POLICY AND JURISDICTION ISSUES
| Published date | 01 April 2000 |
| DOI | https://doi.org/10.1108/eb027268 |
| Pages | 107-118 |
| Date | 01 April 2000 |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 4 No. 2
Chapter One
POLICY AND JURISDICTION ISSUES
Background to this report
There has been a steady trickle of press reports into
cases of so-called 'grand corruption'. The scale of
the wealth reported to have been acquired in such
cases is staggering and can even threaten economic
development and stability of whole countries. One
can but contrast this wealth with the poverty of
countries that have been the victims of corruption
in such cases, namely the people of the countries in
question. While there is nothing new about corrup-
tion the impression gained from press reports is that
the problem of grand corruption is getting worse.
Obviously it is difficult to know whether this really
is the case as there is a complete and understandable
absence of reliable data on the extent of the problem.
The preamble to a draft Council of Europe Con-
vention on Corruption sums up the effects of corrup-
tion generally, not just grand corruption, as follows:
'corruption threatens the rule of law, democracy
and human rights, undermines good governance,
fairness and social justice, distorts competition,
hinders economic development, and endangers
the stability of democratic institutions and the
moral foundations of society.'
We all agree that corruption is morally wrong. The
question is whether it is legally wrong. In this
report we seek to answer this question, largely from
the point of view of the present laws of England
and Wales.
An English Criminal or Civil Court is unlikely to
have jurisdiction to try foreign public officials respon-
sible for grand corruption as their wrongful conduct
is likely to have taken place outside the jurisdiction.
However, wrongful conduct within the jurisdiction
connected with grand corruption would be subject
to the court's jurisdiction. Examples of this conduct
include:
— those within the jurisdiction who make bribe
payments to foreign public officials; and
— banks and other intermediaries in England and
Wales that 'handle' the proceeds of corruption.
If they do so with knowledge of wrongdoing,
even wrongdoing committed abroad, the handler
could commit criminal offences and could be
liable to civil claims.
Banks and other intermediaries in this country are
involved in 'handling' the proceeds of corruption in
a variety of ways, some less innocent than others.
The examples we refer to in this report are taken
from recent newspaper articles. We do not know
whether what is reported is fair and accurate; we
refer to them for illustrative purposes only. The
scale of corrupt payments can be so large that they
cannot go unnoticed. The so-called Ajaokuta debt
buy back arrangement in Nigeria is one example.
Here a US$2.5bn debt to the Russian Government
was allegedly sold to Nigerian government officials
for US$500m. They are said to have arranged for
Nigeria to repay the debt in full less than a week
later resulting in a profit of US$2bn. A press report
quotes an unnamed source who describes how
'many external creditors got wind of the transaction'
and 'it was impossible to move such amount of
money around without alarm bells starting
off'.1
Other reports refer to the banking system being
used to launder dirty money on a grand scale. Offi-
cials at Citibank are reported to have violated
money-laundering controls to help the brother of
the former Mexican President move US$100m out
of the country. The Bank of New York is reported
to be assisting authorities in their investigation into
the use of bank facilities to allegedly transfer
US$4.2bn on behalf of Russian organised crime
between October 1998 and March 1999.2
The main focus of this report is on the criminal and
civil liabilities of those that 'handle' the proceeds of
corruption. This is dealt with in separate chapters in
this report. Before we come on to them, in the
remainder of this chapter we set the scene by defining
what we mean by grand corruption and consider
jurisdictional issues that arise in these cases.
Conclusions
Briefly, we concluded that:
(a) it is unclear whether bribery of foreign
public officials is an offence under UK's existing
Journal of Money Laundering Control
Vol. 4 No. 2, 2000, pp. 107-118
Henry Stewart Publications
ISSN 1358-5201
Page 107
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