Mutual Legal Assistance
Recovery of Proceeds ofCorruption
Tony Kwok, SBS, IDS
Hon Fellow, Adjunct Professor & Course Director, HKU
Visiting Professor, PRC National Prosecutors CollegeUN Anti-corruption Expert Group
Visiting Lecturer, IACA
Visiting Expert UNAFEI
Regional Coordinator, IAACA
Anti-corruption Advisor to Philippines & Mongolia
Honorary Fellow, Open University of HK
Former Deputy Commissioner, ICAC HK

Formal Mutual Legal Assistance Obtain documents, eg. bank
 Evidence taking
 Arrest & extradition Search Restrain properties
 Confiscation of properties
 Return confiscated properties & proceeds ofcrime Sharing of confiscated properties- 26 -

Informal Mutual Assistance Routine enquiries
 Public records, eg. land, companies
 Internet records
 Locating witnesses/suspects
 Interview with voluntary witnesses
 Sharing of intelligence, conviction records
 Training

Letter of Request Procedure(Commission Rogatoire)
From designated authority (Secretary of Justice) to
Secretary of Justice/magistrate/ of the requested country
 State the summary of the investigation and describe theoffences committed
 Full particulars of persons involved
 Description of the assistance requested
 Letter translated and transmitted (sometimes throughdiplomatic channel)
 If urgent, can use Interpol channel- 27 -

Mutual Legal AssistanceComplications

Competing jurisdiction on offences – double criminality
 Reciprocity - Offence must be corresponding Not of political nature Death penalty
 Different legal /judicial system
 Over protection of own citizens
 Witnesses cannot be compelled to testify
 Bank secrecy law
 LEA cannot be allowed to operate cross border Risk of leakage of information
 Resource constraint
 Time delayed is success denied

Solutions• Bilateral & Multilateral Treaties
and Convention– Extradition– Mutual Legal Assistance– Letter of Request– Exchange of prisoners– Asset sharing• Informal mutual assistance- 28 -

Hong Kong Legislation
on Mutual LegalAssistance

Mutual Legal Assistance in Criminal Matters
Ordinance, Cap. 525 (1997)
 Collection of evidence, search, seizure &confiscation
 Through Secretary for Justice Authorized Officers – police, customs, ICAC
Fugitive Offenders Ordinance, Cap. 503 (1997)
 Extradition Treaty
 Test of sufficient evidence

Conventions onCrime
1988 UN Convention Against Illicit
Traffic in Narcotic Drugs & Money
Laundering
1990 Council of Europe Convention
on Laundering, seizures andconfiscations on proceeds of crime- 29 -

Conventions onCrime
1993 European Convention onExtradition
2000 UN Convention Against
Transnational Organized Crime

Conventions onCorruption

1996 Inter-American Convention
Against Corruption
1997 OECD Convention on
Combating Bribery of Foreign
Public Officials in International
Business Transaction
2003 UN Convention Against
Corruption- 30 -

UNCAC
INTERNATIONAL
CO-OPERATIONUNCAC can be applied as legal basis forextradition & mutual legal assistance Mutual legal assistance –A46
 Gathering and transferring evidence
for use in court Tracing, search, freezing, seizure,confiscation & return of corrupt
proceeds
 Technical assistance & training-A60


UNCAC
INTERNATIONAL
CO-OPERATION
 Anti-corruption agencies co-operation-A48:
 Liaison officer Rapid exchange of information
 Exchange of personnel & experts
 Joint investigation-A49-50

 Extradition of offenders-A44- 31 -

UNCAC
Asset Recovery
Article 52 – should regulate the financial
institution on integrity of accounts
 Article 53 – should assist in civil proceedings byforeign countries
 Article 54 – should recognize the court order ofanother member state for freezing, seizing andconfiscation of corrupt assets
 Article 55 – setting the procedure forinternational cooperation
 Article 57 – Return and sharing of assets


Why Asset Forfeiture isimportant?
 Greater deterrent effect High risk, low return crime Enhance income for government/ACA
 Enhance professional image of ACA
 Encourage public partnership Enhance international cooperation
 Provide basis for public education- 32 -

Difficulties of AssetTracing and Forfeiture Secret nature
 Involving third parties
 Professional offenders Cross jurisdiction
 Use of high tech & professionals
 Inadequate legal support

Prerequisite for Effective
Asset Tracing/Forfeiture Adequate law Investigation power Forfeiture Effective public report system Adequate resources Confidentiality of investigation
 International assistance Professionalism- 33 -

Legislation Support
Liable to Forfeiture Any bribe payments
 Corrupt assets

Legislation
Forfeiture – bribe payments
 Upon conviction
 Court must issue “Restitution Order”
 Order the convicted person to pay to such

person or public body Normally the full amount of the bribe, but
liable to pay full interest on the sum However, no sanction for enforcement
 Only through civil proceeding- 34 -

