Thursday, July 21, 2011

World Bank report: repatriated stolen assets just 1/1500th of total lost

The World Bank has published a report under its Stolen Asset Recovery (STAR) Initiative looking at stolen assets. Entitled Barriers to Asset Recovery, it is a massive document, and we haven't read the whole thing yet, but we shall highlight a couple of important points.

First, they accept estimates provided by our ally Raymond Baker at Global Financial Integrity (GFI):
Although the exact magnitude of the proceeds of corruption circulating in the global economy is impossible to ascertain, estimates demonstrate the severity and scale of the problem. The proceeds of crime, corruption, and tax evasion are estimated to represent between $1 trillion and $1.6 trillion annually, with half [$500-800bn] coming from developing countries.
The World Bank goes on to highlight how pitiful asset-recovery efforts have been, in comparison.
"The Stolen Asset Recovery Initiative (StAR) estimates that only $5 billion in stolen assets has been repatriated over the past 15 years. "
That is $5 billion over 15 years - or about $330m per year. Now make the comparison, using the smallest possible figure of illicit financial flows out of developing countries, at $500 billion per year. That is a ratio of about 1,500 to 1 (our calculation, not the World Bank's).

For every 1,500 dollars in illicit financial flows from developing countries, one dollar is repatriated.

But that's not all. The World Bank, for some reason, seems to have ignored the new estimates from Global Financial Integrity in January 2011, estimating illicit financial flows, using more comprehensive methodology, at $1.26 trillion out of developing countries in 2008 alone. That would put the ratio at 3,800 to one. And they stress that they believe their estimate is conservative. The World Bank, to its credit, notes:
The huge gap between even the lowest estimates of assets stolen and those repatriated demonstrates the importance of forcefully addressing the barriers to asset recovery.
It would be nice if the World Bank did more to help developing countries stop assets being hidden around the world in the first place. And there is another thing to congratulate the World Bank for. The emphasis here is ours:
"Jurisdictions should establish a national bank registry that maintains account identification information, including the names of beneficial owner(s) and holders of powers of attorney.
To enable originating jurisdictions to identify and include the necessary information in requests for the seizing or confiscation of assets, jurisdictions should develop and maintain publicly available registries, such as company registries, land registries, registries of nonprofit organizations, and other databases. If possible, such registries should be centralized and maintained in electronic and real-time format, so that they are searchable and updated at all times.
. . .
These registries should include, but not be limited to, names, personal identifying data, corporate director and officer information, shareholder information, and beneficial owner information."
(hat tip: Markus Meinzer and Transparency International-Germany.)

That beneficial owner thing is all-important. Without it, you can have full transparency from corporate nominees, without being any closer to finding out who really owns or controls the assets.


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