and better standards of life. While progress is being made in ratification of the United Nations Convention against Corruption, full implementation of the Convention, which requires strong political will as well as technical and human resources, remains an ongoing challenge.
- Identifying money-laundering activities and recovering criminally acquired assets remains a key tool in the fight against organised crime and corruption. However, there continues to be very few instances of successful prosecution, particularly with respect to corruption cases. Despite considerable technical assistance from different donors, a number of countries in the region are subject to the International Co-operation Review Group process (in the framework of the Financial Action Task Force - FATF) which is dedicated to analysis of high-risk jurisdictions.
- Effective anti-corruption efforts require the participation of all members of society, including civil society groups, individual members of the public and the media. Public engagement often makes a real difference.
Implications for the future
|There remains little obvious correlation between UNCAC ratification and corruption patterns||
A large number of the Member States in the region have ratified or acceded to UNCAC. Despite possessing the legal frameworks and infrastructure, weak governance and a lack of political will to effectively contain corruption continues to undermine governance in East Asia and the Pacific.
There needs to be a genuine rejection of the culture of corruption using strong counter-corruption measures. For this reason, UNODC has placed significant emphasis on public awareness and education, recognizing the strategic role that civil society plays in conjunction with governments in strengthening governance in the region, as well as assisting Member States in effective implementation of the convention.
|AML and asset recovery capacities require on-going strengthening||
Identifying and confiscating the proceeds of crime remains a key tool in the fight against corruption and TOC networks. However, capacities to implement AML and asset recovery systems remain generally weak in the region. Success in this area will require securing political will and creating the right legislative framework to meet international standards and then the appropriate policy decisions to initiate AML/CFT action at an operational level.
UNODC would welcome the opportunity to support this work more comprehensively if the resources were made available.
Implications for follow-up in 2013 and beyond
UNODC plans to give particular focus to:
Over the coming year, UNODC plans to give particular focus to:
- Supporting Member States in effective participation in the UNCAC review process and it's follow-up which provides an opportunity to assist States in the full implementation of the convention. The review process will serve to identify implementation gaps, challenges, and technical assistance needs, as well as good practices and avenues for international cooperation;
- Expanding its anti-corruption focus in the Pacific region through a new regional project funded by AusAID.
- Promotion of domestic and regional information sharing and cooperation between governments and civil society. This could prioritize:
- promoting international, regional and South-South cooperation through regional bodies and identification of good practices;
- the use of the media, press and internet to enhance transparency of public institutions;
- greater interaction amongst and between civil society and governments. This includes the introduction of a transparent feedback system to allow individuals to lodge opinions and complaints with the government on issues of public interest, and engaging civil society in anti-corruption efforts (e.g., in the UNCAC review processor or process of formulating and implementing national anti-corruption strategies) ;
- Strengthening public and media involvement in the fight against corruption.
- Supporting Member States to develop and implement comprehensive and effective regimes for detecting and combating money laundering, as well as recovering illegally acquired assets, in line with the requirements of the international control instruments and accepted standards.