PARIS (Thomson Reuters Foundation) – Money allegedly stolen by Russian officials in a major scandal and funds looted from Afghanistan’s Kabul Bank are sitting in Dubai but international authorities have failed to hold the United Arab Emirates to account, a leading French politician said this week.
Eva Joly, a former magistrate known for exposing high-level political and business corruption in France, said officials should demand that Dubai give back the money stolen in Russia’s Magnitsky case and from Kabul Bank.
Sergei Magnitsky, a Russian lawyer who died in jail, had been investigating an alleged large-scale theft by Russian officials while Kabul Bank nearly collapsed over corruption in 2010.
Joly called on the Organisation of Economic Cooperation and Development (OECD) to place the UAE on its black list of countries failing to enforce money-laundering laws.
“This is a shame, and we cannot live with it,” said Joly, a member of the European Parliament who was named to the anti-graft body backed by the United Nations to monitor corruption in Afghanistan.
“I cannot understand why the OECD blacklist is empty. Kabul Bank is the most important bank scandal ever, affecting 13 percent of the GDP of the country… and half of it is in Dubai,” she said at a roundtable discussion on the impact of the OECD’s Anti-Bribery Convention.
“We have the account numbers and the names of the persons and the international community is sitting by,” Joly added.
UAE financial regulatory officials, contacted on Thursday, did not immediately respond to requests for comment. Angel Gurria, OECD secretary general, said at the roundtable event he would look into better coordination of anti-bribery, tax evasion and money laundering matters at the organisation.
An audit of Kabul Bank revealed $1 billion – deposited from U.S. foreign assistance and to pay military and policy salaries – had gone missing. Investigators alleged its owners were running it like a personal piggy bank to fund lavish lifestyles.
A report last month from the UN anti-graft body noted that the receivers have recovered $172.9 million from the sale of Kabul Bank assets, but that there has been no serious effort to get back about $900 million laundered internationally.
In the Magnitsky case, Joly said international investigators had told her a large chunk of the $230 million stolen was also is in Dubai, which she said investigators call a “black hole in international cooperation.”
Magnitsky was conducting a probe into alleged theft by Russian officials involving at least 23 companies and linked to an alleged $230 million tax fraud case. He was arrested and died in prison in Russia in 2009, seven days before the expiration of the one-year term during which he could be held without trial.
Drago Kos, incoming chair of the OECD’s Working Group on Bribery and international commissioner of the UN’s anti-graft body in Afghanistan, warned during the panel discussion on corruption that flows of illicit money from Afghanistan could accelerate in 2014 depending on the results of the national elections, and that authorities are not taking full action to recover assets looted from Kabul Bank.
Kos said British experts helped the Afghan Attorney General's Office write letters requesting legal assistance for their recovery, including to the UAE. But the Attorney General’s office did not send out the letters to all the countries involved and it shortened some other letters.
For the UAE’s part, it did not forward the request to the appropriate office and no proceedings were started. In the first quarter of this year, the UAE ambassador to Afghanistan promised to personally intervene.
“But we still did not see any practical movements in the direction of seizure or confiscation of assets looted in Kabul Bank,” Kos said.
Gurria acknowledged at the seminar that the OECD – which hosts groups to support the international community’s work on social and economic development included tax, corruption and financial crimes – had failed to use its powers fully to coordinate activities in the area.
“This is a shortcoming,” Gurria said, adding it would be addressed.
As well as the Working Group on Bribery that implements the OECD convention to criminalise bribery in international business, the OECD houses the Financial Action Task Force where financial policymakers set global standards for countering terrorist finance and money laundering.
FATF conducts regular assessments of how well countries comply with its recommendations, naming and shaming those who are stalling.
It publishes a blacklist and in October 2014, it cited Iran and North Korea as high risk and as not complying with FATF recommendations. It also has a so-called grey list of countries that have significant shortcomings in their anti-money laundering and counter-terrorist finance regulatory and investigative systems – a list that includes countries such as Afghanistan and Nigeria but not the UAE.
Money laundering and corruption investigators frequently point to Dubai as a major centre for the laundering of criminal funds.
Other branches of the OECD are working on sharing tax information and reviewing the role that shell companies play in hiding the true owner of assets obtained from crime and corruption. Nicola Bonucci, OECD’s general counsel, said the organisation has “untapped potential” for coordinating and strengthening international efforts in the field of crime and corruption.
Joly gained fame for her work as a French magistrate, exposing high-level corruption in the business empire of former minister Bernard Tapie and Credit Lyonnaise, and in the leading French oil company Elf Aquitaine.
Stella Dawson was moderating the OECD's roundtable discussion, "The Impact of the OECD Anti-Bribery Convention 15 years On and How to Ensure Its Continued Relevance" on Wednesday, at which Joly, Kos and Gurria spoke