Since the ousting of Hosni Mubarak and Zine El Abidine Ben Ali, the EU has frozen assets of 67 people suspected of concealing abroad state funds misappropriated in Egypt and Tunisia. But despite high-level political declarations supporting the recovery of these assets, there seems to be little prospect of their swift return to the countries of origin.
Societies in need
The ousted rulers of Libya, Egypt and Tunisia accumulated wealth, the major part of which has been hidden in foreign accounts in the US, Switzerland and some EU countries (mostly the UK). While it is impossible to establish the amount of these ill-gotten gains, some estimates reach hundreds of billions of euros.
As the post-revolutionary governments struggle with economic hardship, calls to speed up the recovery of these assets and earmark them for reconstructing the societies concerned have grown stronger. Recovery, it is suggested, serves three distinct purposes:
- Funding government programmes and initiatives,
- Providing justice for victims and challenging a political culture of impunity, and
- Deterring officials from engaging in corruption in future.
A convoluted process
Asset recovery is a politically sensitive and tortuous exercise, as it involves numerous stakeholders, who often distrust each other. It is regulated by a plethora of national and international provisions.
First, plundered monies need to be tracked down and linked to the corrupt official. Straw men and shell companies are often used to conceal the origin of funds, however. In addition, a sizeable part is invested in offshore centres. These are reluctant to cooperate, and Western governments are allegedly unwilling to influence them.
Once the assets have been frozen, their illicit nature needs to be proven. The burden of proof lies on the party reclaiming the funds (with the notable exception of the so-called Lex Duvalier in Switzerland), which also has to justify its rights. As countries in transition are struggling to rebuild state structures and guarantee the independence of the judiciary, questions are also raised on the accountability of institutions requesting the return of assets.
Anti-corruption efforts have set the context, as the return of assets to their legitimate owners is a fundamental principle of the 2004 UN Convention against Corruption, which led to the Open-ended Intergovernmental Working Group on Asset Recovery being set up.
Most importantly, the UN Security Council adopts resolutions which serve as the basis for freezing assets (e.g. 2011 resolution on Libya).
The European Union’s role
On the basis of Article 215 TFEU, the EU may apply “restrictive measures” targeting third country entities and persons including former political leaders. They may be adopted either independently or to implement a UN Security Council resolution. Egyptian, Libyan and Tunisian assets have been frozen by relevant Council decisions and regulations.
The European Parliament is informed of restrictive measures taken by the Council (Article 215 TFEU). It addressed asset recovery in its 2012 recommendation to the Council on a consistent policy towards regimes against which the EU applies restrictive measures, as well as in resolutions on the situation in Tunisia, Libya, and, most recently, Egypt.
In November 2012 the Council adopted Regulations aimed at facilitating the return of funds, which allow the Member States to release Egyptian and Tunisian assets on the basis of judicial decisions recognised in the EU.