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The changing face of corruption and security: Munich Security Conference 2024

Corruption was on the main programme of the Munich Security Conference on 16–18 February 2024 for the first time. Gretta Fenner, Managing Director of the Basel Institute on Governance, moderated a panel discussion featuring Bernardo Arévalo, President of Guatemala, Nikolai Denkov, Prime Minister of Bulgaria, Ketakandriana Ke Rafitoson, Vice Chair of Transparency International and Sheldon Whitehouse, U.S. Senator and Chairman of the Senate Committee on the Budget. The main challenge in Gretta Fenner’s closing words, referring to the theme of this year’s conference report “Lose-Lose”: “If we do not understand, acknowledge and then act accordingly in relation to the critical role of corruption undermining everything to do with stability, global governance and international law, we will have a lose-lose situation. And we cannot allow that to happen.” Beyond classical corruption The Munich Security Conference's decision to include corruption as a “spotlight” in the conference programme, together with other non-traditional security topics such as sexual violence, climate finance and mineral supply chains, was highly welcome. It coincides with a rise in recognition and concern over strategic or "weaponised" corruption as a threat to national, regional and global security and peace. As Fenner emphasised at the outset, corruption even in the narrow sense of bribery must be of great concern to the defence and security community. When kickbacks or other bribery schemes lead to the purchase of the wrong military equipment, to the construction of substandard infrastructure, or to half the ordered ammunition missing, it has direct and potentially deadly consequences. What we must also talk about more is the use of corruption for longer-term geo strategic goals. In other words, when corruption is used as an instrument – indeed a weapon – of power and influence at home and abroad. And when, as a consequence, it completely evades and thereby undermines global governance and international law. The result, in the words of Ke Rafitoson, is “an escalation of violence and conflicts around the world.” Corruption has long been seen as a “soft governance” issue, she said, but now: “We have to recognise that corruption has become a global threat.” Vicious cycle: state capture and transnational organised crime Take just about any case of state capture – when power is consolidated in the hands of a few elites, who misuse state institutions to serve their own narrow purposes – and you can trace how corruption is wielded as a highly functional tool to gain and preserve power and influence. That pattern is clearly visible in Guatemala, where President Arévalo’s recent election success owes much to popular unrest over corruption and to his personal anti-corruption campaigning. Corruption has penetrated every arm of the state over the last 20 years, he explained. Money stolen through corruption is used to empower criminal elites, who then further capture the political system in order to extract more rents – and on it goes in a vicious circle. That has serious implications on peace and stability far beyond Guatemala as it emboldens and empowers transnational organised crime, he said, including the trafficking of drugs, humans and wildlife. “When you have corrupt officials, they are quite open to the type of big-money incentives that transnational organised crime can put on the table. On the other hand, transnational organised crime is interested in pushing politicians into office.” In the end, you find the entire governance of countries is in the hands of corrupt actors and of criminal groups. Driven by the transnational nature of organised crime, this can quickly lead to entire regions descending into a vicious circle of illegitimate governance and crime, and eventually into ever greater instability and violence. Control over critical sectors Much concern over strategic uses of corruption for geopolitical purposes also centres on foreign states gaining influence over sectors that are critical for sovereignty, security and stability, such as energy, water and minerals. Historical links and geographical proximity to kleptocratic states increase a country’s vulnerability. Bulgaria has recently struggled with exactly that phenomenon. Noting parallels with Guatemala’s experience of state capture and organised crime, Prime Minister Denkov emphasised that corruption was not just used as a way for individuals to make money for narrow personal gain: “Along with classical corruption schemes, you have another type of corruption at a huge scale that affects all aspects of our lives.” Russia-related energy deals in Bulgaria have wasted more than a billion euros, Denkov said, and resulted in little except total energy dependence on the aggressive autocratic Russian regime. It is clearly a security concern when corrupt deals result in a foreign state gaining power over critical sectors such as energy – not least when they involve sensitive installations such as nuclear power plants. On the positive side, an anti-corruption focus is leading Bulgaria towards a much brighter future, not only in terms of its energy independence but also more broadly in terms of the quality of its governance, of rule of law and of its role in protecting the Euro-Atlantic alliance. In the last two years, with parties in government who subscribe to the fight against corruption, the country has succeeded in removing oil and gas dependence with strategic and transparent energy arrangements. It is also working persistently towards freeing other sectors from state capture. Bulgaria’s example shows how political commitments to transparency, participation and anti-corruption can help countries loosen the grip of corrupt states on sectors critical to their security. How anti-corruption and security communities can join forces Anti-corruption and defence/security communities often work in bubbles, but closer collaboration could bring benefits to both sides. Anti-corruption tools and knowledge Despite legitimate concerns about foreign power and influence through corruption, it’s not helpful to see corruption purely as a foreign