Misappropriation of state assets has long been a problem, particularly in places with weaknesses in their legal institutions and less established state apparatus. Sub-Saharan nations, for example, have been the victims of state fund misappropriation. Some of the more well known examples include Swaziland’s King Mwasti III who is famed for indulging his taste in lavish houses and cars with public funds and Nigeria’s Sani Abache and, more recently, James Ibori, who abused their positions of authority to embezzle state funds.
Unfortunately, this is not a problem unique to any particular region. The use of taxpayers’ money to purchase items of luxury for those in power has recently occurred in regions as culturally and economically diverse as China, Iran and Eastern Europe. It could even be said that the UK’s own expenses scandal, in which democratically elected representatives of the people claimed fraudulent expenses for their houses and fish ponds, was tantamount to the theft of state funds.
Asset-tracing skills are required in a range of situations, including fraud and embezzlement – none of which are new. However, law firms and governments alike are turning to corporate intelligence service providers in response to the ever-evolving ways of hiding assets in trusts and complex offshore arrangements. Despite asset-tracing being made easier through the use of court orders and marevas, the evolving nature of information availability and record digitisation has helped corporate intelligence professionals dig deeper into the publicly available registries of countries further and further afield. In addition, relationship mapping software programmes, such as IBM’s® i2®, have become an invaluable tool in drawing together large amounts of information, while distilling, analysing and drawing out crucial intelligence from previously unmanageable quantities of data.
As corporate information becomes more readily available, privacy laws hindering access to details are being strengthened from Canada to China. Despite its transparent system, the UK is not immune from pressures both top-down (such as the EU’s Transparency Directive) and bottom-up (from citizens themselves) on restrictions on access to personal information, which hinder asset-tracing efforts. Although these represent a move towards ensuring information is kept within safe hands, it will also place greater emphasis on the legal procedures required to reclaim assets, implying more costly legal fees, more work for the affected government organisations such as the Serious Fraud Office, and a heavier burden on the Courts.
While less transparency in public information can hinder asset-tracing, the greater transparency afforded by pre-transactional due diligence can help minimise financial losses caused by failed joint ventures and rogue business partners. At the state level, meanwhile, one can only hope that recent movements towards stronger state institutions globally will minimise the theft of state funds.