06 December 2006

Combating Kleptocracy

A State Department official discusses President George W. Bush’s official efforts against kleptocracy. (© AP Images/Charles Dharapak)

Large-scale corruption by high-level public officials—kleptocracy—is a particular threat for democracy and rule of law in developing countries. Such corruption undermines financial accountability, discourages foreign investment, stifles economic performance, and diminishes trust in legal and judicial systems.

According to the World Bank, $1 trillion is paid every year in bribes, and according to the United Nations, more than $400 billion has been looted from Africa alone and stashed away in foreign countries. Kleptocracy is a development issue, because high-level corruption undermines economic development and renders important issues, such as the fight against poverty, ineffective. In many parts of the world, kleptocrats have lined their own pockets instead of funding development, such as new roads, schools, and hospitals.

In recent years, the United States and its international partners have been developing new ways to deny corrupt officials access to the wealth they have accumulated through corrupt activities, and they have been employing new ways to target their assets.

In 2006, to combat high-level corruption, the United States implemented the National Strategy to Internationalize Efforts Against Kleptocracy. The strategy takes the fight against high-level corruption to a new level by involving U.S. foreign partners and financial institutions in more robust efforts to develop best practices for uncovering and seizing stolen funds, enhance information sharing, and ensure greater accountability for development assistance.

Two crucial aspects of the fight against kleptocracy are the denial of safe haven to corrupt officials and recovery and proper dispersion of the proceeds of corrupt acts.

Denial of Safe Haven

On January 12, 2004, President Bush issued Presidential Proclamation 7750, which gives specific legal authority to the secretary of state to identify persons who should be denied entry into the United States because they are involved in public corruption that has serious adverse effects on the national interests of the United States, including:

-- the international economic activity of U.S. businesses;

-- U.S. foreign assistance goals;

-- the security of the United States against transnational crime and terrorism;

-- the stability of democratic nations and institutions.

This proclamation prevents such people from coming to the United States to enjoy the fruits of their corruption and sends a strong message that the United States is committed to supporting international efforts to combating public corruption wherever it occurs.

Asset Recovery

The United States also is working with international partners to trace and recover the proceeds of corruption. Using law enforcement investigation and forfeiture tools, the United States also provides assistance to foreign investigations to recover assets.

In recent years, U.S. authorities have returned to various countries millions of dollars embezzled by these countries' former leaders.

The United States also will be working with international partners to enumerate best practices for identifying, tracing, freezing, and recovering assets illicitly acquired through grand corruption, and it is working with other international financial centers to establish and promote best practices to deny entry to proceeds of corruption, facilitate sharing of suspicious financial information, and encourage and develop public and private partnerships.

In addition to these measures, President Bush's Millennium Challenge Account—a program that provides aid to foreign governments committed to ruling justly, investing in their people, and encouraging economic freedom—rewards countries for rooting out corruption.