International Initiative to Combat Kleptocracy VIDEO, PODCAST, TEXT

Technorati Tags: State Department and Secretary of State or kleptocracy and Josette Shiner, or Under Secretary for Economic Business Agricultural Affairs and high-level public corruption or Condoleezza Rice, or St. Petersburg G-8 and Ukraine,, or President Bush, and Presidential Proclamation 7750,

The President's New International Initiative to Combat Kleptocracy, FULL STREAMING VIDEO, file is windows media format, running time is 30:33 PODCAST, file is mp3 in m3u format for streaming playback, running time is 30:33, DOWNLOAD, file is mp3 format for PODCAST, running time is 30:33, Washington, DC, August 10,, 2006

Under Secretary for Economic, Business and Agricultural Affairs Josette Sheeran Shiner speaks to reporters about President Bush's National Strategy to Internationalize Efforts Against Kleptocracy,

or high-level corruption, during a press conference at the State Department Thursday, Aug. 10, 2006 in Washington. [© AP/WWP photo], Fact Sheets: White House or Statement by the President on Kleptocracy and in PDF format State Department and

Josette Sheeran Shiner, Under Secretary for Economic, Business, and Agricultural Affairs; Acting Deputy Assistant Secretary of State for International Narcotics and Law Enforcement Affairs Elizabeth G. Verville; Principal Deputy Assistant Attorney General Matthew W. Friedrich; Treasury Assistant Secretary for Terrorist Financing Pat O'Brien

On-the-Record Briefing, Washington, DC, August 10, 2006

MR. CASEY: Good afternoon, everybody. Welcome to briefing two on the day. Pleasure to have you all here with us. As you know, the President has just announced today a new international initiative to combat kleptocracy, high-level corruption, corruption by high-level officials. We wanted to take this opportunity to have you hear from some of the people who have been involved in putting this initiative together and who will be instrumental in implementing it, starting first and foremost with our own Under Secretary for Economic, Business, and Agricultural Affairs, Josette Shiner, and she's accompanied today by colleagues from the Justice Department, starting with Principal Deputy Assistant Attorney General Matthew Friedrich and from the Treasury Department, Assistant Secretary for Terrorist Financing, Pat O'Brien.

We'll have each of them make a brief presentation to you and then we'll move on to your questions. Madame Under Secretary?

UNDER SECRETARY SHEERAN SHINER: Good afternoon. We're here today to discuss the global fight against kleptocracy, high-level corruption by public officials. And what we're really talking about are those who steal the hopes and the dreams and the futures of their own citizens. As you know, the United States has long fought the war against high-level public corruption but today, we're announcing our efforts in the U.S. Government to take this to a new level.

At the St. Petersburg G-8, we had the first comprehensive statement ever combating kleptocracy and getting the agreement of all the G-8 on the tool box available to us and an agreement to work together to fight kleptocracy, high-level corruption together. And we have formed an interagency team that will be working under the leadership of the President and Secretary Rice to pull together all of our resources in the U.S. Government to make sure that we're deploying a full tool box in the fight against high-level corruption.

Further, we'll continue to work with our international partners and multilateral development organizations to ensure that as we do this work, we return stolen funds to the rightful owners, as we've done in the past, by repatriating funds in countries like Nicaragua and Peru. This is a multi-agency effort, as I mentioned, and today, we -- you will also hear from our colleagues from Treasury and Justice on their piece of this comprehensive strategy.

High-level corruption or kleptocracy, we're focused particularly on that because we feel it's an insidious crime that affects not only individuals, but entire nations, and it constitutes a major threat to international security. But most importantly, it undermines the faith in democracy, the rule of law, it hinders economic development, and contributes to organized crime and terrorism. In village after village throughout the world, when you see citizens that have been denied the benefits of development, have been denied the benefits of economic growth, often at the root and cause of it is high-level corruption and kleptocracy.

Kleptocrats rob their nations and their people of a future. Development dollars are often waylaid to line the pockets of kleptocrats and their cronies. Investment opportunities never materialize in these nations and entire nations stagnate, where right over the border, you see nations that effectively combat corruption attracting in investment and growth and effective use of development dollars. This is especially heinous because those who are most in need are the most vulnerable citizens on earth and those most affected by these crimes.