threat. Many countries need to do more to prevent corruption and illicit financial flows domestically, since these ultimately threaten both their own and global security. Tried and tested anti-corruption tools are essential to get one’s own house in order. Senator Whitehouse gave a powerful description of how the U.S. introduced a series of anti-corruption reforms following the realisation that: “We were the problem. The greatest location for hiding corruptly obtained assets was the United States of America. So we began to take that apart.” Apart from basic transparency measures like beneficial ownership registers, priorities for many states should include cracking down on enablers such as unscrupulous lawyers and accountants. These are often based in high-income jurisdictions but are key to enabling corruption in other countries. Senator Whitehouse also testified to the usefulness of working with civil society in devising and implementing the anti-corruption reforms. Likewise, in general security policy making could benefit greatly from the knowledge and analysis of specialist anti-corruption organisations whose understanding of connections between corruption and security, and related data, facts and reports, can support security-related decision making. Embedding anti-corruption across the functions of state Beyond applying tools in specific areas, panellists concluded that states need to embed anti-corruption as a strategic priority across all aspects of security in its widest sense – from procurement to peace building to the development of strong and independent institutions. The U.S. designation of corruption as a core national security issue has helped to “put corruption higher up the agenda,” said Senator Whitehouse. This is vital because, as President Arévalo also emphasised: “We were used to corruption being a problem of bad administration…. Now we are seeing political criminal cliques organising to take control of state institutions in order to make them work for corruption. This is a fundamental threat to the viability of democratic states. It is beyond a threat to the security establishment.” Ukraine’s experience also shows that anti-corruption needs to be elevated as a core and state-wide security issue. Reacting to the panel discussion, Ukrainian anti-corruption activist Hanna Hopko explained that while Ukraine has made significant progress on fighting corruption since the 2014 Maidan Revolution, the illegal invasion of Ukraine by Russia has propelled corruption to the top of the country’s priorities: “Russia’s aggression against Ukraine has redefined the struggle against corruption. In the past, we considered the fight against corruption to be about… eliminating kickbacks, \ money laundering in\ offshore jurisdictions, vanity construction projects… \ Now\ it is crystal clear that without strong institutions, producing strong policies and implementing them, anti-corruption means nothing.” In other words, Ukraine can only win this war if it wins the war against corruption and builds strong, independent institutions resilient to external attempts to corrupt and control them. A tough fight ahead Guatemala and Bulgaria are just two countries facing a tough fight ahead to dismantle corrupt systems and create a well-governed state that works for the people. Legal reforms are important but not sufficient, stressed Denkov. “You have to have the people. It is not only the leaders. In every position you have to have a person who is willing to fight every day.” Those people will need a lot of energy, said Senator Whitehouse: “For the corruption machine, maintaining corruption is life or death. You take away their corruption, there goes their money, there goes their power, their limousines, there goes everything. So they fight to defend it with determination…. The energy and persistence and determination of the corrupt needs to be matched by similar energy, persistence and determination of those trying to root out corruption.” And that energy can only come from the recognition that corruption is, according to “is no longer \ just\ a nuisance. It is a direct political threat,” according to President Arévalo. “ Until we do not recognise that, we are not going to really be able to muster the energy, imagination and commitment at the international level to fight corruption effectively.” Learn more See the full recording on the Munich Security Conference website. See related articles on corruption and peace building and on how corruption fuels insecurity by affecting power.

The "favourability" principle - UNCAC's plug adapter for enforcement of non-conviction-based confiscation requests

Opening remarks and a presentation of key concepts by Oscar Solórzano at the side event “Living up to the spirit of articles 43 and 46 UNCAC” during the eighth session of the Conference of the States Parties to the United Nations Convention against Corruption, Abu Dhabi, 16-20 December 2019. Ladies and gentlemen, let me please welcome you to the side event “Living up to the spirit of articles 43 and 46 UNCAC”. The title suggests that the purpose of this session is to achieve the goals of the Convention, and specifically articles 43 on international cooperation and 46 on mutual legal assistance MLA . To achieve the goals of the Convention, it is of course important that States Parties initiate legislative revisions where domestic legislation is not up to standard. We would like to talk about something else, however: using domestic legislation to its full extent, approaching legal challenges presented by asset recovery cases with a mindset of "Yes we can " Where possible, law enforcement authorities should do whatever is permitted by their domestic law and practice. This means applying underlying concepts in a constructive manner and - in many settings - changing the way foreign MLA requests are received and executed. In the asset recovery field, for instance, consider the practices of authorities charged with the execution of foreign requests related to non-conviction-based confiscation NCBC actions. Of course, confiscation laws may differ between the two countries. But differences in legal systems alone are not grounds to refuse MLA. Why? Because the UNCAC policymakers envisioned this situation and introduced