Peter Hain: Bring looters to justice with an International Anti-Corruption Court

Delivering a lecture at the University of Cape Town (UCT), Lord Peter Hain urgently calls for an International Criminal Court to address rampant corruption in South Africa, emphasising the moral imperative and the need for accountability in the fight against financial crime.

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By Chris Steyn

An International Criminal Court (IACC) needs to be established urgently to bring looters to justice.

The call was made in a lecture at the University of Cape Town (UCT) this evening (Thursday 25 January) by Lord Peter Hain.

Hain is the son of South African born anti-Apartheid activists and himself a former anti-Apartheid leader. He is also a former British Labour Cabinet Minister.  

Hain said corruption continued at every level of government in South Africa while there was an absence of political will and insufficient resources for public agencies investigating suspicious procurement practices.

“Over a year ago, President (Cyril) Ramaphosa made a promise in response to the findings of the Zondo Commission, that ‘there will be no place for corrupt people, for criminal networks, for perpetrators of State Capture to hide’. Yet, numerous individuals responsible for various aspects of State Capture continue to sit at senior levels in Ramaphosa’s ANC, including in his Cabinet.”

Noting that most of the corruption in SA was in the area of public procurement,” Hain said: “If we can close the taps in public procurement, we will make a big difference in our fight against corruption.

“We recommended the establishment of a public anti-corruption agency. We see that the Public Procurement Bill of 2023 doesn’t have an institution like that.”

Hain added that a growing number of South African opinion formers was backing an IACC and was striving to garner support from diverse civil society groups, “because of all the countries in the world South Africa should be leading the campaign to establish an IACC”.

He stressed that the establishment of the IACC was “not just a legal necessity, but a moral imperative”. 

“And in South Africa to help recover the noble mission of the anti-Apartheid Struggle so badly betrayed by State Capture and corruption.”

Read more: Winnie Mandela’s last wish: “Mama” feared corruption would destroy the ANC….

Hain recalled how, in South Africa, the “State Capture” decade under former President Jacob Zuma and his “business cronies the Gupta Brothers”, resulted in a devastating economic collapse, erasing one-fifth of the country’s gross domestic product, and in turn causing huge cutbacks in public services, including crippling daily electricity outages through load-shedding and contamination of the water supply. 

“That this occurred in Africa’s most modernised nation, with the best infrastructure in the Continent, which has perhaps the best Constitution in the world, and a world-class system of financial regulation, is salutary indeed. 

“These kleptocrats have ravaged their populations for far too long, with corrupt leaders looting public funds for personal gain and thrusting the poorest into even deeper into poverty.

“And they have done so with the help of global corporates and banks, many household names, most based in New York and London. I have detailed in the House of Lords how Bain & Co, McKinsey, KPMG, HSBC, Standard Chartered and Baroda Bank actively aided the looters in South Africa, the money often flowing through the notorious money laundering hubs Dubai and Hong Kong.”

Although a new IACC could not eliminate corruption, it would “substantially” strengthen the existing international framework designed to prevent it. 

“This will help reduce the widespread impunity associated with financial crime because legal prosecution remains the most effective method to combat it. But it is also crucial to encourage citizens to demand accountability from their leaders and endorse initiatives that empower them in this pursuit.”

Read Hain’s full speech below*

New International Anti-Corruption Court Needed Now

By Peter Hain*

Lecture at University of Cape Town 25 January 2024 – Thank you for this invitation to discuss why it is vital to establish an International Anti-Corruption Court (IACC) as soon as possible, and thank you to two eminent founder Judges of the Constitutional Court, Albie Sachs and Richard Goldstone for attending. 

‘Corruption Kills’, former UN High Commissioner for Human Rights Navi Pillay ominously warned in 2013, underscoring the devastating impact it inflicts on ordinary people worldwide, particularly the poor, destabilising countries and helping trigger failed states.

Corruption has reached alarming proportions, with money laundering alone causing global annual losses of $1.6 trillion, with more than $7 trillion in private wealth held in secretive offshore accounts – the equivalent of 10 percent of global gross domestic product (GDP). The consequences are dire: money stolen through corruption every year is enough to feed the world’s hungry 80 times over. 

