• It Doesn’t Pay to Steal: In Largest Ever Kleptocracy Forfeiture Action, DOJ Seizes $458 Million
  • March 19, 2014 | Author: Fatema K. Merchant
  • Law Firm: Sheppard, Mullin, Richter & Hampton LLP - Washington Office
  • On March 5, 2014, the U.S. Department of Justice announced that it had frozen over $458 million of ill-gotten assets that former Nigerian dictator Sani Abacha and his co-conspirators had stashed in bank accounts across the globe. The DOJ is seeking to recover almost $100 million more. The largest-ever kleptocracy forfeiture action brought in the United States, this case is a victory for the Kleptocracy Asset Recovery Initiative, a program launched by the DOJ Criminal Division’s Asset Forfeiture and Money Laundering Section in 2010. We wrote about the Initiative’s first-ever action, brought in 2012, when the DOJ executed a forfeiture order of just over $400,000 against a former Nigerian governor. And while the DOJ has seen great success in its actions against bribe-payers through the enforcement of the Foreign Corrupt Practices Act, initiatives to bring bribe-takers to justice have faced bumps in the road, probably because of the politically fraught and complex nature of such cases.

    Assistant Attorney General Mythili Raman called Abacha “one of the most notorious kleptocrats in memory,” embezzling “billions from the people in Nigeria while millions lived in poverty.” According to Transparency International, Abacha stole between three and five billion from Nigerian public coffers during his dictatorship from 1993 until his death in 1998. Abacha and his associates embezzled money on the false pretenses that the funds were necessary for national security, caused the Nigerian government to buy highly inflated bonds - essentially lending money stolen from Nigeria back to Nigeria for enormous profit, and extorted millions in connection with payments on government contracts. The corrupt monies were then laundered through the United States by the purchase of bonds that were backed by the United States using U.S. banks.

    We will likely see an uptick of anti-corruption enforcement through the recovery of stolen public funds, especially in light of the current upheaval in Ukraine. According to a very recent White House statement, the U.S. is deploying a team of experts to Kyiv to identify misappropriated assets and return them to the people of Ukraine, and assist in providing more “robust safeguards against corruption.”

    According to the DOJ, the Abacha case is meant to send a “clear message,” that the U.S. government is “determined and equipped to confiscate the ill-gotten riches of corrupt leaders who drain the resources of their countries.” It remains to be seen how such actions will impact overall U.S. enforcement of anti-corruption matters, but the threat of U.S. seizures could potentially trigger the cooperation of crooked government officials with U.S. enforcement officials, thereby facilitating more FCPA prosecutions.