How much impact do kleptocrats have? Just a few examples; the World Bank estimates that $1 trillion a year is paid every year in bribes. Over 400 billion, according to the UN, has been looted from Africa and stashed away in foreign countries. In Sub-Saharan Africa, we have eight -- about 800 million people, many living on a dollar a day. $400 billion is a lot of money that belongs with the citizens of those nations. Transparency International estimates that former Indonesian President Suharto, for example, embezzled between 15 and 35 billion dollars from his people during his tenure. Ferdinand Marcos and many others, but he was estimated to have embezzled $5 billion from his people. Where is that money coming from? It's coming from the citizens of those countries.

Over the years, the United States has led the effort to form an international regime and action plan to fight corruption. In 1977, a very important action; we enacted the Foreign Corrupt Practices Act and made it illegal for U.S. citizens to bribe foreign officials. We will work to ensure and to advocate and to push for every country on earth to have similar action and laws in place. In the past two years, we have taken 16 enforcement actions under this law.

In 2002, President Bush created the Millennium Challenge Corporation, and in that we provide foreign assistance to countries that can demonstrate that they are effectively combating corruption. We feel that an important prerequisite for effective use of development dollars is ensuring that there are effective measures against corruption. This is one of the first international development programs that makes that a prerequisite of those dollars going into a country. But we’re not making it a pass/fail test with countries. And those countries that are committed to and pass the other qualifications for MCC, we’ve developed threshold programs to help them build capacity to fight corruption.

Corruption is often endemic. It’s also multi-generational. And we are working with our partners in Ukraine, in Philippines and other countries to build in through the MCC threshold program anti-corruption programs. For example, we have approved just in June a $45 million anti-corruption program in the Ukraine and a $21 million anti-corruption program in the Philippines. In USAID, this is a regular part of our development toolbox, and we have anti-corruption reform programs in over 50 countries, and we’ll be working with countries to ensure the effectiveness of those.

In 2004, President Bush issued Presidential Proclamation 7750, which denied kleptocrats and those who bribed them and their families safe haven in the United States. And today, President Bush is announcing this broader strategy to work with our international partners to ensure that there is as much coherence as possible among nations in the use of a effective toolbox against kleptocracy.

This expands on our current efforts that we already have in place in the different agencies, but for the first time, we will pull these together and mobilize and coordinate to ensure, that with our international partners, we are effectively using all the tools in the toolbox.

In the G-8 we were able to get, as I mentioned, for the first time -- we've had statements on anti-corruption -- first time addressing the specific issue of kleptocrats, those in high level in governments who line their pockets with public funds.

Also just last week the Senate committee voted out of committee the UN Convention Against Corruption. This is a critical new toolbox for nations to use to fight corruption and we will be implementing those provisions and in fact many of them we are already incorporating into our toolbox. There's the Inter-American Convention Against Corruption, the OECD Anti-Bribery Convention, which was a piece of the G-8 statement committed to another peer review under the OECD Anti-Bribery Convention, which is very critical.

As part of the strategy, the critical tools will be denying physical and financial safe haven to corrupt officials; we will prevent them through -- from laundering their ill-gotten proceeds; bringing to justice those who bribe foreign officials; and identifying, recovering and returning to the people of these countries the stolen assets that belong to them.

And so today we're putting kleptocrats on notice. We want the world to not be a safe place for kleptocrats and we will take actions just as we have recently done with Belarus.

I would like now to call on Matt to talk to us about efforts at the Department of Justice and then Treasury will make some statements. Thank you.

MR. FRIEDRICH: Good afternoon. When it comes to public corruption, the message that the Attorney General has consistently delivered to prosecutors across this country, that message is that no one is above the law. The strategy that we announce today reinforces our commitment and our responsibility to take that message to the rest of the world.

The Department of Justice brings to the strategy announced today a critical enforcement capacity. This capacity is built on the strength of our relationships with law enforcement partners around the world and years of collaboration in the daily fight against transnational crime. Consistent with the strategy, the Department of Justice will continue to bear responsibility for the investigation and prosecution of kleptocrats, those who bribe them, and the money launderers who facilitate these offenses. We will continue to vigorously enforce our forfeiture laws and recover the proceeds of these crimes. And we will continue to provide foreign governments with anticorruption technical assistance and training.

As you know, the Attorney General has made the enforcement of our laws that preserve the integrity of our public institutions a top priority of the Department. You are all aware of the recent public-corruption prosecutions that the Department has launched over the last year. You may also be aware that the FBI has added some 200 additional agents to its public corruption squads across the United States. Corruption is a subversion of our democratic process, and we will prosecute these offenses wherever we find them.

