Nihal Sri Ameresekere, who is in the forefront agitating against fraud and corruption in the highest echelons of society, made a presentation on the UN Convention Against Corruption (UNCAC) at the Annual Seminar of the International Association of Anti-Corruption Authorities (IAACA) held recently in Dalian, China.
Nihal’s presentation had been acknowledged as a masterpiece by the Secretary General of IAACA, Dr. Ye Feng, who is a Member, Prosecuting Committee/Director General of International Co-operation of the Supreme Procuraturate, China, International Director of Asia Crime Foundation and Vice-President, International Association of Prosecutors. The President of IAACA is the Prosecutor General of China.
IAACA membership comprises of governmental authorities of different countries combating fraud and corruption, and also includes, international and regional organisations and individuals, who are involved in the global campaign against fraud and corruption.
Nihal has been an individual member of IAACA, since its inception in 2006, which has been mooted by the United Nations Office on Drugs & Crime (UNODC) to promote and facilitate the implementation of the UNCAC, and is supported by the Chinese Government.
UNODC is the custodian of the UNCAC and the Secretariat for the Conference of State Parties, who have ratified the UNCAC, now numbering 140 States. Sri Lanka had been the second country, as far back as March 2004, to have ratified the UNCAC, which came into force in December 2005. However, Sri Lanka has done very little to effectively fulfil its duties and obligations under the UNCAC, and is perceived by the rankings of Transparent International as a country rampant with corruption.
For instance, Article 52 of the UNCAC specifically emphasizes the necessity for enhanced scrutiny of persons, who are entrusted with prominent public functions and their family members and close associates known as, ‘politically exposed persons’ i.e. ‘PEPs’. Let alone such enhanced scrutiny, the law enforcement authorities apparently are blind to fraud and corruption in such very circles, shielded through socio-political subservience or patronage.
The theme of the Seminar in Dalian had been the 5th Chapter of the UNCAC dealing with Assets Recovery. Nihal’s presentation was on the tracing of funds and assets, as an essential pre-requisite for its recovery, emphasising the dire need for tracing of funds and assets siphoned through corrupt means from the resources of the impoverished people of a country, by those who have wielded political power, and in some cases ousted through the revolt of such impoverished people, seen as a growing phenomenon in contemporary times.
Nihal asserted that at the same time the colossal financial calamities caused by fraudulent mismanagement and dubious deals by financial institutions, necessitating stimulus or bailing out packages by governments, using the resources of the people, cannot be condoned, and that the miscreants ought be arraigned before the law, in similar manner as ‘PEPs’, since this too involves public funds.
Tracing of funds and assets stashed away in foreign regimes by real owners was a daunting challenge, with invariably such funds and assets being hidden in a complex multitude of corporate structures, spread out in different global financial centres, such as in Channel Islands, UK, British Virgin Islands, Gibraltar, Western Samoa, Bahamas, Hong Kong, Singapore, Caymans Island, Bermuda, Mauritius, Nevis, Turks & Caicos, Vanautu, Eire, Isle of Man, Anguilla, Labuan, Panama, Cook Islands, Marshall Islands, Liberia, St. Vincent, et al.
It is a well-established practice that professional firms such as lawyers, accountants and fund managers afford services for the formation of such complex corporate structures, also providing persons to act as nominee directors and shareholders of such corporates, with the real owners’ names suppressed.
A foolhardy real owner sometimes would obtain a power of attorney from such corporate structures to act as the attorney for and on behalf of such corporates, whilst more intelligent embezzlers would create trusts to be the prima-facie beneficial owners of such corporates, with the real owners being only beneficiaries.
Should a real beneficial owner die, then the heirs of the deceased real beneficial owner are required to present the real beneficial owner’s copy of the trust instruments and proof of his/her death and proof of the deceased real beneficial owner’s assets devolving on such heirs. In such circumstances, the nominee directors, shareholders and the trustees of the corporates will recognise the heirs, and substitute them as the beneficiaries in such trust instruments.
Nihal posed the cogent issue, where the real beneficial owners, as beneficiaries under trusts are alive, as to how such trustees could be lawfully compelled to disclose such funds and assets to any other persons in the first instance, for such funds and assets to be recovered by the people, from whom such funds and assets had been pillaged and plundered, and siphoned to foreign regimes, to be hidden in a mire of corporate structures, with nominee shareholders and trustees, as prima-facie owners ?
In seeking ‘mutual legal assistance’ in terms of Chapter 5 of the UNCAC, requested countries insist upon specific particulars and details of funds and assets sought to be recovered by law enforcement authorities in requesting countries. Hence, would not the foregoing phenomenon, be a challenging obstacle to trace the funds and assets sought to be recovered, as provided for in the Articles of Chapter 5 of the UNCAC?
The recent official data released by the Swiss National Bank disclosed that Sri Lankans had deposited Euros 85 million during 2011, with liabilities by Sri Lankans of Euros 44 m, during the same year, some of which would be bona-fide funds of Sri Lankans resident overseas. This would not have included funds and assets stashed away hidden in complex corporate structures, with such corporates having bank accounts, whereby there would be no disclosure of even the correct domicile of the real owners of such funds and assets, and with such corporates registered in different foreign regimes.