MyPrivateBanking Research has analyzed what has happened to the assets of the 25 most important dictators/corrupt politicians since 1990 after they left voluntarily or were forced from office. Only a small fraction (5%) of stolen assets have ever been traced and frozen, and an even smaller fraction (2.4%) has been returned to governments and people who had been the victims of corruption and outright theft on the part of these former rulers.
Online PR News – 06-May-2011 – – Zurich, May 3 2011. The recent events in North Africa and the Middle East show once again that every time a dictator falls from power, governments, politicians and banks across the world announce that his, his family’s and follower’s assets in foreign countries will be frozen and later returned to the new, legitimate government. But the fact of the matter, according to a new report by the research company MyPrivateBanking, is that these announcements have only been paying lip service to the public demands for amends to be made. Only a small fraction, of 5% of stolen assets by dictators and corrupt politicians, is frozen and after often tortuous legal proceedings only about half of that is repatriated.
For the report „Billions without a Trace – Dictators´ Stolen Assets” MyPrivateBanking Research analyzed what became of the assets of the 25 most notorious dictators/corrupt politicians since 1990 after they were forced from office or left voluntarily. The overall sum of stolen assets by these 25, their families and associates is estimated at almost USD 140 billion. According to MyPrivateBanking, a very conservative estimate based on historic (not inflation adjusted) US dollar values. However, only a small fraction (5%) of stolen assets have ever been traced and frozen, and an even smaller fraction (2.4%) has been returned to governments and people who had been the victims of corruption and outright theft on the part of these former rulers.
MyPrivateBanking sees multiple reasons for these sobering results. In many cases the government and its agencies are not able to trace such assets as they are well hidden in a network of interlinked trusts, companies and associates who may not be directly linked to the former dictator. Furthermore, Western governments often don’t have the political will to persecute former political allies, as their own collusion could be discovered in the process. For similiar reasons, in some cases, the new, legitimate governments in developing countries are not interested in laying claim to stolen assets.
Banks and wealth managers have also to bear a substantial part of the responsibility: due diligence with respect to the origins of investments by politically exposed persons often resembles, in MyPrivateBankings´ assessment, “going through the motions”, in spite of the trend in many countries such as Switzerland, for the regulations to prevent money-laundering being strengthened considerably. But still in many instances checkboxes are ticked but the will and the wherewithal to untertake serious investigations are lacking even when suspicions have been raised. As a result dictators and their henchmen are given access to the legal financial systems. “An overwhelming proportion of assets linked to criminal activities of corrupt politicians and their entourages has been lost for ever, seemingly untraceable and unrecoverable”, states Steffen Binder, Research Director of MyPrivateBanking. “Our numbers show, however, that once assets have been frozen or blocked there is a relatively high probability of final asset restitution to the country of origin.”
The most important measure to improve the situation is, in MyPrivateBanking’s view, that banks refuse problematic assets in the first place. Once assets have entered the legal financial system it is of utmost importance to trace them which requires a clear political will on the part of the government agencies and financial services firms involved but also the necessary resources (e.g. databases, human resources, investigative capabilities).
Over the last few years the international legal framework to counter money laundering has been considerably strengthened. MyPrivateBanking commends existing money laundering regulation for its good intentions but found that it has been relatively easy to circumvent the rules. “These illegally obtained and now hidden assets are a ticking time bomb for governments and financial services firms as they bear witness to past involvement with corrupt and criminal politicians and their associates.” stresses Christian Nolterieke, Research Director of MyPrivateBanking. Therefore, it is in the interests of the banking industry, particularly wealth managers and private banks, not to wait for further regulation, but to actively devise and implement effective strategies to identify persons with a background of corruption, to refuse to receive their assets and to trace tainted money that may have already been invested with a bank.
About the report:
MyPrivateBanking Research has analyzed what has happened to the assets of the 25 most important dictators/corrupt politicians since 1990 after they left voluntarily or were forced from office: Alberto Fujimori (Peru), Arnoldo Alemán, (Nicaragua), Augusto Pinochet (Chile), Benazir Bhutto (Pakistan), Carlos Menem (Argentina), Carlos and Raul Salinas (Mexico), Charles Taylor (Liberia), Daniel Arap Moi (Kenya), Felix H. Boigny (Ivory Coast), Ferdinand Marcos (Phillipines), Frederick Chiluba (Zambia), Gnasingbé Eyadema (Togo), Hosni Mubarak (Egypt), Jean-Claude Duvalier (Haiti), Joseph Estrada (Phillipines), Laurent Gbabgo (Ivory Coast), Mobutu Sese Seko (Democratic Rep of Congo), Mohamed Suharto (Indonesia), Moussa Traoré (Mali), Omar Bongo (Gabon), Pavlo Lazarenko (Ukraine), Saddam Hussein (Iraq), Sani Abacha (Nigeria), Slobodan Milosevic (former Yugoslavia), Zine El Abidine Ben Ali (Tunisia)
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