“Bankrupting Kleptocracy” report to be presented today at Carnegie in DC
A new report, “Bankrupting Kleptocracy: Financial Tools to Counter Atrocities in Africa’s Deadliest War Zones,” by the Enough Project, highlights three types of potent financial pressure tools that the U.S. can use to build leverage in the fight against violent kleptocracy: targeted sanctions, anti-money laundering provisions, and anti-bribery laws, including the Foreign Corrupt Practices Act. The U.S. government has used these tools to counter terrorism, nuclear proliferation, and organized crime. These tools, the authors argue, can also be used to fight violent kleptocracy in East and Central Africa.
The report, authored by J.R. Mailey and Jacinth Planer, will be launched at an event today at the Carnegie Endowment for International Peace in Washington, DC. Click here for event details and to watch the livestream at 2pm EDT.
J.R. Mailey, report author and Senior Policy Analyst for Illicit Finance & Conflict at the Enough Project, said: “In several conflict-affected countries in East and Central Africa, the state has been hijacked and transformed from an institution that is supposed to provide social services and safeguard the rule of law into a predatory criminal enterprise that does quite the opposite. Kleptocratic networks use state power to loot public coffers and natural resource wealth with impunity, and sideline or silence those who get in their way.”
John Prendergast, Founding Director at the Enough Project, said: “For decades, the United States and other international donors have poured billions of dollars into peace talks and endless peacekeeping missions. Although these efforts can be valuable parts of an effective peacebuilding strategy, they often fail to achieve the desired result because they don’t address a core root cause and driver of war: the warped incentive structures of officials who hijack state institutions, loot public funds and natural resources, and use extreme violence to maintain their grip on power.”
The report notes that the globalized economy allows kleptocrats and their enablers to store, move, and launder ill-gotten gains. The U.S. government can, with its partners, leverage the interconnectivity of the global economy, the size and primacy of the U.S. financial system, and the significance of the U.S. dollar in global trade and money exchange to target kleptocrats and their ill-gotten gains.
Prendergast added: “Tools of financial pressure—especially highly-targeted and robustly enforced sanctions and anti-money laundering measures—that have successfully been used for other national security objectives should increasingly be deployed to create leverage in preventing atrocities and resolving these conflicts.”
“Violent kleptocracy,” a system in which ruling networks and commercial partners capture the state and hijack governing institutions to extract resources and maintain the security of the regime, has had disastrous results in East and Central Africa. The looting and diversion of resources has stifled commerce and economic development, facilitated a wide range of criminal activities, and stoked violence and the commission of mass atrocities.
The report argues that the fight against corruption must become much more of a pillar and a central focus of U.S. engagement with these countries as leaders and members of society work together to shift the incentive structures underpinning political, economic, and military decision-making by ruthless elites.
Brad Brooks-Rubin, Director of Policy at the Enough Project, said: “When developing strategies for engagement in conflicts in East and Central Africa—a region home to several of the longest-standing and deadliest conflicts in human history—the U.S. government must acknowledge that the wholesale theft of state assets is a central feature of each crisis. Supporting efforts to promote transparency, accountability, and good governance need to become a cornerstone of U.S. engagement with East and Central African countries that have been plagued by violent kleptocracy.”
Mailey added: “The politicians, military officials and warlords most responsible for mass atrocities and widespread looting often do so without suffering any consequences for their misconduct. The tools of financial pressure can help change that and, ultimately, chip away at the environment of impunity.”
Tools highlighted in the report:
- Targeted financial sanctions are a potent tool to counter kleptocracy precisely because of their ability to impact the target the wealth of senior officials within kleptocratic regimes.
- Sanctions can be used to alter incentives to violently extract wealth and repress dissent by:
- Targeting the wealth of senior officials
- Targeting individuals who engage in public corruption, undermine democracy, or stifle free speech and assembly
- Targeting those who facilitate and enable kleptocracy (lawyers, wealth managers)
- Targeting secondary actors who do business with those who are under sanctions
- Targeting certain business sectors but not others
- Limiting the negative impact on humanitarian and social services by clarifying and expanding sanctions exemptions.
Anti-Money Laundering and Asset Forfeiture:
- Numerous anti-money laundering (AML) statutes provide the U.S. government with the power to trace, block and, in some cases, seize the illicit proceeds of overseas corruption. Anyone who knowingly facilitates the movement of the illicit funds into or through the United States (including the U.S. financial system) engages in money laundering and could be subject to criminal prosecution as a result.
- The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has significant authority to place enhanced due diligence requirements on financial institutions, investigate financial crimes, and even impose sanctions-like prohibitions on overseas entities believed to be involved in money laundering. Moving forward, FinCEN should use these powers to identify banks, institutions, and classes of transactions that kleptocrats use to loot and launder state assets.
Foreign Corrupt Practices Laws:
- A foundational element of the U.S. framework for countering violent kleptocracy is the Foreign Corrupt Practices Act (FCPA). This law imposes a compliance requirement that places certain record-keeping and accounting requirements on U.S. firms doing business overseas and criminalizes bribery of foreign officials in order to gain a competitive advantage.
- Tools like the FCPA should be more vigorously deployed in countries marked by violent kleptocracy where its impact will be more effective and meaningful in terms of saving lives.
EVENT DATE TIME: Tuesday, October 11, 2016 | 2:00 to 3:30 p.m. EDT
EVENT LOCATION: Carnegie Endowment for International Peace, 1779 Massachusetts Avenue NW, Washington, DC 20036
EVENT LIVESTREAM: http://eno.ug/2dGbNia
FOR MEDIA: For media planning to attend the event in person, please email: email@example.com. For media inquiries and interview requests, please contact: Greg Hittelman, Director of Communications, +1 310 717 0606, firstname.lastname@example.org.
About THE ENOUGH PROJECT
The Enough Project, an atrocity prevention policy group, seeks to build leverage for peace and justice in Africa by helping to create real consequences for the perpetrators and facilitators of genocide and other mass atrocities. Enough aims to counter rights-abusing armed groups and violent kleptocratic regimes that are fueled by grand corruption, transnational crime and terror, and the pillaging and trafficking of minerals, ivory, diamonds, and other natural resources. Enough conducts field research in conflict zones, develops and advocates for policy recommendations, supports social movements in affected countries, and mobilizes public campaigns. Learn more – and join us – at www.EnoughProject.org.