a favourability principle: States should interpret the provisions of the Convention in a manner that is most favourable to international cooperation in judicial matters. In order to live up to the favourability principle of UNCAC, States do not need new laws, but rather to explore solutions in the existing legal framework. Favourability does not mean "anything goes". But countries can learn from their peers, and that is what we are hoping to promote this morning. Certain European countries have acquired expertise in enforcing foreign NCBC requests, while acknowledging differences in domestic laws. To prove this, the panel of experts will showcase recent international asset recovery cases between Switzerland and Peru based on NCBC laws. I will start by providing the conceptual perspective of the cases from my experience as Senior Asset Recovery Specialist at the Basel Institute’s International Centre for Asset Recovery. I will then invite Hamilton Castro, a Peruvian specialised NCBC prosecutor with whom I have worked closely on several important asset recovery cases, to explain through a case presentation why in some scenarios NCBC is the only viable option to recover illicit assets. Barbara Kammermann, Legal Officer, Division for Mutual Legal Assistance at the Swiss Federal Office of Justice, will then explain what the challenges in that case were and what legal avenues Switzerland used to enforce the Peruvian NCBC request. Finally, two distinguished practitioners, Markus Busch, Head of Division at the Federal Ministry of Justice and Consumer Protection in Germany and Muthoni Kimani, Director of the Asset Recovery Office in Kenya, will react and present their thoughts on "favourable" approaches to NCBC. Enforcing non-conviction-based confiscation in Europe: can UNCAC provide the plug adapter? ------------------------------------------------------------------------------------------ In cases of mutual legal assistance MLA in criminal matters, law enforcement authorities are often confronted with a variety of legal provisions potentially applicable to a case. A norm of a bilateral MLA treaty and a norm in domestic MLA law may address the same issue. Choosing the solution that is more favourable to the assistance required is the reasoning behind the “favourability principle”. A coherent interpretation of such fundamental principle means that a refusal of MLA should be a measure of last resort. In the UNCAC, favourability is deliberately formulated very broadly so as to enable States Parties to provide MLA to “the widest measure”. One such application of the favourability principle is the granting of MLA when a requesting State seeks to recover illicit assets from a requested State through non-conviction-based confiscation NCBC . Objectives of the panel Advocate for an interpretation of favourability that promotes NCBC as a valid basis to recover ill-gotten assets. Encourage the introduction of the obligation to “sufficiently explain” the decision of the requested State to refuse MLA on the grounds that NCBC is incompatible with its legal framework. Pledge for a policy dialogue aiming at revising such a rule or practice so as to meet UNCAC’s standard. This presentation is divided in three parts: I will take a “back to the roots” approach to confiscation. I would then like to introduce a discussion of the “supposed affected rights” in NCBC procedures. Finally, I would like to convey the lessons learned from international asset recovery efforts involving Peru and Switzerland. What is confiscation? During the Middle Ages, confiscation was a widely unpopular measure with the general public as it was often applied for malicious purposes. It was only in the context of the trade in illegal drugs that a wider concept of confiscation was reintroduced: in most countries, confiscation is now considered a reparative measure that only seeks to target illicit wealth. Additional punitive effects and deterrence are not commonplace among the vast majority of States Parties. According to UNCAC, confiscation is the permanent deprivation of assets by a competent authority. Simply put, proceeds of crime must be taken away in order to ensure that "crime does not pay". The reparative nature of confiscation has important consequences for its procedural treatment in many countries. In common law jurisdictions, as well as a rising number of European and Latin American countries, confiscation is treated as a “civil” measure closer to the “unjust enrichment” of civil law than to a sanction imposed by a criminal court. A direct consequence of this interpretation is that safeguards of criminal procedure, such as the presumption of innocence, do not apply as as confiscation is not considered an accusation in criminal matters. For that reason, it can be ordered in just but simplified procedures. In its contemporary interpretation, confiscation is not to be considered a pecuniary sanction. It is certainly neither a civil reparation nor a fine. A civil reparation is based on the concept of harm while a fine is an ordinary criminal sanction. Confiscation, on the other hand, has its basis in the provenance of the funds derived from the crime. It is said that confiscation in its basic form targets the assets that are the “proceeds” of crime. As said, most countries in continental Europe share the reparative conception of confiscation. The constant jurisprudence of the European Court of Human Rights ECHR assessing the scope of individual European States relating to NCBC is very clear in this regard. Extinción de dominio The Peruvian NCBC law, extinción de dominio law roughly translated as the extinction of possession follows the same reasoning as the one exposed in the ECHR caselaw. It is directed against the asset and has a reparative nature. Its essential aim is to take assets linked to crimes out of circulation in a special proceeding directed against objects. In any event, it is not intended to punish the perpetrator of the crimes. The main problem with this point of view is that a pure in rem action - directed against objects - is an alien concept to European civil law countries. This concept, imported from the US legal arsenal, enables the use of a completely different procedure governed by civil standards but