Hints for Asset Hunters

Relying exclusively on foreign governments for assistance in identifying and seizing stolen assets held on their soil is an exercise in futility.

The Swiss government's decision, on February 12, to freeze Hosni Mubarak's assets in Swiss banks will probably cause sleepless nights to other Middle Eastern rulers who liked to keep themselves in the sun and their assets in the dark. (Cynics will wonder what the Swiss government suddenly discovered that it didn't know about them before. ) Still, old coffers may be seized, but new coffers will soon be open for business.

There were unconfirmed estimates regarding the magnitude of Mubarak's personal wealth, ranging from $5 billion to $70 billion, and deposited in Britain, the United States and France. His family is also rumored to own property in London, Paris, Dubai and the U.S. Deposed Tunisian President Zine El Abidine Ben Ali was more blatant. His wife fled the country with one-and-a-half tons of gold, worth more than $55 million, probably just the latest addition to what the couple accumulated and deposited overseas during Ben Ali's 20 years of rule.

Globally, these numbers are just the tip of the iceberg. The World Bank estimates that developing countries lose $20-$40 billion each year through bribery, misappropriation of funds and other corrupt practices by government leaders.

If countries can't fight the theft of public wealth while their leaders are engaged in it, can they at least recover it after the leaders are deposed? This has never been an easy task, because countries that host the stolen billions are not particularly enthusiastic about helping in the recovery and repatriation of funds that are fueling their own economies - dubious sources notwithstanding.

However, a significant change occurred in 2005, when the United Nations Convention against Corruption was adopted by 140 states, including, among others, Switzerland, Tunisia and Egypt. The signatory countries agreed to cooperate in fighting corruption and provide legal assistance to foreign governments in gathering and transferring evidence for use in court to extradite offenders. Under the convention, countries are also required to support the tracing, freezing, seizure and confiscation of the proceeds of corrupt practices. The signatories agreed that in cases of embezzlement of public funds, the confiscated property would be returned to the state requesting it.

With the UN convention in place, it is clear why some corrupt rulers have been shaken. The assets they stole for a rainy day may not be available when the legal clouds over their heads open up. However, although the convention makes it sound simple, the process of discovering, seizing and repatriating stolen assets is a complex, lengthy and tedious undertaking. After all, despots don't just deposit their holdings in the bank account of "Mr. & Mrs. Corrupt Ruler."

Financial advisers, some even within the banks, spin a complicated international web of trusts and offshore corporations with nominee shareholders and directors. Sometimes, the web is so complicated that with the passing of time and people, the rulers themselves lose contact with some of their money. Therefore, the first and most difficult stage in the battle to recover these assets is to gather combat-zone intelligence, asking how much is hidden, and where. How do you start? A country newly freed of its dictator may resort to criminal complaints, civil lawsuits or administrative orders of seizure. As a rule, the stolen assets are situated outside the deposed ruler's country, so substantial international efforts may be necessary before the first dollar, euro or yen is recovered.

In 20 years of experience working for U.S. government agencies in gathering intelligence on criminals who absconded with hundreds of millions of dollars, I have learned a firm lesson: Relying exclusively on foreign governments for assistance in identifying and seizing stolen assets being held on their soil is an exercise in futility. The smaller the country, the more likely it is to put off responding to another country's request for assistance. Even when it does say yes, the help is often slow in coming.

I've even seen cases in which foreign government officials secretly leaked to the absconding criminal (in their eyes, just a respectable investor ) that the U.S. government was on his tail. So countries that seek to retrieve assets stolen by corrupt leaders must operate on two fronts : diplomatically - country-to-country and by invoking the UN convention; and operationally - through independent investigations by outside experts conducting worldwide intelligence-gathering on the assets.

In a nutshell, the asset hunters have a gun with just one bullet. Action must be taken simultaneously in all the places where assets are located, or the money whose existence is yet to be discovered will disappear. Investigators without specific experience in that particular field could trip on land mines planted by the rulers to expose the intelligence operation.

I know from experience: Early in my career, I tripped on one of those land mines, and I still carry a scar on my forehead to remind me to be more careful next time. The mine I stepped on was a corrupt bank employee to whom my target paid a hefty sum to alert him if any suspicious activity was conducted with regard to his account. I was physically attacked; but luckily, the money was seized.

Corrupt rulers know that the world has changed, and we have to assume they've adapted accordingly. One of the differences between a gas station robber and a white-collar criminal is that the robber wants cash, because its source cannot be traced. White-collar criminals want everything to look legal if the paper trail is followed. But when there's a trail, there are traces for the professional to walk through, until a broken link is found, and he can say "Gotcha!"

Haggai Carmon is an international lawyer and the author of four intelligence thrillers. His website is at www.carmonlaw.com.