Concerned by the lack of global governance in the financial and banking sphere and by the proliferation of unexplained wealth, illegal transactions and offshore funding schemes, we propose to establish the International Corruption, Fraud and Money Laundering Court, as well as the World Social Development Fund for putting on the new basis the global efforts in fighting corruption and money laundering operations and fair redistribution of assets seized as a result of this activity.
We believe that our project matches organizers' major requirements, and 1) ad-dresses a global problem which exists due to insufficient character of the national regulation; 2) may mobilize the global civil society to cooperate closely with the national and international bodies for establishing global transparency; 3) proposes both normative and organizational solutions which may facilitate the realization of the desired goals, 4) definitely serves the common interest, and 5) has good chances to be fully or partially implemented since it is build around the existing examples of rather successful international institutions.
The reasons for addressing the issue:
It is obvious that the unfair redistribution of material goods is one of the main challenges of modern civilization. It impedes sustainable development, declared one of the main goals of the United Nations. This injustice is felt most keenly when it comes not from objective economic laws and the international diversification of production, but is the result of criminal activity.
The issue of corruption, fraud and money laundering looks as a central one to a long range of problems which starts from proliferation of illegal economic activity around the world, banking frauds, tax evasion, public finances misuse, and stretches to the formation of global industry that manages the unexplained wealth, corrupts public officials in the developed countries, and adds to the creation of financial bubbles endangering both local communities and the global economy.
Today, more than $40 trillion of 'dirty money' are parked in offshore financial jurisdictions, annually up to $1 trillion flows to the main financial centers annually, and $300 billion is invested anonymously into the high-end real estate and luxury goods over the world.
The existence of such practices leads to two major consequences.
On the one hand, the rich countries at the 'core' of the global economy lose billions of dollars, euros and pounds annually in evaded taxes and undeclared revenues with the main result being the growing fiscal burden, difficulties for doing business, increasing unemployment, and ballooning social benefits the governments are forced to disburse to their citizens. The affluent nations today face a critical challenges in this field which can be perfectly seen in France where the state effectively reached the ceiling for rising taxes while struggling to meet its ends in providing popular welfare. We believe that the effective fight with tax evasion and illegal financial flows is the key for implementing a more balanced economic policy combining lower taxation rates with an enhanced business environment and solid social protection. We believe that there are not the rich, but the illegally rich 'easy riders' who should be targeted as the developed nations look forward for establishing more decent and equal societies.
On the other hand, the poorer nations lose incredible amount of money, first of all through their corrupt officials and fraudsters. Embezzled assets are siphoning to the international banks by people who believe their own countries are only a place to do criminal business, while the Western world is the place to live in. The openness of the main financial centers to these dirty money encourages the bureaucrats and officials all over the world to get rich on the expense of the poor. As the result, the weak states fail; the humanitarian disasters cause the economic migration from the poor South to the rich North; the democratic virtues come out of favor among the people, and many countries lose the hope for be-coming a developed ones because of a chronic deficit of investment resources and skilled labor. The West is therefore forced to accommodate the needy, to increase the humanitarian assistance and even to send peacekeeping missions into the remote areas of the world doing this on its taxpayers' expense while only several thousands financiers and lawyers profit from the dirty money.
So we would say that combating the corruption, fraud and money laundering serves the goals of building decent societies on the global scale, of emancipating both entrepreneurship and initiative, and of eradicating poverty and inequality.
The inadequacy of the current regulation environment:
We are deeply convinced that the current national and international regulation that aims on curbing the corruption, fraud and money laundering operations, looks outdated and in-adequate.
First of all, we argue that today the international (either of a single state or of multilateral institutions) reaction to the corruption and tax evasion which happen in other countries, is critically dependent not only on the laws, but also of common practices. Investigating suspected money laundering operations, the officials in any given country cannot act on their own and need to ask the government of the state from where the money originate, on its background. If this government is deeply corrupt, or the suspected wrongdoer has good relations with its leaders, he will always appear a decent person with no criminal records.