granting, however, effective procedural rights to the asset holder in a two-fold judicial process. This is particularly important because one of the main arguments to refuse MLA in NCBC is that it affects fundamental rights. But what human rights are we talking about? What rights are violated in NCBC? I think it is a valid question that needs special consideration. Fundamental rights in play The Peruvian extinción de dominio law grants due process and fundamental rights without restriction. They are in fact fundamental principles of this piece of legislation. The asset holder is granted a large number of procedural rights, including: the right to a fair hearing; the right to inspect the casefile; the right to provide evidence; the right to appeal and to a judicial review; constitutional courts and international human rights tribunals complete the review possibilities of this action. The discussion in Europe and Latin America basically revolves around two fundamental rights: the right to property and the protection of procedural guaranties. Property rights Latin American States have brought innovative understanding to overcome the difficulties linked to the protection of the right to property: property must have a licit origin to deserve the protection of the State and it must be exercised according to social and public interest as imposed by constitution. The first limitation to property arises therefore from the Constitution itself. Likewise, property rights are not “absolute” in the sense that they can suffer limitations when confronted with other similar or superior interests. This is the case for instance when the State develops more incisive confiscation rules to protect collective interests, which may have an impact in property rights. Procedural rights A persistent argument is that NCBC procedures do not grant, in general, the same procedural rights as criminal confiscation. For some, NCBC tools circumvent the defences of the criminal proceedings and therefore limit the fundamental rights of the defence. In most cases, indeed, the procedural guaranties are modulated according to the nature of the action: reparative and in rem . As NCBC targets assets, it does not include a general presumption that the assets under investigation are licit, as it is the case in proceedings against persons. In my view this makes perfectly senses as the asset holder’s freedom is not in play, luckily the ECHR and the majority of constitutional courts follow this idea. In dubio pro reo literally “the doubt benefits the offender” is another of the rights inappropriate in NCBC procedure. The prosecution still supports the burden of proof but if a doubt persists regarding the origin of the asset, it does not benefit the asset holder. In practice, the burden of proof is lowered to the civil standard of balance of probabilities, which means that the judge decides on the confiscation when he or she thinks that it is more probable that the assets arise from a crime than that they don’t. What lessons were learned? NCBC procedures are better placed to recover illicit assets Several interconnected asset recovery cases in Peru show that NCBC procedures are necessary and adequate in certain scenarios. In these Peruvian cases, the criminals the beneficial owners of the Swiss accounts intentionally absconded from Peru upon the initiation of the criminal investigation. As the Peruvian Constitution prohibits in absentia trials, it would have been impossible to confiscate through criminal proceedings as a criminal prosecution cannot take place. In such scenarios, it is unacceptable to let the criminals knowingly avoid the criminal accusation and enjoy the benefits of their crimes, simply because of old-fashioned legislation or narrow concepts pertaining to confiscation. Favourability must be applied in the Requested State order to overcome such a legal loophole. Impact on MLA The success of Peru in these cases heavily relied on the active involvement and support of Swiss authorities. For the cooperation to succeed, the nature of the investigatory or judicial proceeding in the victim country is highly relevant for Switzerland’s ability to cooperate. It is therefore important to find common grounds of understanding between requesting and requested States and to jointly decide what is feasible and what is not in terms of international MLA. We believe, the adapter plug, the common language among States, is that confiscation is not punitive but a remedial measure. When States want to use NCBC to punish the perpetrators of crime, it becomes a “penalty” – whereupon criminal safeguards apply without any restrictions. NCBC laws must therefore be limited to assets arising from crimes. In this respect, Swiss authorities determined that the Peruvian NCBC law complies with Swiss human rights and public order standards. The Swiss Federal Tribunal and the Federal Criminal Court have both confirmed that Switzerland can cooperate with foreign NCBC investigations and is also capable of enforcing the resulting decisions. Likewise, the European Court of Human Rights, applicable in Switzerland, has repeatedly confirmed that: "\ C\ ommon European and even universal legal standards can be said to exist which encourage the confiscation of property linked to serious criminal offences such as corruption, money laundering, drug offences and so on, without the prior existence of a criminal conviction". Ensuring a sound implementation of the specialized asset recovery framework Asset recovery laws cannot translate into investigations, seizures, confiscations and asset restitutions in the absence of proper specialization and implementation. The extinción de dominio law foresees the progressive implementation of a specialized prosecution and court apparatus, with a nation-wide deployment of 22 courts and 3 courts of appeal devoted to NCBC, each with designated specialized judges, prosecutors and investigative police. The specialization is particularly important as it gives the justice operator, particularly judges, the necessary comprehension and experience to decide on actions which are conceptually disconnected from the criminal trial.

Anti-korruptions-compliance und integrity management in hochrisikoländern - herausforderungen und lösungsansätze