© 2012 Edwards Wildman Palmer LLP & Edwards Wildman Palmer UK LLP Criminal & civil recovery mechanisms to recover the proceeds of corruption a common law perspective on advantages, disadvantages and challenges of different mechanisms James Maton Partner, Edwards Wildman Blog: Twitter: #assetrecoverlaw and #anticorruptionlaw 27 November 2014

Recovering assets overseas: the options ♦ domestic criminal conviction, followed by confiscation order ♦ enforced domestically or internationally through mutual legal assistance ♦ domestic civil forfeiture or recovery ♦ orders obtained by law enforcement without a criminal conviction on basis assets represent proceeds of crime ♦ enforced domestically or internationally through mutual legal assistance ♦ foreign criminal or civil forfeiture proceedings ♦ for underlying corruption offences ♦ or (typically) for money laundering offences ♦ repatriation of confiscated or forfeited assets ♦ private civil proceedings, domestic or foreign ♦ state instruct lawyers to bring proceedings in the civil courts, domestically or overseas where assets are located or where jurisdiction can be established

Is there a best mechanism? ♦ “best” route depends on the particular facts and circumstances ♦ and those circumstances may change with time, so flexibility may be needed ♦ most asset recovery programmes will need a mix of mechanisms ♦ dual criminal and civil mechanisms may be necessary and more effective ♦ too often, there is no analysis of which is the most sensible route for a particular case

Choosing the recovery route: issues to consider (1) ♦ public interest in criminal convictions and sentence ♦ serious wrongdoing demands criminal sanctions ♦ But are criminal and confiscation proceedings available & realistic? ♦ no point pursuing route that cannot ultimately be taken to a conclusion! ♦ efficiency and fairness of Courts and appeal process needs to be considered ♦ location and legal owner of corrupt assets can be very important ♦ can confiscation orders or civil judgments be enforced in countries where assets are located, and in a sensible period of time? ♦ usually better to bring proceedings in countries where assets are located ♦ otherwise fight cases twice ♦ what about claims against associates, intermediaries, financial institutions, companies or other third parties?

Choosing the recovery route: issues to consider (2) ♦ need and ability to obtain further evidence ♦ law enforcement typically best placed to obtain further evidence through use of investigatory powers (e.g. production orders and search warrants) ♦ and internationally through mutual legal assistance ♦ often less opportunity for (meaningful) coercive powers in civil cases, and certainly less opportunity at investigation phase before proceedings are brought ♦ but will timely MLA be available? ♦ ease of freezing assets ♦ usually desirable or critical to secure assets at outset ♦ law enforcement typically have lower threshold to meet e.g. existence of an investigation and a reasonable suspicion

Choosing the recovery route: issues to consider (3) ♦ do contractual relationships need to be terminated or recast? ♦ civil courts may be better at dealing with termination and claims that arise ♦ risk of civil waiver of contractual rights through inaction ♦ standard of proof ♦ civil “balance of probabilities” more straight-forward than criminal “beyond reasonable doubt” ♦ particularly relevant where evidence is incomplete and there is a need to rely heavily on inference ♦ or where there may be admissibility issues in criminal proceedings ♦ availability of settlement mechanisms ♦ settlement of corruption cases can be a sensitive and controversial subject ♦ but there can be clear advantages to achieve earlier recoveries at lower cost ♦ but there may be legal difficulties in settling criminal cases

Choosing the recovery route: issues to consider (4) ♦ amount that can be recovered (quantum) ♦ is criminal confiscation or forfeiture limited to assets that can be linked to criminal activity? or can a “value-based” order be obtained that can be enforced against legitimate assets or assets of unknown origin? ♦ does criminal or civil route offer higher financial recovery? ♦ claims against third parties ♦ civil claims may be available against third parties that have assisted in wrongdoing such as associates of the wrongdoer, banks or advisers ♦ criminal proceedings against those parties may be unavailable, difficult or undesirable ♦ use of insolvency remedies ♦ States may be able to appoint liquidators to take control of companies ♦ cost and control of recovery mechanisms

Role of CSOs – a practitioner’s perspective ♦ traditional advocacy roles ♦ active involvement in claims? ♦ bringing claims where available? Private prosecutions? ♦ funding or managing claims? ♦ But how manage risk? ♦ investigations and reports ♦ often better access to on-the-ground information and whistle-blowers ♦ sometimes able to produce meaningful evidence at lower cost and more quicker ♦ able to use of Freedom for Information legislation, where it exists ♦ criminal complaint ♦ scrutiny of asset declarations, where available 8

Asset recovery: the future  Political will is by far the biggest obstacle to asset recovery  extend jurisdiction of International Criminal Court?  specialist International Corruption Court?  give universal jurisdiction to domestic Courts, or wider jurisdiction?  permit (legitimate) civil society groups, where they exist, to bring claims (False Claims Act)?  use some of freezing mechanisms deployed in terrorism cases?  Publicly available filings on beneficial ownership of companies?  But what about other entities?  Asset declarations  make public?  presumption of forfeiture, without more, if asset is economically controlled by public official but undeclared?  Mutual Legal Assistance  permit use of evidence for civil forfeiture/recovery and civil claims? 9