Secondly, the international groups which are formally concerned with the money laundering operations, concentrate their attention on the places where these funds are supposedly cleared, but not on those where they originate. The list of 'problematic' jurisdictions is composed from well-known offshore zones but not of either most corrupt states or even offshore territories administered by the wealthy nations (quite recently, the Council of the European Union rejected the such a list proposed by the European Commission because the latter featured American Samoa, Guam, Puerto Rico and U.S. Virging Islands). Therefore, this doesn't allow the international community to fight the corruption properly.
Thirdly, the fight with money laundering, corruption and fraud is greatly influenced by the political reasoning as applied to the countries where the dirty money comes from. We can remind dozens of cases in which mobsters and looters from countries with rather undemocratic regimes were cleared of any accusations in the European countries or in the United States since they pretended to be persecuted for political reasons or claiming their businesses were destroyed by the governments' actions. In these cases even the respective states were asking for arrest of both the accused and their assets, little or nothing were done on their request, and the supposed wrongdoers have been allowed to stay and to do business in Europe or in the U.S.
Fourth, the developed countries in recent years created a giant and highly sophisticated system of offshore harbors, trusts, shell companies, special purposes vehicles, family foundations, and other means of hiding the unfair acquired funds and assets which now is effectively used by corrupt officials and fraudsters with the assistance of London-, Zurich- and New York-based lawyers and financiers. These produce a mighty lobby that pushes for a constant amendment of the existing laws and norms in the absence of any internationally coordinated efforts by both their opponents and the global civil society. Due to these trends, the owners of 'dirty money' can more and more successively disappear from the radars, while the financial lobby in the rich nations guarantees their safety.
Fifth, and the last point we want to mention here, is a drastic difference in the penal codes in different countries concerning the money laundering and corruption, so no 'common denominator' could be found for prosecuting either the corrupt officials or the tax evadors. Therefore, the need and demand for moving from one jurisdiction to another will exist forever, and the rich countries will remain the best place for the corrupt officials to park their money since here the punishment for financial crimes remain relatively loose and lenient.
All the above suggest there is a need for a much more coordinated international efforts in fighting tax evasion, corruption, financial fraud and money laundering – but as we can see today, the forces that profit from these activities are too influential to prevent this from happening. The fight with 'dirty money' gets a 'political' aspect also in a way that the problematic jurisdictions overlap more and more often plagued with terrorist activities.
The need for a Court as the new means of combating money laundering:
So we propose to establish a new institution, namely the International Corruption, Fraud and Money Laundering Court which might possess several crucial features.
The Court can be set off following a similar procedure as the International Criminal Court in Hague. The initiative of its establishing should come from the United Nations General Assembly, and the participants will be the countries who recognize the need to overcome the global "dirty money" problem and sign the relevant Statute.
The two most distinct features of the Court might be, on the one hand, its ability to nominate prosecutors and investigators being independent from the national judiciary and law enforcement agencies, with their powers covering the territory of all participating nations, and, on the other hand, the universal character of its rulings, which are to be implemented into the national legislation. Both features differ the Court greatly from any international organization or convention providing it with necessary independence and enhancing its reach and authority.
Another crucial point that needs to be mentioned is the system of claims behind the cases the Court investigates and deliberates. These claims might be filed by any private or corporate persons who consider themselves complainant or aggrieved – and in this case the set of actors might be very wide, beginning from any taxpayer in the country where 'dirty money' originates or from a client of a bank that was ruined by its owners, and towards any citizen of the country where the money is parked whose rights may be violated by the decreasing level of decency in its country's governing authorities caused by the inflow of stolen assets. This means that the proposed option is able to overcome the negligence of the national prosecutors and/or investigators who for different reasons might be demotivated from launching the inquire into either nature of unexplained funds or its uses in the receiving nations.
What also may become the Court's great advantage is it powers to block and arrest the funds and assets owned or controlled by the citizens of the countries not being constituent parts of the convention, on the territory of its member nations. This very fact might undermine the fundamental principle of safety that today motivates the corrupt officials from all over the globe to hide their property abroad: just imagine, how senseless such a move will become if the documented claim sent from the country where the money was stolen, can cause the seizure of funds in the country where either the real estate was acquired or bank deposit was opened. Even though the Court may not become a well functioning institution overnight, it can be anticipated as a crucial danger to anybody engaged in corrupt and illicit financial operations around the world and therefore can greatly curb the inflows of 'dirty money'.
