Recovering assets through reconciliation agreements

Read our new report Reconciliation agreements and asset recovery

Reconciliation agreements are a way for states to recover assets obtained through corruption by entering into deals with persons involved in corruption, whereby money is given to the state in exchange for amnesty from prosecution for the original crime.

For states involved in long and complex prosecutions and inter-state negotiations over the recovery of corruptly acquired wealth, this kind of an agreement can represent a quick and easy solution to asset recovery. They are resource effective in avoiding lengthy and complex law enforcement investigations, they avoid the need for extensive cross-border cooperation with authorities in other jurisdictions, and they sidestep prosecutions across one or more jurisdictions. They can also be concluded relatively quickly, responding to financial or political pressure, in ways that classic asset recovery efforts are not designed to do.

In doing so though, they also present numerous challenges. Not least of these are questions of justice. They risk that persons committing corruption do not pay the price for their actions, and that there is the perception that corrupt actors are evading justice. They also risk undermining broader restitution processes. Reconciliation agreements also risk not acting as a sufficient deterrent to corruption, through imposing ‘penalties’ that are not commensurate with the gravity of the original crime. Due to their nature of often sitting outside of formal legal structures, they also risk questions over the independence and impartiality of committees tasked with agreeing to and setting the amounts for reconciliation, as well as having the potential to be opaque in their decision making and to lack the links for investigative bodies that would enable them to determine whether amounts returned are commensurate with monies stolen. They further risk undermining legal processes taking place abroad, by ending domestic investigations.

With these factors in mind, should a jurisdiction decide to introduce a reconciliation agreement framework, several factors should be taken into account:

  1. Transparency and accountability standards commensurate with international best practice should be included. These should enable the public and interested parties to clearly understand how decisions are reached and why, and to trace the disposition of reconciled funds.
  2. Oversight of authorities responsible for reconciliation should be included in any framework. Oversight bodies should be able to review and overturn decisions. The existence of both reconciliation and reconciliation oversight authorities should not preclude the possibility of judicial oversight over these authorities.
  3. A clear principle in coming to decisions on who to reconcile with and amounts should be individual and societal corruption deterrence.
  4. Reconciliation agreements should include obligations to cooperate with law enforcement to expose broader networks and actors involved in the corrupt acts for which immunity is being provided, in order to allow for potential prosecution of other actors.
  5. Victims and organisations representing victims should be able to engage with reconciliation authorities to express their opinion on reconciliation, on amounts agreed upon, and on disposition of returned funds. These opinions should be heard and reflected on by authorities.

Read more in our latest report: Reconciliation agreements and asset recovery