Recovery of Stolen Assets, Shutting Down the Illegal Economy

Recovery of Stolen Assets and Shutting Down the Illegal Economy: Investing in APEC's Regional Economic Security and Sustainable Development, and Empowering Communities to Achieve Open Governance, Open Markets, and Open Societies

Remarks
David M. Luna
Director for Anticrime Programs, Bureau of International Narcotics and Law Enforcement Affairs
Phuket, Thailand
July 10, 2012

Good morning, everyone. It is great to see so many friends again from across APEC economies and our participating partners from the international community.

I would like to thank the Royal Thai Government and the National Anti-Corruption Commission (NACC) for their kind invitation to be here today. It is an honor to share the stage with NACC President Panthep Klanarongran and my good friend Dr. Pakdee Pothisri, NACC Commissioner. They continue to advance their mission with passion and dedication, and their leadership at the NACC sets an example for us all.

As the Vice-Chair of the APEC Anti-Corruption and Transparency Experts’ Working Group (ACT), it truly is a pleasure to provide a keynote statement at this important APEC workshop, which will explore how international asset recovery and careful, coordinated tracking of cross-border financial flows can enhance our collective efforts at combating corruption and targeting illicit trade pipelines, and help stimulate growth across our economies for communities to reach their full potential.

The ACT Work Program: A Solid Record of Combating Corruption

Eleven years ago, the APEC anti-corruption work program consisted of a few lines in the Bangkok Leaders’ Declaration of 2003. Today, thanks to the commitment of our hosts, the Royal Thai Government, and many other economies represented here this week, the ACT is a pioneer in international efforts to prevent, investigate, and prosecute acts of corruption and illicit activity.

Our five-year ACT strategic work plan takes a global view, with emphasis on implementing the UN Convention against Corruption, and where appropriate, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and other multilateral frameworks. As leaders in global trade and industry, we in the APEC community recognize our shared responsibility to keep our markets and supply chains clean through the APEC Conduct Principles for Public Officials and the APEC Code of Conduct for Business, which underscores the Leaders’ call to replace a culture of impunity with a culture of integrity.

These codes of conduct are not just words on paper, but have been put into practice by APEC member economies. In 2011, APEC developed the Principles for Financial/Asset Disclosure by Public Officials, which empowers officials responsible for anti-corruption within APEC economies to detect conflicts of interest and illicit enrichment and hold accountable those who would abuse their office for private gain.

Our anti-corruption and open governance work in the ACT has contributed to making APEC the premier Asia-Pacific economic forum through which 21 economies have united to build a dynamic and harmonious Asia-Pacific community by championing free and open trade and investment, promoting and accelerating regional economic integration, encouraging sustainable green growth, enhancing human security, and facilitating a favorable and inclusive business environment.

A Recognition that Corruption and Illicit Trade Impede Economic Prosperity

I hope all economies will continue to encourage or actually require their senior public officials to disclose their financial assets in recognition of the fact that such disclosures help bolster public confidence in their officials’ actions and can contribute significantly to good governance, which, in turn, stimulates investment and growth across all sectors of society.

Corruption and illicit trade have the opposite effect. The APEC Business Advisory Council (ABAC) has driven this point home through numerous initiatives designed to increase our collective understanding of the harms posed by the illegal economy.

At our recent meeting in Russia a few months ago, I had the opportunity to co-chair an ACT-ABAC Dialogue on Anti-Corruption and Illicit Trade. The Dialogue responded to the observation that savvy business leaders will not invest capital in overseas markets where the rule of law is unpredictable and where illicit trade threatens the reputation of their brands and their ability to maximize profits.

Corruption Hinders Economic Development and Environmental Sustainability

When transparency is low and corruption high, otherwise competitive markets lose in investment, and illicit markets gain from the enhanced ability to operate without oversight. This is not the underground black market that has existed for centuries, but an illegal economy that is as multidimensional and interconnected as our economies, and indeed intersects them as corrupt officials and criminal entrepreneurs move their illicitly acquired assets through the international financial system.

Corruption is to the illegal economy what transparency and the rule of law are to legal markets. It opens the floodgates for cross-border illicit trade flows, raising the cost of doing business and diverting legitimate revenues into the accounts of transnational illicit networks. According to a 2011 World Economic Forum Report on Global Risks, illicit trade represents 7 to 10 percent of the global economy, and a major source of income in some areas. This estimate focuses only on economic volume, and does not take into account the human costs associated with the illicit trade of drugs, arms, people, natural resources, wildlife, and counterfeit consumer goods and medicines.

Corruption and illicit trade impacts every facet of our lives from the environment in which we live to our health, prosperity, and security. For example, the dumping of toxic waste contaminates our food and water supplies. Illegal logging and deforestation exacerbate our climate change concerns. Poaching and trafficking of endangered wildlife species for the production of traditional medicines and other uses destroys vital habitats and ecosystems and robs governments and citizens of their natural capital assets. And peddling counterfeit pharmaceuticals puts the lives of sick children and patients who are ill in jeopardy.

All of this takes money out of the hands of legitimate businesses and puts cash into the hands of criminals, who then build larger illicit networks and destabilize governments. In addition, national revenue and assets intended to finance the future are being embezzled and then stashed away, impairing the ability of many communities to make the necessary investments to give people hope for a brighter tomorrow. Revenue that could be used to build roads to facilitate commerce, hospitals to save lives, homes to raise and protect families, or schools to educate our future leaders are lost to kleptocrats, criminals, and terrorists whose only interest in the future may be to destroy it.