The Pandora Papers, released in 2021 by the International Consortium of Investigative Journalists (ICIJ), offers proof of global corrupt leaders exploiting both domestic and international networks to enrich themselves, often at the cost of their citizens. 

These leaders covertly transferred their illicit wealth abroad through the international banking system. The Pandora Papers revealed the hidden finances of over 330 politicians, including 35 then-current and former Heads of State – an exposé following the ICIJ’s Panama and Paradise Papers, which provided further evidence of widespread corruption.

$100 billion is stolen from Africa each and every year, constituting around a quarter of the continent’s Gross Domestic Product. Fully a quarter!  With the actual extent of this gross theft  likely much higher. 

It has been estimated by Global Financial Integrity that developing countries lose more than 10 times in illicit financial outflows due to corruption than they receive in foreign aid, the real figure probably much higher.   

As Ray Baker, who founded Global Financial Integrity, wrote in his book, Invisible Trillions: “For decades Americans and Europeans have been persuaded to see themselves as extremely generous to the developing world with foreign aid, private investment, and military assistance. Reality is the opposite. Data indicates that more money appears to be flowing out of the developing world into Western accounts than is flowing via Western generosity into the developing world. Africa is particularly hurt by this phenomenon, with annual outflows – permanent outflows – likely exceeding $100 billion a year and perhaps much more, making Africa in all probability a net creditor to the rest of the world. In other words, it is not always the rich supporting the poor; often it is the poor supporting the rich. The financial secrecy system is designed to accomplish this outcome and performs its role with great effectiveness.”

Southern Africa is a region embroiled in cases of grand corruption and should be performing far better for its citizens were it not for brazen corruption by politicians and their complicit business cronies. 

In South Africa, the ‘state capture’ decade under former President Zuma and his business cronies the Gupta Brothers, resulted in a devastating economic collapse, erasing one-fifth of the country’s gross domestic product. In turn causing huge cutbacks in public services, including crippling daily electricity outages through load-shedding and contamination of the water supply. 

That this occurred in Africa’s most modernised nation, with the best infrastructure in the Continent, which has perhaps the best Constitution in the world, and a world-class system of financial regulation, is salutary indeed. 

These kleptocrats have ravaged their populations for far too long, with corrupt leaders looting public funds for personal gain and thrusting the poorest into even deeper into poverty.

Read more: Lord Peter Hain to SA: Find your inner Neil Aggett – Rise Up and say enough is enough

And they have done so with the help of global corporates and banks, many household names, most based in New York and London. I have detailed in the House of Lords how Bain & Co, McKinsey, KPMG, HSBC, Standard Chartered and Baroda Bank actively aided the looters in South Africa, the money often flowing through the notorious money laundering hubs Dubai and Hong Kong.

In Angola, the former President, Jose dos Santos, along with his associates, embezzled billions from the public treasury. While these perpetrators indulged in extravagant spending abroad using the stolen funds, a staggering 53% of Angolans have been left to live on less than $2.15 a day. His daughter, Isobel dos Santos, managed to funnel hundreds of millions of dollars from public funds into offshore accounts, exploiting her position as the head of Sonangol, Angola’s state oil company. Her ill-gotten wealth, amassed through nepotism and corruption, even earned her recognition in Forbes Magazine as Africa’s wealthiest woman in 2013, which they later removed following the Luanda leaks and asset freezes.   Corrupt Angolan officials have been known to invest their illicitly acquired riches in the real estate market in London – London of course being infamous for money laundering by oligarchs and others, despite the pious rhetoric of UK Ministers who talk the talk but don’t walk the walk.

Elsewhere in the Southern Africa region, Namibia is gearing up for its largest-ever corruption trial following the disclosure of the ‘Fishrot Files’ by Wikileaks in 2019, which unveiled extensive government corruption. Granted, Namibia’s level of poverty has declined vastly in recent decades, but poverty still remains high for the country’s level of development. 