But our efforts in fighting corruption do not end at our border. For in our increasingly interdependent global economy, the effects of public corruption reverberate beyond any particular locale. The common denominators in the fight against corruption, be it foreign or domestic, are many. Offenders, including kleptocrats, act out of greed to subvert the will of the people, and the result is bad governance for all. We are all offended by examples of so-called "grand corruption," including instances in which distinctions between state and personal property become non-existent for senior officials and public funds are looted on a wholesale basis.

I would like to highlight for you some recent examples of actions the Department of Justice has taken to combat foreign corruption and kleptocracy in particular.

This month, former Ukrainian Prime Minister Pavel Lazarenko is scheduled to be sentenced in federal court in San Francisco as a result of his conviction for money laundering, wire fraud, and related offenses in connection with his abuse of office. We are also engaged in on-going efforts to recover the proceeds of his crimes.

Next, as a result of an investigation and forfeiture action led by the U.S. Attorney’s Office and the FBI in Miami, the Department repatriated to Peru in 2004 more than $20 million connected to the illicit conduct of former president Alberto Fujimori and his associates. The Department’s cooperation with international investigators also helped lead to the capture of Vladimiro Montesinos and the repatriation of millions more in illicitly acquired assets from other jurisdictions.

Next, in collaboration with ICE agents, the U.S. Attorney’s Offices in Miami and Oklahoma City have recovered more than $3.3 million in criminally tainted assets connected to the associates of former Nicaraguan President Aleman. The Treasury Department transferred $2.7 million of those assets back to Nicaragua in 2004.

Also in recent months the Department enforced a United Kingdom restraint order to freeze more than $400,000 in assets connected to a former Nigerian Governor charged with corruption offenses there and money laundering in the UK. This represented the first such use of this enforcement action of its kind under the Patriot Act.

Further, since 2001, we have significantly increased the number of cases the Department has prosecuted under the Foreign Corrupt Practice Act, which makes it a federal crime to bribe foreign government officials for the purpose of obtaining or retaining business, and I fully expect that trend to continue. In 2005, to cite just one example, the Department convicted a U.S. company for violating the FCPA in connection with $3.5 million in illicit payments made to an advisor of the President of Benin. The company paid over $28 million in criminal and civil fines to resolve the Department’s criminal action and a related SEC enforcement action.

The Department is also actively engaged in developing strong international standards to combat corruption and recover the proceeds of kleptocracy. Department attorneys, together with our colleagues from State, were key participants in the negotiation of the UN Convention Against Corruption, including the criminalization and asset recovery articles that targeted kleptocracy specifically. The Justice and State Departments have worked to implement a G-8 initiative on practical measures to enhance international recovery of the proceeds of kleptocracy and ensure accountability and transparency in the repatriation of those recovered assets. Also with support from the State Department, the Justice Department developed and delivered regional conferences in South Africa in 2003 and in May of this year in Miami to bring prosecutors, judges and other foreign authorities together to promote cooperation and best practices in the recovery of proceeds of corruption.

We will work together with our partners, our international partners, in other ways, too. The Department provides anti-corruption training, technical assistance, and equipment to police, prosecutors and judges across the world to assist our foreign colleagues in their efforts to prevent and prosecute public corruption.

The President’s initiative is designed to build upon these efforts to spark even more collaboration in the international fight against kleptocracy. We are actively litigating cases to remove -- to recover the proceeds of foreign official corruption and develop effective and transparent mechanisms for repatriation. We look forward to working with our colleagues at the Departments of State and Treasury and other federal agencies to make the President’s initiative a success.

ASSISTANT SECRETARY O’BRIEN: Good afternoon. One of the key missions of the Treasury Department is to safeguard the U.S. and international financial systems against financial crime. A critical component of this charge is ensuring that the international financial system is not available to kleptocrats seeking to transfer their ill-gotten gains.

The importance of this mission is not only recognized by the United States, but has been stated by our partners around the globe. Indeed, the G8 Leaders just last month underscored the importance of this in their joint statement.

Together with other departments, Departments of Justice and State and DHS, Treasury has actively assisted countries in recovering official assets looted by kleptocrats. At the request of foreign governments, or pursuant to UN Security Council Resolutions and U.S. laws and executive orders, Treasury financial investigators can provide key support in identifying and tracing looted assets to foreign countries. In certain cases Treasury can also be granted specific authority to freeze kleptocrats and their networks out of the U.S. financial system.

