Corruption has become a major governance challenge in today’s world. Its effect on the economy of a country — more so of a developing country — is debilitating, as it hampers socio-economic development. Corruption is a complex socio-economic and cultural phenomena, the fight against which not only calls for innovative and localised solutions, but requires the support of the global community through INTERPOL and similar multilateral organisations.
There is no single remedy for fighting the menace of corruption. The battle has to be fought at many levels. The design of development programmes should provide for more transparency and accountability. Systems and procedures which are opaque, complicated, centralised and discretionary are a fertile breeding ground for the evil of corruption. ‘Ethics in Governance’ would hold key to good governance in any society. I am prompted to recall a famous verse from the ancient Indian scriptures, which says Yatha Raja Tatha Praja. In other words, if the king is immoral, so would be his subjects.
The development of new methods of financial flows and communication technology has made it easier for the corrupt to conceal and stash away wealth. On the other hand, differences in legal systems, high costs in coordinating investigations, inadequate international cooperation and bank secrecy laws have made the task difficult for the anti-corruption authorities. The World Bank estimates the cross-border flow of money from criminal activities, including corruption and tax-evasion, to be around $1.5 trillion annually. Over $40 billion of this flow is on account of bribes paid to public officials in the developing countries. Of this, the World Bank estimates that only $5 billion in stolen assets have been repatriated over the past 15 years. That leaves a wide gap between the outflow from the developing countries and its subsequent repatriation.
Tracing, freezing, confiscation and then repatriation of stolen assets is a legal challenge. Managing the asset recovery investigation is complex, time-consuming, costly and, most importantly, requires expertise and political will. There are many obstacles to asset recovery. Not only is it a specialised legal process filled with delays and uncertainty, but there are language barriers and a lack of trust when working with other countries. The global financial market allows money to travel further and faster than ever before.
One of the most complicated aspects of international asset tracing is the issue of jurisdiction. Generally, the jurisdiction in criminal law is territorial and it is a well-established principle that one state will not enforce their legal formalities on another state, without following proper procedures. Criminals use these principles to their advantage, often spreading the crime over at least two jurisdictions and investing in a third.
In some of the recent important cases being investigated by the Central Bureau of Investigation (CBI), such as the 2G telecom, the Commonwealth Games and Madhu Koda, we have found that money is taken to Dubai, Singapore or Mauritius, from where it goes to Switzerland, and then to British Virgin Island or Caymen Islands... For the criminals, all it takes is setting up of a few shell companies and making layered transfers from one account to another in a matter of hours, as there are no boundaries in banking transactions. For the investigators, however, each layer has to be peeled by sending a Letter Rogatory through judicial channels, and obtaining information from each leg of the transaction can take several years in many cases.
Fifty three per cent of countries said to be least corrupt by the Transparency International Index are offshore tax havens, where most of the corrupt money goes. While New Zealand is ranked the least corrupt country, Singapore is ranked at the fifth position and Switzerland stands seventh. There is a lack of political will in the leading tax havens to part with information required to trace such assets, as they are aware of the extent to which their own economies have become geared to this flow of illegal capital from poorer countries. India, in particular, has suffered from the flow of illegal funds to tax havens... It is estimated that around $500 billion of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss banks are also reported to be Indians.
We need to relentlessly pursue asset recovery strategies to make such illegal acquisitions a “No Profit High Risk” proposition. It is in this backdrop that this global programme is being organised. The main objective of the programme is to enhance the knowledge and skills of police investigators and prosecutors in tracking the assets created out of corrupt activities, within the country and across the borders, in an effective and expeditious manner. It is also intended to sensitise them to mutual legal assistance in international and transborder investigations.
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During the training, they would be exposed to some complex investigations by persons who have actually dealt with tracing the proceeds of crime. The problems that were encountered during such investigations, especially when it related to transborder issues, will be highlighted.
The participants are also being taken to the Centre for Training in Cyber and HiTech Crime Investigation. This was established by the Government of India in 2010 at the CBI Academy to train personnel from the CBI and other law enforcement agencies in cyber forensics, mobile forensics and other such areas. These are an essential and integral part of any investigation related to financial frauds and transnational crimes.
I am sure the deliberations during the training programme would lead us a step closer in achieving the daunting task of asset recovery in the emerging global scenario.
Edited extract from Central Bureau of Investigation Director A P Singh’s speech at the inauguration of the 1st INTERPOL Global Programme on Anti-Corruption and Asset Recovery in New Delhi on February 13