Additionally, Al Jazeera’s 2023 investigation titled ‘Gold Mafia’ exposed an intricate scheme of money laundering and gold smuggling in Zimbabwe, involving senior government ministers and officials, including President Mnangagwa. Interestingly, the financial transactions were orchestrated by the same individuals linked to the Gupta family, with funds also laundered through Dubai. As with most government-facilitated grand-corruption schemes, it is the nation’s citizens who suffer the most. Zimbabwe is a country where over 40 percent of the population live in extreme poverty.

The UK is a prominent player in facilitating global corruption, with funds illicitly channeled and hidden in UK offshore havens. Almost £88 billion is laundered through the UK annually. During the Covid-19 pandemic, one in five UK government PPE contracts had red flags for possible corruption. Reports by the Good Law Project estimate that more than £4 in every £5 spent on PPE was wasted or “lost”.

Globally, there is increasing evidence that grand corruption and money laundering is on the rise, with existing anti-corruption mechanisms proving to be ineffective. Considering both the substantial harm caused by grand corruption and the impunity its perpetrators currently enjoy, it is evident that a radically new approach is needed. 

But why create a new court when the International Criminal Court (ICC) already exists?  Because the ICC only focuses on atrocity crimes like genocide and war, not corruption. Amending its foundational Rome Statute to include corruption crimes would be complex, requiring ratification by the vast majority of its 124 member states – some led by the very people guilty of corruption who would obviously be hesitant if not hostile to ratification. 

Yet a new IACC’s jurisdiction will not require the creation of new norms. The UN Convention Against Corruption (UNCAC) already obligates its 190 parties to criminalise corruption, including bribery of public officials, embezzlement and other misappropriation of public resources and money laundering. 

The problem is that few countries actually enforce these laws. The IACC will therefore help fill a ‘crucial enforcement gap’. It will target high-level officials, bribers, and money launderers who commit part of their crimes within member states. Despite potential resistance from entrenched kleptocracies, the IACC’s ability to freeze and recover stolen assets, even across international borders, would create a compelling deterrent.

Countries with entrenched kleptocracies (like Russia or Zimbabwe) may resist joining the new Court, but kleptocrats frequently conceal their illicit assets in other countries (like the UK).  That would enable the IACC to freeze and recover stolen assets, even where they evade arrest by staying in their home countries or depositing their stolen gains in safe havens. 

Read more: Lord Peter Hain: Time for South Africans to rise up and demand change

Moreover, if these kleptocrats travel to an IACC member state or a country with an extradition treaty, they face the risk of arrest, trial, and imprisonment. Although never ideal, trials in absentia could even be considered. 

In countries making fragile transitions towards more democratic institutions, the IACC can play an important role. The new Court would aid local law enforcement agencies and contribute to the country’s justice system, thereby enhancing and complementing anti-corruption initiatives. Its expert investigators and prosecutors could work with national authorities in such countries to build cases. 

These countries might otherwise struggle to conduct the sort of complex, costly transnational financial crime investigations that touch numerous jurisdictions. By fostering global collaboration, the IACC can assist in obtaining evidence across borders. Where adjudication in the national courts is free and fair, the IACC’s role would end at assistance; but, where corrupt, the IACC’s judicial chambers would represent a useful last resort. 

The IACC would comprise both a criminal and civil chamber. The civil chamber will be empowered to address illicitly obtained assets when criminal prosecutions are not possible, and also provide a forum for states to resolve disputes over seized assets. If a criminal case is unlikely to move quickly due to a lack of cooperation from an indicted kleptocrat, and therefore a delay in the orders of restitution that would accompany a criminal conviction is likely, the civil chamber could be employed. 

Additionally, in cases where long-dead kleptocrats such as Mobutu Sese Seko assets are held but not returned or repurposed in a manner benefiting victims, states could make use of the civil chamber to determine a fair judgment on how the funds should be put to good use.  This will help ensure the efficient recovery and repurposing of stolen wealth for the benefit of victim populations, particularly those in the Global South who frequently suffer the most from the ravages of corruption. 

