Recovering the proceeds of
corruption: international
success stories
THE POTENTIAL OF
CIVIL ASSET RECOVERY
Edwards Wildman Palmer UK LLP
Tim Daniel
December 2, 2011
© 2011 Edwards Wildman Palmer LLP & Edwards Wildman Palmer UK LLP
An [In] Famous Five
President Suharto of Indonesia
♦ General Sani Abacha of Nigeria
♦ Benazir Bhutto of Pakistan
♦ Dieprey Alamieyeseigha of Bayelsa State
♦ Anglo Leasing (Kenya)
♦
League Table
Suharto (deposed 1998 – died 2008) (30 yrs) $15bn1
♦ Abacha (died 1998) (4½ yrs) $3-5bn
♦ Bhutto (assassinated 2007) (7 yrs) Unknown
♦ Alamieyeseigha (living) (6½ yrs) £20m
♦ Anglo Leasing $1bn
♦
1 $73bn
acquired by family over 30 years
Declared: $2.4m in savings, 19 hectares of land in Indonesia
Source: Time Magazine: 24.5.99
Favoured Havens
Suharto (plus children): Switzerland, Austria, UK, US, Guernsey,
Netherlands, Nigeria, Uzbekistan, Vanuatu, etc etc
♦ Abacha: Switzerland, Luxembourg, Liechtenstein, Jersey, UK
(BVI: 19; IOM: 2; Panama: 1; Liechtenstein: 1)
♦ Bhutto/Zardari: Switzerland, Isle of Man, Liechtenstein, BVI,
Panama, Dubai
♦ Alamieyeseigha: UK, Denmark, Cyprus, South Africa (BVI,
Seychelles, Bahamas)
♦ Anglo-Leasing: Switzerland, UK, Jersey, Guernsey, US, Cyprus,
Netherlands, BVI, Liechtenstein
♦
The Looting of Nigeria
£210 billion since 1960
♦ Nearly $10 billion per annum
♦ Abacha - $3-5 billion in 4 years
♦
Death of Abacha
Interim military government
♦ Amnesty and Decree 53
♦ $750 million voluntary surrender
♦ Special Investigation Panel
♦
Advent of civilian rule (May 1999)
♦
♦
steps by Obasanjo
the Letters of Request – informal and formal
♦ Switzerland
♦
USA
♦
Luxembourg
♦
Liechtenstein
♦
France
♦
Belgium
♦
The United Kingdom
♦
Jersey
How did Abacha operate
security votes
♦ the Central Bank of Nigeria
♦ the Ajaokuta Steel Plant debt
♦ ballot boxes, vaccines
♦ oil industry
♦ bribes
♦
Action in Switzerland
freeze by Council of Ministers
♦ investigating magistrates
♦ Cantonal Attorney-Generals
♦ Enrico Monfrini
♦ information from banks
♦ basis of LoR’s to other jurisdictions
♦
Proceedings in Switerland
initiated in 1999
♦ criminal, with Nigeria as civil party
♦ many interlocutory applications
♦ Supreme court twice
♦ completed in 2005
♦ Repatriation issues
♦
Mutual Legal Assistance in England
request made in 2000
♦ many queries – dual criminality
♦ first Judicial Review proceedings 2001
♦ gathering of evidence
♦ second Judicial Review 2004
♦ transmission of evidence in 2004
♦
Civil proceedings in England
FSA Report March 2001
♦ proceedings issued May 2001 ex parte
♦ 120 defendants
♦ freezing injunctions and disclosure orders
♦ “No say” order
♦ inter partes September 2001
♦
Battle of affidavits
defendants evasive
♦ potential settlement
♦ release of Mohamed Abacha
♦ continued worldwide freezing order
♦ access to UK funds by Abachas
♦
Proceedings in Jersey
institution of money laundering proceedings
♦ involvement of Bagudu
♦ extradition of Bagudu from US
♦ Bagudu prosecuted in Switzerland
♦ Bagudu banned from US/UK travel
♦ Bagudu settles for $180m
♦
Proceedings in Luxembourg and Liechtenstein
monies frozen
♦ monies lost by banks
♦ follow Switzerland
♦
Recoveries made, and to come:
voluntary surrender
♦ Switzerland
♦ Jersey
♦ UK
♦ Luxembourg
♦ Liechtenstein
♦ Ongoing
♦
$750m
$570m
$380m
$150m
$300m
$400m
$450m
$3 billion
The Suharto family: “A Talent for Business”
(Time Magazine)
Sector
Oil & gas
Forestry & plantations
Interest on deposits
Petrochemicals
Mining
Banking & financial services
Indonesian property
Food imports
TV, radio, publishing
Telecommunications
Hotels & tourism
Toll roads
Airlines & aviation services
Clove production/distribution
Autos
Power generation
Manufacturing
Foreign property
TOTAL:
CURRENT HOLDINGS:
Cash and assets acquired by the family
over 30 years (in billions)
$17.0
$10.0
$ 9.0
$ 6.5
$ 5.8
$ 5.0
$ 4.0
$ 3.6
$ 2.8
$ 2.5
$ 2.2
$ 1.5
$ 1.0
$ 1.0
$ 0.46
$ 0.45
$ 0.35
$ 0.08
$73.24
$15.0
Humtomo Mandala Putra “Tommy”
Age: 39
Estimated wealth: $800 million
Major holdings: 60% of Humpuss Group, which has more than 60
subsidiaries in industries ranging from construction to
pharmaceuticals
Property: Ranch in New Zealand, Mill Ride Golf Club, an 18-hole
course he partly owns in Ascot, England. Plays there twice a year
and is said to have a respectable 12 handicap
Acquisitions: Lamborghini, The Motor Bike Company
June 1998: Suharto desposed
July 1998: Tommy opens BNP account in Guernsey C.I.
