How dictators stash their cash 101: How can Egypt track stolen assets?
A first step is identifying where assets are held. Libyan leader Muammar Qaddafi is said to have billions stashed in bank accounts from Dubai to Switzerland.
Boston — It's a multibillion-dollar question: When does an autocrat's wealth become illicit? Often only after his ouster, as seen in efforts to freeze accounts of Egypt and Tunisia's deposed leaders. But how will the new governments in those countries retrieve ill-gotten gains?
A first step is identifying where assets are held. Former Egyptian President Hosni Mubarak is believed to have money in Swiss and offshore bank accounts, as well as invested in real estate in Egypt's Red Sea resort town of Sharm el-Sheikh, London, New York, and Los Angeles. Libyan leader Muammar Qaddafi is thought to have billions of dollars in Dubai, southeast Asia, the Persian Gulf, and in Swiss accounts that were today frozen.
Indeed, Switzerland, Britain, and the United States are historically financial beehives for kleptocrats looking to stash money, in large part because their cities offer the best bankers, lawyers, and financial resources. About 27 percent ($2 trillion) of the world's privately held offshore wealth is managed in Switzerland, according to Boston Consulting Group.
“In those countries with large concentrations of financial actors, with clusters of services such as banks, lawyers, corporate advisers – there is everything you need to manage wealth,” says Daniel Thelesklaf, who heads the Swiss-based International Center for Asset Recovery. “That’s something that even a criminal is interested in.”
In the case of Nigeria's efforts to reclaim stolen assets of late President Sani Abacha, who died while in office, the government sought assistance from Liechtenstein, Luxembourg, Switzerland, Britain, and the US in identifying, tracing, and freezing $1.1 billion in embezzled public funds and profits from corruption. After five years of legal battles, with the Swiss particularly providing legal assistance to Nigeria, the Abacha family agreed in 2002 to return $1 billion. Further legal battles returned another $300 million to Nigeria.
"These people have good lawyers and have well protected themselves with various layers," says Mr. Thelesklaf, adding that the Basel Institute on Governance is willing to assist Egypt. "To break through all these layers is a complex procedure, and experience shows that this will take some years."