For example, on June 19th of this year, President Bush issued Executive Order 13405 - Blocking the Property of Certain Persons Undermining Democratic Processes or Institutions in Belarus. This executive order explicitly incorporated kleptocratic behavior as a basis for designation.

This targeted measure serves as an example of the means available to the U.S. Government to deter other public officials from using the international financial system to move proceeds of grand corruption.

A large part of the Treasury's activities against kleptocracy relate to working to close the vulnerabilities in our financial system. We continue to forge a coalition of international financial centers to strengthen our ability to detect illicit use of the financial system by kleptocrats and other illicit actors.

We do this through a variety of means. We do this through bilateral technical assistance, as well as coordination with international financial institutions, the Financial Action Task Force, and the UN and other international bodies. Playing a critical role in this is the FATF, which is the premier international organization for the development and promotion of standards and norms to combat money laundering and terrorist financing. The FATF standards recognize and reflect the close nexus between money laundering and corruption, as kleptocrats moving their corruption proceeds routinely need to launder funds in order to hide their true origins and move them out of their home country.

The FATF, along with the IMF and World Bank, assess countries' compliance with anti-money laundering and counter-terrorist financing standards. These standards include recommendations requiring enhanced due diligence for politically exposed persons in order to identify and prevent the transfer of illicit proceeds of kleptocracy. Ensuring international compliance with these standards is an important step in ensuring that kleptocrats do not profit from their criminally derived proceeds.

With Treasury leadership, the IMF and World Bank endorsed inclusion of comprehensive AML/CFT assessments as a regular part of all financial sector assessments and ongoing surveillance. We also support the World Bank and IMF efforts to provide technical assistance and training to strengthen AML/CFT regimes worldwide. Treasury, through its financial intelligence unit, the Financial Crimes Enforcement Network, also works to build international capacity for information sharing of financial data to aid investigations. We do this through training and outreach with FIUs worldwide.

Finally, we recognize that an important piece to our national strategy against kleptocrats is establishing an appropriate mechanism to return the assets, and we applaud the World Bank Group's efforts to explore its role in the restitution of looted assets and the responsible management of these recovered assets.

In conclusion, Treasury understands that protecting the financial system from abuse by kleptocrats, and among other illicit financiers, is integral to international financial stability and global security. To this end, we continue to look for closer bilateral and international cooperation. Preventing kleptocrats, terrorists, proliferators, and other rogue actors from using the formal financial system to bankroll their agendas is truly a critical component of our national and economic security.

Thank you.

UNDER SECRETARY SHEERAN SHINER: Any questions?

QUESTION: I noticed you’ve referred to kleptocrats who are no longer in office, like Saddam Hussein, Aleman and Abacha and Fujimori and others. There must be some incumbents who are in that same category. Can you address that?

UNDERSECRETARY SHEERAN SHINER: I think one of our first steps in the strategy will be to work in our inter-agency team and then with our partners to identify those who we think need to be targeted. And really, what we’re saying today is we’re putting kleptocrats on notice. If you’re stealing the funds that legitimately belong to the citizens of your country, we will be organized to act on that. So we’re not here today to announce a list, but we are here to say that the action we’ve taken with Belarus is an example of the kind of action that we seek to take. And the point we want to underscore is this is a development issue. This is essential to the successful development of countries and ending poverty. And we think it’s a critical piece of addressing the systemic issues in countries where we see endemic poverty. So we will be looking at an action plan and working as closely with our G-8 partners and others to have an organized strategy on which and where to target our efforts.

I don’t know if you want to add anything.

Any other questions? Hi.

QUESTION: There still are corrupt officials. And then are there governments that are in effect criminal enterprises in themselves? I know that North Korea has been singled out by the United States for state-sanctioned counterfeiting and smuggling. Is North Korea a particular issue of concern to you?

UNDER SECRETARY SHEERAN SHINER: Well, North Korea is a particular issue of concern on many fronts. But I think you point out something very central here, which is there's all kinds of levels of corruption and we have a supply problem and a demand problem in corruption. What we are really highlighting today, and really putting the international spotlight on in a unique way, is grand corruption -- kleptocracy. And it was interesting in the G-8 -- I negotiated that text -- there wasn't even an agreement on the terminology to address what we've all known and seen over many decades, which is high-level corruption that is often spread throughout a Government where core funds that should be going to the development of a country are being siphoned off for illegal purposes. So the purpose of this effort is to put a unique spotlight on that. And sometimes that involves many in a government and not just an individual, and sometimes it starts at the very top and infuses itself through the whole system.