♦ Garnet Investments Ltd incorported in BVI
♦ Aug ’98 – June ’99: £8m and $59m paid into Garnet accounts
♦
July 2002: Tommy convicted in Indonesia of:
Unlawful possession of fire arms and ammunition
♦ Arranging the murder on 26 July 2001 of Supreme Court Judge
Syafiuddin Kartasmita (who convicted him of corruption on 22
September 2000)
♦ Preventing a public servant from performing his duty (by failing to
surrender to serve his sentence after conviction)
♦
Tommy fights back
October 2002: Tommy instructs BNP to pay him
the money in his accounts
BNP seek permission from Guernsey FIU, The Financial
Intelligence Service (FIS)
♦ Indonesia invited to intervene
♦ Indonesia fails to secure a favourable judgment at home
♦ Court of Appeal orders payment to Tommy
♦
The FIS intervenes
FIS freeze funds
♦ Judicial Review: Tommy wins
♦ Appeal: Tommy loses
♦ Unanswered question: where did the money to buy Lamborghini
and the Motorbike Company come from?
♦ Further appeal to Privy Council pending
♦ Court of Appeal suggests Tommy sue BNP …
♦
Article 1 Protocol 1 point:
“Every natural or legal person is entitled to the peaceful enjoyment
of his possessions. No one shall be deprived of his possessions
except in the public interest and subject to the conditions provided
for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the
right of a state to enforce such laws as it deems necessary to
control the use of property in accordance with the general interest
or to secure the payment of taxes or other contributions or
penalties.”
Money Laundering
♦
It is of the essence of anti-money laundering methods to seek to
maintain a system whereby funds are properly traceable in order
to seek to defeat the mischief which is facilitated where all the links
cannot be traced or all the underlying transactions verified.
AAZ 1: ZARDARI PROCEEDINGS
Claim No: 2006 Folio 156
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
BETWEEN
THE ISLAMIC REPUBLIC OF PAKISTAN
Claimant
-
(1)
(2)
(3)
(4)
and -
ASIF ALI ZARDARI
ROMINA PROPERTIES LIMITED (in liquidation) (a company registered under
the laws of the Isle of Man)
WINKFORD FARM LIMITED (in liquidation) (a company registered under the
laws of the Isle of Man)
PARSONAGE FARM LIMITED (in liquidation) (a company registered under the
laws of the Isle of Man)
Defendants
AAZ 2: The Players
Benazir Bhutto: elected Prime Minister of Pakistan from 2.12.88
to 6.8.90 when dismissed by President for corruption and inability
to maintain law and order. Re-elected 19.10.93, dismissed again
on 5.11.96 on similar grounds. Acted as Federal Minister of
Finance during both terms.
♦ Asif Ali Zardari: husband of Ms Bhutto: variously a member of the
National Assembly and of the Senate, Federal Minister for
Investment.
♦ Jens Schlegelmilch: Bhutto family’s Swiss lawyer from 1981.
♦
AAZ 3: The Property: description
♦
Rockwood Estate, near Godalming, Surrey. 350 acres of prime
farmland in an area of outstanding natural beauty: Rockwood
House plus two farms, Entertainment complex with swimming pool,
outbuildings to be converted to provide 60-70 loose boxes for polo
ponies, polo pitch, airstrip.
AAZ 4: The Property: “The Surrey Palace”
AAZ 5: The Surrey Palace
AAZ 6: The Plan
♦
Ownership and source of funds to be concealed at all costs.
Schlegelmilch recruited: Partner in Lawrence Jones, solicitors, Mr
Howard; tax consultant from Jeffcote Donnison Group, Mr
Wilamowski to advise.
AAZ 7: The Advice
♦
Rockwood House should preferably be held by an Isle of Man
trust, and purchased with a loan from an offshore entity (also
controlled by the ultimate individual client), such loan being
secured on Rockwood House, with the charge being registered in
the name of the trustees for the benefit of the settlor, that is to say
the ultimate individual client. Noted that the ultimate individual
client already had a Liechtenstein trust that could be used for this
purpose.
AAZ 8: The source of funds
Bribes and secret commissions derived from two Swiss preshipment inspection firms:
SGS
Cotecna
♦ Payable: 10% of value of amounts billed to Pakistan (bills based
on value of goods inspected).
♦
AAZ 9: The Purchase
♦
2.10.95: The Surrey Palace is purchased for 2.25m.
AAZ 10: The Sale
♦
On 16 July 2004 the Defendant companies, now in liquidation,
completed the sale of the Surrey Palace for £4,350,000.
AAZ 11: The Declarations
♦
On 18 July 1996 Bhutto and Zardari as members of Pakistan’s
National Assembly made declarations in the Members Register of
Interests: neither of them disclosed any interests outside Pakistan.
AAZ 12: Surey Palace – The Swimming Pool and
Leisure Centre
Sic transit gloria
Kenya
Recovering the proceeds of
corruption: international
success stories
THE POTENTIAL OF
CIVIL ASSET RECOVERY
Edwards Wildman Palmer UK LLP
Tim Daniel
December 2, 2011
© 2011 Edwards Wildman Palmer LLP & Edwards Wildman Palmer UK LLP