All our Governments must also do much, much more to regulate the lawyers, bankers, real estate agents, accountants, and other financial service providers aiding money laundering; to enforce laws against foreign corruption; and to enhance transparency. It’s no good national leaders like British and South African government ministers condemning corruption whilst in practice turning a blind eye to it. They must be pressed hard to act – and now. 

But before the establishment of another multi-lateral institution like the IACC, it is imperative that legitimate concerns about Western bias are addressed. This bias has historically persisted with international organisations like the International Criminal Court, the World Bank, the International Monetary Fund, and the World Trade Organization often perceived as serving Western interests against those of the Global South. 

The United Nations Security Council is another key multi-lateral institution which must be reformed, at least to include a nation from Latin America and Africa, as well as India, fast becoming an economic super-power. 

This underscores the vital need for the IACC to be truly international, ensuring equal justice for all regardless of their origin. The IACC has the opportunity to avoid the bias of these institutions, which is essential to the effectiveness and legitimacy of the court.  The IACC must not be a Western construct.

Led by Integrity Initiatives International Vice-Chair, Justice Richard Goldstone of South Africa, a globally diverse group of leading international jurists, lawyers, and anti-corruption experts are contributing to this effort. The New Institute in Hamburg, Germany hosted the first in-person such expert meeting in August 2023, to begin drafting a model IACC treaty. 

Participants included those from Trinidad and Tobago, Nigeria, Brazil, Cameroon, Bangladesh, Mexico, the US, Canada, Germany, Australia, and New Zealand. 

Corruption knows no borders; hence, the IACC will involve defendants from both the Global North and South, ensuring a comprehensive approach to justice. For this reason, the model IACC treaty, currently under development, will undergo extensive consultations with civil society before it is presented to governments for negotiation and adoption.

London and UK overseas territories – from the Caribbean to Gibraltar – are infamous money laundering hotspots, and the UK Government should therefore adopt a leading role in gathering global support for the IACC.  Encouragingly, Shadow Foreign Secretary David Lammy has endorsed it.

Corruption is not confined to the Global South; it’s a global and transnational issue. That’s precisely why an international institution like the IACC is imperative, for each case brought before it could well involve defendants from various countries across the Global North and Global South.

The IACC will prosecute not only corrupt public officials, but also those who pay the bribes and those who launder the stolen funds – bankers, lawyers, accountants, real estate agents, and other financial service providers – many of whom are based in the financial centres of the Global North. 

Read more: Urgent action needed: SA takes a stand against corruption, calls for global cooperation: Lord Peter Hain

Eminent figures, including former presidents, prime ministers, Nobel laureates, and legal experts like Senior US District Court Judge Mark Wolf, back the initiative. Integrity Initiatives International, has mobilised global civil society organisations, resulting in commitments from nations including Canada, Ecuador, Moldova, the Netherlands, and Nigeria as well as the European Parliament. 

There is significant public support for the IACC, with majorities in favour in all of the BRICS and G7 countries including 78% of respondents in South Africa and 73% of respondents in the UK . I’ve urged the UK Government to adopt a leading role in gathering global support for the IACC. 

Over a year ago, President Ramaphosa made a promise in response to the findings of the Zondo Commission, that ‘there will be no place for corrupt people, for criminal networks, for perpetrators of State Capture to hide’. Yet, numerous individuals responsible for various aspects of State Capture continue to sit at senior levels in Ramaphosa’s ANC, including in his Cabinet. 

As Chief Justice Zondo warned recently: “The levels of corruption in our country have reached completely unacceptable proportions, and unless something very drastic and effective is done soon, we will have no country worth calling our home.” 

He added: “Most of the corruption we get in SA is in the area of public procurement. If we can close the taps in public procurement, we will make a big difference in our fight against corruption. We recommended the establishment of a public anti-corruption agency. We see that the Public Procurement Bill of 2023 doesn’t have an institution like that.”