So what we are saying today is we are putting together those tools. And as you see, it involves really needing all our departments to work together because we all have a piece of that picture, so we will be looking and we expect that in some countries it will be far more endemic and across the board than in others.

Anything you'd add? Any other --

QUESTION: Well, so in other words, there are more -- there are probably, in your opinion, more than one government in existence that is, say corrupt from top to bottom or from top a good ways down on the ladder?

UNDER SECRETARY SHEERAN SHINER: Again, we're not here to put forward lists. But I think -- I think yes. We will be looking across the board throughout the world and we certainly know of countries that have been -- individuals within those nations that have been prosecuted and named and publicly before, whether it's Ferdinand Marcos or Suharto or others. No, high-level corruption hasn't ended in the world and we will be looking at what our first targets will be and moving ahead with that. We think it's not limited to one nation.

Yes.

QUESTION: Is there greater sensitivity to this issue now than there used to be? You mentioned two presidents who routinely came to Washington. They were in power for a long time. They visited the White House -- President Marcos and President Suharto. Is this an issue that is gathering momentum that wasn't there years ago?

UNDER SECRETARY SHEERAN SHINER: I think there's a couple issues here. And one is certainly a widespread understanding among many nations that kleptocracy and high-level corruption undermines an ability of a nation to get on its feet and have long-term development and leads to human suffering and endemic poverty. And so as we look toward meeting the Millennium Challenge goals of halving absolute poverty in the world, you can't do it without addressing this problem. And so I would say that what you have now is far more of a international commitment and global understanding and that's what you saw reflected in that G-8 statement on the unique problem of high-level corruption and misuse of public funds.

So this has been a long-term effort. The U.S., I think has a track record of being a leader in fighting corruption, but this is really taking -- putting a spotlight on the high-level corruption and the efforts to pull together all leading nations and our own interagency team to deploy this as a priority, to target this particular kind of corruption and effect it has on the lives of real people and on the efforts to fight poverty.

Anything you'd add?

ASSISTANT SECRETARY O'BRIEN: No, I'd just add, I think it's important. The Under Secretary has mentioned both the targeting tools that we have, but as well as -- and I've touched on it in my remarks -- the systemic addressing of vulnerabilities; be it promoting greater transparency in the financial system as I spoke about or if it's building government institutions through the Millennium Challenge threshold accounts or whatever. It's trying to prevent and address the lack of institutions and some of the systemic vulnerabilities in addition to having this toolbox of specific actions that we could take against an individual actor.

UNDER SECRETARY SHEERAN SHINER: I think what's also unique is you see in the UN convention and recent actions by the World Bank to put highlight on this issue that it not only will involve leading nations but also leading institutions in pulling this together. And so just this week we saw strong action by the World Bank to look at the issue of contracting and vulnerabilities in that, to take action on it. This is part of our ongoing discussion and to engage with all institutions that can have a role in drying up the possibility for high-level corruption to happen.

QUESTION: It's more than just theoretical that you can have a government with a leader known to be on the take or stealing from the treasury. A government with which the United States has dealings, might be an oil country, might be a country whose support is considered essential in a regional issue or a UN issue. What are you doing with that sort of paradox?

UNDER SECRETARY SHEERAN SHINER: Well, we have a full toolbox and so one of our first steps, and I mentioned the Millennium Challenge Corporation. It's the first program ever that says as a condition of getting help you need to meet the conditions and address corruption. In some cases, if there's a genuine effort to root out corruption, it can't be a pass/fail test and we will work with partner nations to build the capacity to do that. It's a complex challenge in many countries.

And so if you look again at the Millennium Challenge program, we've got threshold programs to work with countries that are willing to do it. I would say there are countries then in a different category who aren't trying to end corruption, who aren't putting in place systemic programs and who perhaps the leaders themselves are participating. And I think that's the particular category we will be looking at using all our tools that we can to ensure that the financial systems of the world and all other tools are not used by these individuals to enable their corruption. And that will be the target of our effort to really make sure that we block at every level possible their ability to take those monies and to store them for their own personal use or expend them for their own personal use.

Any other questions? Thank you.

2006/748 Released on August 10, 2006

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