The last but not least advantage of the Court might be its records which – unlike the records and databases of either Interpol or national law enforcers – are to be kept open to the public and electronically accessible from any place on the world. This would contribute to the emergence of the first truly global database of the corrupt officials, doubtful jurisdictions, of the banks involved into processing of the 'dirty money' as well as the law offices and attorneys most closely associated with money laundering practices. Such an open database may, as we believe, erode the very foundations of the secrecy that allows the international corruption and money laundering to prosper in today's world.
International Fund as a tool for global justice recovery
An urgent task for the international community is not only to punish corrupt officials and fraudsters who financially exsanguinate whole continents, provoke backwardness, poverty and hunger for their nations. The assets they have stolen are subject to confiscation and fair redistribution among the victims of their criminal activities.
According to the latest World Bank report, out of almost 7 billion people in the world, 3,4 billion live on less than $5,5 a day. The experts estimated the poverty line for countries with different income levels. Thus, the figure of $ 5,5 per day is the poverty line for countries with incomes above the average. For countries with incomes below the average poverty line set at $ 3,2 a day. The situation of extreme poverty is fixed in the event that a person spends less than $ 1.9 per day. Researchers point out that more than 1,9 billion people, or 26,2% of the world's population, spend less than $ 3,2 a day, and 3,4 billion people or 46% of the world's population spend less than $ 5,5 a day. According to the authors of the report, despite the fact that the number of people living in a state of extreme poverty has decreased from 36% to 10% since 1999, the pace of fighting poverty has slowed.
To this purpose, in addition to the Court, participants of its Statute must establish the World Social Development Fund that will accumulate and dispose of the financial resources obtained as a result of the trials. Recipients can be destitute people, who will open individual accounts. In order to avoid irrational spending (alcohol, drugs, etc.), money can be used in a cashless form to pay for goods and services certified by the Fund. Since we are talking about tens of trillions of dollars, the Fund must be sufficient to ensure that the minimum needs of the part of people who are in a position of extreme poverty. As soon as assets are replenished, the Fund may include less poor segments of the population in its program.
In addition to contributing to the global fight against poverty, the Fund should encourage citizens of countries suffering from corruption and fraud to be more active in public life and force their governments to battle this evil - as a result of the new global mechanism of redistribution, these citizens themselves become the direct beneficiaries of the successful exposure of the white-collar criminals.
The mechanism for progress of the new institutions:
We clearly understand how difficult it may become to launch the new institution, but we advocate the idea of the International Corruption, Fraud and Money Laundering Court, as well as the World Social Development Fund first of all because we realize that in the countries respecting and promulgating the Rule of Law the judiciary became, and remains, an independent branch of power free from the national bureaucracies and evolving according to its own logic.
Looking on the majority of international organizations which are plagued by many obstacles to their functioning like the vetos, the majority/unanimity principles, the continuous revision of the rules and norms, etc. we would argue that the courts are the bodies best of all suited for dealing with acute international challenges, and the future of the global governance will greatly depend on their progress.
We believe that the development of the Court might create an ever enlarging sphere of justice and accountability since more and more countries would like to join if the Court proves to be an effective means of curbing the tax evasion, corruption, fraud and money laundering. The call for their governments to join the Court and to adopt its Charter might become the powerful instrument for grassroots public mobilization across the globe and to provide the civil societies with new distinctively new horizons.
The same applies to the Fund. Existing international financial institutions, designed, in theory, to help poor countries, in fact transfer money to their governments, which are corrupt themselves. As a result, these resources are either stolen or spent inefficiently. The Fund will deal directly with citizens who need assistance, and this guarantees results for the population in increasing in the standards of living.
Therefore, the Court and the Fund might become an institution which will revolutionalize the international civil society and made it truly responsible for the future, contributes to the implementation of the concept of sustainable development of the United Nations.