This is why we have come to Phuket today, and not by coincidence. Thailand has been a leader in promoting collective action by all our economies to track the stolen assets of kleptocrats and criminal entrepreneurs and shut down criminalized markets.

Cooperating to Stem Illicit Financial Flows and Recover Stolen Assets

We must work together to dismantle the financial pipelines used to launder stolen assets and the proceeds of illicit trade. Prioritizing stolen asset recovery and anti-money laundering are especially useful tools that APEC economies can use to prevent the harms of illicit trade and restore these assets to our communities, where they belong.

We applaud Chile and Thailand for their multi-year ACT project to strengthen capacities to effectively investigate and prosecute corruption and money laundering, including through the use of financial flow tracking techniques and investigative intelligence. We look forward to the handbook the project will develop on best practices in investigating and prosecuting corruption and money laundering and in recovering illicitly acquired assets.

We should also maximize the effectiveness of information-sharing mechanisms among financial intelligence units, anti-corruption agencies, and other law enforcement bodies with data and information that can help identify and track criminal and corrupt fugitives and their assets, and help freeze, confiscate, and return the proceeds of their criminality and corruption.

We should use the ACT as a forum to encourage our expert practitioners to participate in emerging networks of investigators and prosecutors, to bolster regional and global cooperation in investigations. Recognizing the challenge of different legal traditions and legal frameworks, we should also strive to share information about our laws and practices in these areas. In the United States, we have just published a practical guide to U.S. Asset Recovery Tools and Procedures, which is available online and has been translated into Arabic, Chinese, French, Spanish, and Russian.

The APEC ACT should also enhance cooperation with the Stolen Asset Recovery (StAR) Initiative under the auspices of the World Bank and the United Nations Office on Drugs and Crime (UNODC), the global asset recovery Focal Point network, G20, the Basel Institute on Governance’s International Centre for Asset Recovery (ICAR), INTERPOL, and ASEAN, and support more technical assistance and specialized training workshops on financial investigations, asset tracking and forfeiture, drafting request for mutual legal assistance or other types of international assistance.

An example of this international cooperation is the G8 Deauville Partnership with Arab Countries in Transition, which adopted, under the U.S. Presidency this year, an Asset Recovery Action Plan to streamline international legal cooperation, enhance coordination on cases, and foster capacity building. Our APEC regional work in the Asia-Pacific region can augment this G8 innovative asset recovery initiative to strengthen cross-border cooperation and to target illicit financial hubs.

Finally, evidence-based research and enhanced intelligence collection and analysis will go a long way towards mapping the scale of the illegal economy to help us understand the harms, consequences, and costs to our communities of a convergence of illicit threats.

Moving Forward: Drawing upon Networks to Trace Stolen Assets and Recover Illicit Wealth

The United States is committed to work with our partners in APEC, ASEAN, and globally, to combat corruption and illicit trade. Enhancing our ability to trace proceeds of corruption is an integral part of our combined strategies to deny safe haven to kleptocrats and criminal entrepreneurs, freeze and seize their stolen assets, raise the transaction costs of engaging in illicit trade, and send a powerful signal that the APEC network does not tolerate theft from our economies.

Rule of law and criminal justice institutions are vital to consolidating the success of our efforts, from basic policing to prosecution and corrections. I have seen first-hand how open governance and market transparency has stimulated fresh innovation in major economic centers like St. Petersburg, Shanghai, Singapore, and Tokyo and can bring further inclusive, sustainable green development to places like Phuket whose cultural and natural diversity enriches the APEC sphere, and many others across our economies such as Hoi An and DaNang in Vietnam, Cuzco in Peru, Kazan in Russia, Cairns and the Great Barrier Reef in Australia.

Combating corruption and illicit trade and recovering stolen assets also advance our efforts to make the necessary investments in environmental protection and the conservation and sustainable use of natural resources, ecosystems, and biodiversity, which are essential foundations for achieving our economic and social goals for the APEC region.

I am confident that Indonesia will build on our record of achievement in 2013, and further integrate our efforts into APEC’s inclusive, sustainable green development agenda. Thailand has set an excellent example with its leadership, as have all APEC and ASEAN economies and invited international partners who are here this week in Phuket. We look forward to working with both Indonesia and Thailand, as well as Australia, to enhance our law enforcement against the illicit trade of natural resources in APEC, both together and in partnership with ASEAN through a proposed joint APEC-ASEAN pilot project in Cambodia in 2013.

I hope that our leaders from both public and private sectors will take note of the important work that is being done by the ACT in combating corruption and illicit trade when they meet at the APEC Summit in Vladivostok, Russia in September.

This year must be the turning point. If we do not act now to mitigate corruption and illicit trade, they will continue to rob our economies of their future potential and threaten our sustainable development, trapping millions of people in poverty, and hampering our efforts to build better communities for future generations.

The United States remains committed to the fight against corruption and illicit trade, and vows to work alongside other committed partners build capacity to trace stolen assets and secure their return to victimized communities as new investments to finance long-term prosperity and sustain open governance, open markets, and open societies.

Thank you.

ENDS

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