Has the interim government made a mess of recovering stolen assets?
Secrecy and confidentiality are vital to the recovery of stolen property
When Chief Adviser Yunus spoke at the UN General Assembly, he spoke of the billions of dollars stolen from Bangladesh over the past fifteen years. He said, "We are working tirelessly to bring this wealth back. Yet legal processes and other obstacles are hurting our efforts."
But the way the interim government (IG) has conducted itself on the matter has in fact undermined asset recovery. The IG has been its own worst enemy.
Some years ago, I was involved in efforts to persuade the US Justice Department to seize a property in California, a lavish estate worth tens of millions of dollars. As an anticorruption lawyer focusing on Africa's mining and petroleum industries, I had come into some sensitive information. It appeared that, behind shell companies and trusts, the property was owned by a government minister of an African state, a man whose income on paper was in the tens of thousands of dollars and not millions.
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The information was supplied to me by an investigative NGO, eager to go public with the news, but which, after some convincing, agreed to hold off publication until all of us had discussed the matter further. Or so I thought.
Ordinarily, one imagines that the public interest is best served by quickly bringing to light evidence of official wrongdoing. And that is indeed normally the case. But in some circumstances publicity can have exactly the opposite effect, destroying any prospect of securing an outcome that best serves the public.
When the NGO's press release appeared, to my surprise, I was in my office in London on a call with a senior lawyer at a firm in Washington D.C. We were deep in discussion developing a strategy to recover the stolen assets and hold accountable the minister and American corporations, when the gentleman broke off to ask me if I'd read the email that had just landed in his inbox.
The most likely reason the IG has gone about asset recovery in such cack-handed fashion is mere incompetence combined with a craven need for adulation
I refreshed my browser window and there it was, a press release from the NGO announcing to the world the fruits of its investigation. No doubt the reaction of many was the reaction one might expect of people of goodwill: a cheer for transparency and a step towards justice.
Down the line, however, came a sigh from my colleague, the senior lawyer. I continued to hold out hope but the senior lawyer's many years of experience denied him the unfounded optimism that a youngster like me could have.
"Well, that's that," said the senior lawyer. "The property is gone. It would take me less than a day to restructure the title behind shell companies and trusts and hide the property's ownership for years," adding jokingly that it would take me, a junior lawyer, a week to do so.
It's worth noting, by the way, that the NGO's press release did not alone furnish enough information for the US Justice Department to secure a freezing order. Nor, for that matter, did the Justice Department receive advance notice from the NGO.
The effect of the NGO's press release is akin to what is called "tipping off," alerting the minister to efforts possibly underway to have the property seized. The minister's lawyers would doubtless quickly restructure ownership thereby hiding the property again. Any prospect of the US Justice Department seizing the property was kicked into the long grass by the NGO's actions. Why the NGO would issue a press release announcing the finding even though it had been warned of this consequence is something I'll come to presently.
Secrecy and confidentiality are vital to the recovery of stolen property in a world in which the powerful and the rich enjoy ready access to superb lawyers and the means to hide ownership quickly. Another decade would pass before any advance would be made against the minister and even then the Californian property would not be the subject of a claim of recovery.
All this naturally came to mind over the past twelve months as I watched, with dismay, the IG trumpeting, at every turn, its pursuit of former kleptocrats.. The fact that members of the Hasina regime stole hundreds of millions from the country's coffers could hardly come as a surprise. But it was astonishing to watch the IG go about asset recovery with all the finesse and discretion of snorting buffalos wallowing in mud.
From the beginning, the IG has been vocal in its pursuit of kleptocrats of the former regime, identifying individuals and, with time, pointing to proceeds of and properties bought with stolen funds.
In order to recover assets in England, the Bangladesh government would obviously need the services of English law firms and, needless to say, such firms have been petitioning the IG for this business. But they have been exasperated by the extent of the IG's tipping off and its public declarations that efforts are underway to recover assets. The IG has made the job of asset-tracking an even greater task for everyone involved, including government agencies and law firms, and has ensured a more uncertain outcome.
