Tuesday, January 3, 2017

The 1MDB scandal should be addressed by an international criminal tribunal - an important first in the fight against grand corruption


KL Skyline large

If you steal pennies you are likely to be caught and punished; if you steal bilions you're likely to be a government minister.


 This captures the essence of grand corruption. The scale of the crime is such that it is impossible to achieve without control of, or collusion with, a government.  And the involvement of the government means that the theft is rarely punished.  Kleptocrats, such as President Marcos of the Philippines, never prosecute themselves or their cronies.

Judge Wolf, a senior U.S. district judge, argues that the response to the impunity enjoyed by kleptocrats should be an International Anti-Corruption Court.  This court would have jurisdiction over grand corruption and would employ elite investigators expert at unravelling complex financial transactions.  It would only operate if the domestic state was unwilling or unable to pursue the case itself. 
Both friends and foes of the idea think that it is utopian and have raised many questions:  Why would corrupt heads of state agree to set up an international tribunal that might prosecute them later?  Wouldn’t this court be biased towards prosecutions of corrupt African leaders?  What makes grand corruption an international crime? Indeed, in legal terms, what is grand corruption anyway?

These questions are good ones. However, the proposal for an international court might be premature rather than utopian. The model for a global anti-corruption tribunal is the International Criminal Court (ICC) with jurisdiction over genocide, war crimes and crimes against humanity.  A study of the history of those crimes might provide a more likely route map to the development of international law on grand corruption.

The ICC was the culmination of a century of developments in international criminal law. The law on war crimes started as domestic codes for the conduct of military behaviour, then developed into international humanitarian law but applicable to inter-state relations, not individual criminal behaviour. Likewise, acts now understood as crimes against humanity – including the mass murder of civilians by their own government – were originally seen as domestic affairs, not international crimes.

It was only the advent of ad hoc international tribunals – first Nuremberg, and then Yugoslavia and Rwanda – which acted as a catalyst; transforming those codes and rules into international criminal law. When confronted with the capture of men who had undoubtedly committed crimes but where jurisdiction was uncertain, politicians and lawyers improvised and set up a new international court. The need to write a statute for the tribunal then forced the international community to decide: should crimes against humanity require a nexus to armed conflict or were pre-war Nazi crimes against Jews to be considered also?  Should genocide be an international crime? Should war crimes be applicable in both international conflict and civil wars?

It is this type of on-the-fly political pragmatism which will most likely also drive the development of international law on grand corruption. In retrospect, not establishing a special court for the enormous corruption crimes of Libya’s Colonel Gaddafi was a missed opportunity. Gaddafi had few friends at the Security Council who might have blocked its establishment. The successor governments in Libya were willing but probably unable to try such a case – and so may have been willing to cooperate with the special court.

Today, it is possible that the 1MDB case might fit the bill.  It is one of the world’s largest ever financial scandals.  In a civil complaint the U.S. Justice department accuses Jho Low, a financier, and ‘Malaysian Official 1’, widely reported to be the Malaysian Prime Minister, and their associates of embezzling $3.5 billion from 1 Malaysia Development Berhad (IMDB), a state investment fund. According to the complaint money was fraudulently diverted through anonymous shell companies and offshore bank accounts. The money was then allegedly laundered through the purchase of real estate in the US and UK, a luxury jet, works of art by Van Gogh and Monet, and the production of the The Wolf of Wall Street film. Hundreds of millions of dollars are said to have passed through the Malaysian Prime Minister’s personal bank accounts. He denies any wrongdoing.

Kuala Lumpur, the home of 1MDB bank. Photo: Wikimedia Commons
If true, these allegations would fit a common sense definition of international grand corruption: the sums involved are vast, there are at least a dozen jurisdictions involved, and senior government officials are implicated.

Investigations have been opened by the US, Switzerland and Hong Kong, but each probe only targets facets of the complex affair, while investigations in Malaysia have been stymied by alleged political interference. Cooperation from the present Malaysian government is unlikely but in the future a special court established under UN auspices, featuring both Malaysian and international judges, could help to insulate the court from accusations of either domestic political or pro-western bias. Importantly, if pursued by an international tribunal, prosecutors could investigate both high level officials from Malaysia, and the western facilitators of corruption – the financiers, lawyers, company formation agents and auditors who may have made a crime possible either through sins of commission or omission.

Kleptocracy has enormous costs both for an individual country and its neighbors. The victims include the millions of infants who die early because of inadequate healthcare. Grand corruption can also trigger threats to international peace and security – through either state collapse or regional aggression. President Mobutu’s turbo-charged corruption laid the groundwork for the Congolese civil wars. The Arab spring followed years of corruption in Tunisia, Egypt and Syria. This link means that either the United Nations Security Council or General Assembly could, in theory, begin a process which led to the establishment of ad hoc tribunals for cases such as 1MDB. 

None of this would be easy. But imagine the effect of an ad hoc international tribunal with jurisdiction over a specific corruption case: the drafters of its statute, and the jurisprudence it would generate, would help to shape the law of grand corruption for decades to come.


Source: Nick Donovan, Global Witness Blog

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