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'Corruption tied to conflict' should trigger international sanctions

Bribery and corruption tied to conflict should trigger international sanctions, a global anti-corruption expert has said.13 Sep 2018

John Prendergast, director of US human rights organisation Enough Project, has recommended that the United Nations Security Council add 'corruption tied to conflict' as a distinct sanctions criterion under its existing sanctions programmes. The council should also appoint 'panels of experts' to report to it on corruption related to conflict, and make recommendations for coordinated international action, he said.

Prendergast was addressing the UN Security Council's first dedicated session on the links between corruption and conflict. The session was set up to consider ways in which international policy could be used to prevent the sort of corruption which ultimately weakens state governments, leaving the country susceptible to conflict.

Businesses and individuals pay more than $1 trillion in bribes every year, according to the World Bank. According to Prendergast, tackling this would require "system change" rather than "regime change".

"Remarkably, and regrettably, there is currently no coordinated strategy to gain [the] necessary leverage to disrupt the illicit siphoning of money by leaders and their foreign business partners, to break the link between corruption and conflict," he said in a speech to the 15-member council.

"Every year, billions of aid dollars pour into Africa. UN agencies, taxpayers and donors around the world fund peacekeeping forces, state-building programmes, humanitarian assistance, elections and peace processes. But none of this support has been able to keep corrupt leaders and their network of beneficiaries from stealing billions of dollars because the diplomats leading these efforts have no leverage to change the systems that perpetuate conflict," he said.

In Prendergast's view, targeted sanctions imposed against individuals are not enough to tackle the problem, particularly in Africa. The creation of a new 'corruption tied to conflict' criterion would allow the Security Council and member states to instead impose sanctions against entire corrupt networks, not just individuals, he said.

"Sanctions that target networks in this way are powerful tools for changing behaviour and pressuring individuals to come to the negotiating table," he said.

"These 'network sanctions' work because they affect not only the primary target of the sanctions themselves, but also the individuals and companies who play an important role in supporting the targets' activities. By sanctioning these individuals and entities at once, or in close succession, and ensuring robust enforcement, the primary target's network does not have enough time to recover from the financial impact of being cut off from the global financial system," he said.

Network sanctions should form part of a "three-fold" policy approach, also incorporating anti-money laundering measures focused on the illicit movement of money through the international financial system, and prosecutions focused on "financial crimes associated with atrocities", Prendergast said.

"Ultimately, these tools of financial pressure are not an end in themselves, but should be deployed in the context of a comprehensive strategy that intensifies diplomacy and supports institutions of accountability and transparency," he said.

Regulatory law expert Stacy Keen of Pinsent Masons, the law firm behind Out-Law.com, said that it was unclear from Prendergast's comments how any new sanctions criteria would work in practice.

"No detail is given as to the assessment that would be carried out prior to imposing sanctions based on the proposed new criteria," she said.

"It is unclear if sanctions would be imposed in, for example, circumstances similar to the corruption connected to the Oil-For-Food programme established in 1995 to allow Iraq to sell oil in exchange for goods, medicine and other humanitarian needs for its citizens. Many companies were prosecuted for corruption in connection with that programme, albeit years after it had been suspended."

"Financial sanctions are generally imposed to coerce a change in offending behaviour, deny a target access to resources, to signal disapproval, to stigmatise and to protect assets that have been misappropriated from a country. Imposing sanctions at the time of corruption connected to conflict may achieve these aims. However, sanctions are not typically applied on a punitive basis and therefore may not be used where enforcement action is taken years after the corruption related to conflict takes place, particularly if the offending business has, for example, self-reported the corruption, terminated the employment of offending individuals, implemented remedial measures and paid a financial penalty that includes and profits arising from the corrupt activity," she said.