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Theft of public assets stifling poor countries

13th April 2012
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Developing countries including Tanzania have been challenged to increase transparency and public accountability in a bid to fight against theft of public assets and improve their economies.

Speaking to The Guardian in Dar es Salaam recently, Juma Mwageni, a development activist, urged developing countries to strengthen their legal and public financial management systems.

World Bank says fraudulent money associated with bribes and embezzlement by public officials from developing and transition countries is estimated at between USD 20 and 40 billion per year, equivalent to between 20 and 40 percent of flows of Official Development Assistance (ODA).

He said theft of public assets in most of the countries is mainly facilitated by a lack of transparency and public accountability.

“If the situation is left unattended it will degrade public institutions, especially those involved in public financial management and financial sector governance, weakening the private investment climate and social service delivery,” he said.

However he was optimistic after the move taken by the World Bank through its Stolen Assets Recovery Initiative (StAR) launched three years ago in collaboration with UN Office on Drugs and Crime (UNODC).

He said the initiative would help improve accountability and reduce transfer of money by corrupt leaders or officials.

According to WB, assets stolen by corrupt leaders at the country-level are frequently of overwhelming magnitude.

The true cost of corruption far exceeds the value of assets stolen by the leaders of countries.

This “collateral damage” in terms of foregone growth and poverty alleviation will be proportional to the duration of the tenure of the corrupt leader, the bank says.

Addressing the problem of stolen assets is an immense challenge. Even though countries as diverse as Nigeria, Peru, and the Philippines have enjoyed some success in asset recovery, the process has been time-consuming and costly.

Generalizing from the experience of the countries, developing countries are likely to encounter serious obstacles in recovering stolen assets, the Bank warns.

Even where the political will to pursue stolen assets exists, limited legal, investigative, and judicial capacity and inadequate financial resources could hamper the process.

Jurisdictions where stolen assets are hidden, often developed countries, may not be responsive to requests for legal assistance, the Bank said.

Political will and legal reform are also needed in developed countries, not just in developing countries. Both sets of countries need to ratify and implement the UN Convention Against Corruption (UNCAC).

At the 2007 IMF-World Bank Spring Meetings, during a side-event introducing the StAR Initiative, representatives of developed and developing countries and multilateral development banks expressed strong support for the Initiative, the bank said.

The consensus was that StAR is an idea whose time has come and that every country or international agency must do its part to make it succeed.

SOURCE: THE GUARDIAN
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