Illustrative of this is what I learned was said by an FBI agent in Asia to the Bangladesh Bank governor regarding monies taken to a country other than the UK: The assets were gone, said the agent, "faster than you can blink."
Keep in mind, also, that the British state itself scarcely stands to gain anything from pursuing these assets, which means the incentive to do so is already weak. After all, the assets were not stolen in Britain or from Britain or from British corporations.
Moreover, Britain is a notorious money laundering haven, regarded by many in anticorruption circles as the world's largest when one accounts for London's financial district, the Cayman Islands, Guernsey and Jersey. It is a mistake to think of this as a failure of the system; it is what some would describe as a feature and not a bug.
And if it weren't already apparent that helping Bangladesh with asset recovery is not a British priority, consider the embarrassing spectacle of the Chief Adviser visiting the UK not once but twice without being able to secure a meeting with Keir Starmer.
The refusal of Starmer to meet with Yunus speaks not so much to the IG's impotence as it does to the new political dispensation sweeping through Western countries today and the changing nature of the world in which we now live. Even a few minutes' attention to news in the UK will show that seismic domestic events monopolise the past year, from neo-Nazi rioters to the collapse of freedom of expression, from the rise of far right political parties to the cost of living crisis. Nothing could be farther from the preoccupations of the political class of Britain than Bangladesh's woes about kleptocratic loot.
But why would the IG do something so patently stupid as to broadcast its asset recovery initiatives, making recovery even more remote? Why would it not heed expert advice?
Let's assume the IG had sought even the most rudimentary expert legal advice at the outset. They will have learned that even if all the Bangladeshi and British agencies and all the lawyers involved were to work speedily, the Bangladeshi treasury would not see a single Taka in recovered assets for five or more years. Asset recovery takes time. Perhaps the IG had concluded that this timeframe didn't work for them: in five years the IG, long gone, would be unable to take credit for any returned assets. After all, the IG's business model these past twelve months seems to have been not so much to get things done as to establish commissions and committees and attend roundtables and take some credit in that.
In my own Californian case all those years ago, I recall that the NGO was raring to issue a press release. Understandably so: they knew that it was only a matter of time before the news would leak out and a newspaper or other organisation would report the story about the California property, perhaps even taking credit. The raison d'être of investigative NGOs is to find and disclose. Their funding model is based on that. If a newspaper or another NGO were to steal a march on them, that would hit the NGO's bottom line.
Similarly, a serious effort to recover assets would require the IG to work discreetly and diligently in the background but such discretion would also make it difficult for the IG to take any credit publicly.
Freezing orders issued by a court prevent those assets—physical or financial—which are the subject of an order from being sold or transferred or otherwise restructured. One potential aspect of a freezing order illustrates the centrality of discretion. An English court may issue a freezing order without notice to the party purportedly holding title to the assets. Why would such a freezing order ever be considered useful or necessary? Such is the alacrity of skilful legal specialists that freezing orders are sometimes issued without notifying the party in question but informing banks and other institutions holding or registering the assets—in effect a temporarily "secret" freezing order. All it takes some lawyers is a few hours to move assets or change titles.
The most likely reason the IG has gone about asset recovery in such cack-handed fashion is mere incompetence combined with a craven need for adulation. Making a noise about asset recovery no doubt wins cheers from crowds unfamiliar with the practicalities of such recovery but it goes against received wisdom. Disdain for sound legal advice is all the more plausible given how little regard the IG has generally shown for expertise, (although that disdain deserves separate examination).
In any case, one thing is abundantly clear. Most of the assets stolen and siphoned off abroad is now beyond the reach of agencies, with the IG's actions having made it infinitely harder to trace the true ownership of such loot.
Zia Haider Rahman is a former anticorruption lawyer, banker, and the author of the novel "In the Light of What We Know," which won the James Tait Black Memorial Prize, Britain's oldest literary award. Zia was educated in mathematics, economics and law, at Oxford, Cambridge, London, Munich and Yale Universities and is a Montgomery Fellow at Dartmouth College and was a fellow at the Radcliffe Institute for Advanced Study at Harvard University.
