Financial Transparency Coalition

Ferdinand Marcos corruptly ruled over the Phillipines from Dec 30, 1965 – Feb 25, 1986.

On Sunday, US Attorney General Eric Holder delivered a promissory gem to the leaders gathered in Uganda, the pearl of Africa.  It was not a pledge of more foreign aid for the continent – which has tripled since 2000 – but it could bring billions of dollars to Africa:

“ I’m pleased to announce that the U.S. Department of Justice is launching a new Kleptocracy Asset Recovery Initiative aimed at combating large-scale foreign official corruption and recovering public funds for their intended – and proper – use: for the people of our nations. We’re assembling a team of prosecutors who will focus exclusively on this work and build upon efforts already underway to deter corruption, hold offenders accountable, and protect public resources.”

Government promises, as both Americans and Africans know, are often broken, but this announcement calls for (cautious) optimism.

The seizures of assets in recent years of many high-profile, corrupt leaders – Nigeria’s Mr. Abacha, the Philippines’ Mr. Marcos and Peru’s Mr. Fujimori – have all involved assets held in Swiss banks.  In all three cases, a World Bank report points out, official cooperation and the goodwill of the Swiss government was critical for repatriating the assets. Holder’s words, if translated into concrete action could have a huge impact: GFI research estimates that the US banks holds almost nine times the amount of private, non-resident deposits of their Swiss counterparts.  Undoubtedly, Africa’s kleptocrats – the crooked leaders who take advantage of their power to expand their own wealth – have tucked away portions of their stolen loot in America’s banks.

Moreover, there is precedent for sanguinity. After the collapse of Enron and other high-profile corporate scandals, the US dusted off the Foreign Corrupt Practices Act, a little-known law passed in the post Watergate era. The Justice Department began going after multi-national corporations, from Lucent Technologies to German giant Siemens, tied to bribery of foreign officials. Earlier this month, Snamprogetti, a Dutch engineering firm joined American KBR and French Technip in settling with the US Securities and Exchange Commission a two-year long case involving hundreds of millions of dollars in kickbacks to Nigerian officials in a US$6 billion construction project.  Indeed, the US has taken the lead in prosecuting corporations for bribery: analyzing bribery cases in 38 countries, a recent OECD report found that the US accounted for 88 out of the 225 cases where criminal sanctions were imposed. Of the 29 cases brought in civil courts, all but one was prosecuted in the US.

Click here, for more on the history of U.S. policy toward foreign bribery…

If the US can channel a similar amount of energy into seizing the assets of Africa’s kleptocrats, the continent may see a dramatic new stream of revenue for important development projects. The World Bank report notes that the US$500 million repatriated to Nigeria from President Abacha’s stolen assets could be used to build over 1200 km of new paved road or to fully immunize some 20 million children.  Further, confiscating looted assets could deter future politicians from going down the road of corruption and graft.

The Justice Department has not revealed further details on the Kleptocracy Initiative, but Holder’s words, if backed up with tangible action, could be huge.  We’ll have to hold our breaths to see if this hope turns out to be warranted.