Corruption costs the global economy an estimated $3.6 trillion every year, and has been called "one of the biggest impediments" to achieving the SDGs. The World Bank also "considers corruption to be a major challenge" to the Bank's twin goals of ending poverty and boosting shared prosperity.
Recovering the proceeds of corruption and returning them to developing countries is critical to sustainable development, as the SDGs emphasize. The proceeds of corruption—money, property, or other assets—are often located in a foreign country. After legal proceedings occur, and assets are seized, governments are faced with questions: How can the proceeds of corruption be returned to the country of origin in a manner that is transparent, avoids allowing corruption to recur, benefits the poorest, and promotes sustainable development? How will civil society be involved in the asset return process?
A new BIC report examines the World Bank’s supervision and oversight of the return of the proceeds of corruption to developing countries. The report reviews five case studies of World Bank supervision of asset return—two in Nigeria, two in Kazakhstan, and one in Kyrgyzstan. Civil society experiences with these projects have been mixed. For example, the Corruption and Human Rights Initiative raised concerns about potential indicators of corruption, distribution of benefits to the ruling party, and an overall lack of transparency in a recent World Bank-supervised youth engagement project funded by recovered assets in Kazakhstan. In Nigeria, the Africa Network for Environment and Economic Justice is intensively monitoring a World Bank-supervised conditional cash transfer project funded by recovered assets, and has so far seen largely positive results.
BIC's report finds that the Bank faces significant limitations on its ability to conduct independent oversight and monitoring, and that the Bank could improve several aspects of the design and management of projects funded by recovered assets. Even though independent CSO monitoring is the lynchpin in successful asset return projects, Bank-facilitated asset return projects do not consistently enable participation from independent CSOs. The Bank has sporadically disclosed information about its role in facilitating asset return, and has at times obfuscated its role by referring to asset return projects as funded by “grants” from foreign development agencies. World Bank policies also do not require disclosure of information critical to effective, independent CSO monitoring—such as information about the source of assets, the Bank’s role, detailed financial and procurement documentation, and information about beneficial owners of all contracting companies.
The mostly positive experiences with asset return via the World Bank occurred in political contexts in which it was possible for civil society organizations to independently conduct in-depth monitoring of and reporting on the return of assets. Such monitoring requires open civic space, the ability to express critical views freely, and genuine and specific commitments from governments to facilitate and allow for in-depth CSO monitoring.
In future asset return projects, the Bank must commit to strengthen transparency and disclosure of documents in order to improve independent civil society’s ability to participate in and monitor project implementation. World Bank country offices and project staff also should seek technical advice on asset return projects from the Bank's Stolen Asset Recovery Initiative.
The paper recommends that future asset return projects, particularly potential projects in Uzbekistan, consider a range of options for asset return. Uzbek activists, for example, recently suggested that future asset returns should be used to incentivize reforms to strengthen the rule of law, national anti-corruption mechanisms, and the enabling environment for civil society (particularly freedom of association, assembly, and expression). Capacity-building could also be offered, if needed, in order to improve the country's ability to manage asset return in the interest of those who have been harmed by corrupt conduct.