Corruption continues at every level of government in South Africa.  There is an absence of political will and insufficient resources for public agencies investigating suspicious procurement practices. A growing number of South African opinion formers is backing an IACC and striving to garner support from diverse civil society groups, because of all the countries in the world South Africa should be leading the campaign to establish an IACC.

Although a new IACC could not eliminate corruption, it would substantially strengthen the existing international framework designed to prevent it. This will help reduce the widespread impunity associated with financial crime because legal prosecution remains the most effective method to combat it. But it is also crucial to encourage citizens to demand accountability from their leaders and endorse initiatives that empower them in this pursuit.

To sum up, the establishment of the IACC is not just a legal necessity; but a moral imperative, as a concrete expression of our collective commitment to a just, transparent, and corruption-free world, promoting the principles of fairness, equality, and accountability, and helping to ensure that corruption has no place to hide. 

And in South Africa to help recover the noble mission of the anti-apartheid struggle so badly betrayed by state capture and corruption.

*Lord Peter Hain, son of South African born anti-apartheid activists and himself a former anti-apartheid leader, is a former British Labour Cabinet Minister.  His memoir A Pretoria Buy: South Africa’s ‘Public Enemy Number One’ is published by Jonathan Ball

References:

  1.  https://www.ohchr.org/en/stories/2013/03/human-rights-case-against-corruption
  2.  https://www.un.org/development/desa/en/news/financing/facti-interim-report.html
  3. https://www.ohchr.org/en/stories/2013/03/human-rights-case-against-corruption
  4.  https://www.icij.org/investigations/pandora-papers/
  5.  https://www.icij.org/investigations/panama-papers/
  6.  https://www.icij.org/investigations/paradise-papers/
  7. https://punchng.com/100bn-stolen-from-africa-yearly/
  8. Kar, D. and Freitas, S. (2011, December 15). Illicit financial flows from developing countries over the decade ending 2009. Washington, D.C.: Global Financial Integrity. https://gfintegrity.org/report/illicit-financial-flows-from-the-developing-world-over-the-decade-ending-2009/
  9. Baker, R. Invisible Trillions (New York, Berrett-Koehler Publishers, 2023)
  10. https://databankfiles.worldbank.org/public/ddpext_download/poverty/987B9C90-CB9F-4D93-AE8C-750588BF00QA/current/Global_POVEQ_AGO.pdf
  11. https://www.aljazeera.com/economy/2020/1/20/how-angolas-isabel-dos-santos-stole-a-fortune-icij-documents
  12. https://www.forbes.com/sites/kerryadolan/2021/01/22/the-unmaking-of-a-billionaire-how-africas-richest-woman-went-broke/; https://www.icij.org/investigations/luanda-leaks/read-the-luanda-leaks-documents/
  13.  https://x.com/ShadowWorldInv1/status/1712071418467201159?s=20
  14. https://www.bbc.co.uk/news/world-africa-64526018
  15. https://www.worldbank.org/en/country/namibia/overview
  16. https://www.aljazeera.com/news/2023/3/30/who-are-the-gold-mafia-a-cigarette-don-and-a-man-named
  17. https://www.wfp.org/countries/zimbabwe
  18. https://credas.com/news/oecd-money-laundering-leader-board/
  19. https://www.bmj.com/content/373/bmj.n1072
  20. https://www.theguardian.com/politics/2023/oct/08/covid-corruption-commissioner-recoup-lost-billions-labour
  21. https://ojs.uwindsor.ca/index.php/nlj/article/view/8185/5601
  22. https://integrityinitiatives.us7.list-manage.com/track/click?u=764db6de5b870d053ad30f038&id=8293c1fc82&e=e941bbeaf1
  23. https://www.theguardian.com/politics/2023/jul/09/labour-global-anti-corruption-court-david-lammy-international-law
  24. http://integrityinitiatives.org/
  25. https://www.stimson.org/2023/global-governance-survey-2023/
  26. https://www.dailymaverick.co.za/article/2023-10-30-mia-president-ramaphosa-and-his-promise-to-decisively-act-against-the-anc-and-state-corruption/
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