Legislative Support
Excessive Asset (Illicit Enrichment)
Criminal Offence
Any Government Officer
 In control of asset
 Disproportionate to his official emoluments
 Without satisfactory explanation
 Presumption on close relationship Max fine HK$1M (US$128,000) & 10 yrs
imprisonment
 Court order for forfeiture of unexplained asset
Legislation
Forfeiture of Corrupt Asset Court Order upon conviction
 For asset held by third parties, Secretaryof Justice to apply for court order Third parties allowed to show cause Third parties can appeal to Court ofAppeal- 35 -

Legislation
Restraining Order
To freeze property during the course ofinvestigation
 Ex parte application to High Court
 Including assets held by third parties
 6/12 months renewable by court, 3 months at atime, but continue in force upon prosecution
 Criminal offence for breach of order Can apply for revocation/variation of order Basis for civil proceedings & settlement
Legislation
Investigative Power Bank Check Surveillance Intercept
 Search & seize
 Demand for Information Order- 36 -Legislation
Demand for Information Order Court Order to direct suspect to provide

statutory declaration on his income, assets (including gift, luxuryitems) & liabilities, past & present Overseas remittances May be used in court proceeding for crossexamination onlyLegislation
Demand for Information Order Court Order to direct any other person toprovide statutory declaration on Properties suspected to be held on behalf ofsuspect Court Order to require any government &public bodies to produce documents
 Court order to require any other person toattend ICAC Office & answer questions onoath- 37 -Asset Tracing
Preliminary Stage
Effecting reporting system – Life Style
Hotline Check Asset Declaration, if any
 Complainant/Informant
 Witnesses Background check : Registration of Persons
Office, Birth, Marriage Registry
 Civil Service Registry/Treasury
 Immigration Department – passport, travelmovement


Asset TracingPreliminary Stage
Transport Department – car/driver
registration
 Land/Property Registry Company Registry Source of expenses - Credit cardcompanies
 Police, FIU
 Public Utility companies – electric, gas etc
 Mobile phone/Internet service provider
 Social media- 38 -

Source of Information
Protracted Stage Surveillance & Observation – close

relatives/mistresses Intercept
 Overseas enquiries

Source of Information
Protracted Stage
 List of related persons
 Bank accounts
 Remittance Stocks, shares & funds
 Shell companies
 Properties- 39 -Source of Information
Overt StageSearch Confession
 Interview close associates
 Demand Order for information
 Immunity Witnesses
 Forensic evidence – computer Corrupt sources?
 Mutual legal assistanceFinancial Investigation Unit
 Cooperation FIU/ACA Access to Suspicious Transaction

Reporting (STR) record
 Liaison with Foreign FIU
 Use of FIU power to investigate and freeze
assets Criminal or civil proceeding to forfeit
corrupt assets- 40 -

Mathematical Exercise
 Current Assets
 - Current Liabilities = Net worth - Previous net worth
 + total expenditure - total official income
 - explainable income
 = excessive asset

Thank You
Welcome to my homepage
http://www.kwok-manwai.com- 41 -Public – Private Partnershipin Combating Corruption

Tony Kwok, SBS, IDS
Hon Fellow, Adjunct Professor & Course Director, HKU
UN Anti-corruption Expert Group (2006)
Visiting Lecturer, IACA
Visiting Expert UNAFEI
Regional Coordinator, IAACA
Visiting Professor, PRC National Prosecutors College
Honorary Fellow, Hong Kong Open University
Anti-corruption Advisor to Philippines & Mongolia
Former Deputy Commissioner, ICAC HK

True or False• Corruption is so serious in this country that it
will take a decade to eradicate it?
• If we can identify all the opportunities forcorruption, and plug them all, corruption will
be eradicated?
• We can rely on the dedicated ACA toeradicate corruption?
• Government should focus on public sector
corruption, and leave business sector alone• ACA should focus on “Big Fishes” & tolerate
petty corruption- 42 -

Two Important
Understandings
1. There is no single solution infighting corruption
2. You can’t rely on a single agency
to fight corruption3-Pronged Approach

Deterrence
Prevention
Education- 43 -Three-pronged approach• Don’t want to corrupt• Can’t corrupt• Dare not corrupt

Why Enforcement is important?
• Demonstrate political will
• Encourage public support• Driving force for system review• Provide basis for public education• Recovery of corrupt proceeds• Deter the most corrupt!

- 44 -

Equal Emphasis on public &private sector corruption• Double standard• Identical to deception and theft• Protect investment• Level Playing field• Consumer interest• Financial Market stability• Public safety• Catalyst to organized crime & crimePartnership••••Public organizations• Anti corruption commission• Police, FIU• Public Prosecutors• Judiciary• Ombudsman• Audit Commission• Civil Service Commission• Government departments• Parliament• Political parties
Private• Business communities• Professional bodies• Civil society organizations• Educational institutions• Mass media, social media
PublicInternational networking- 45 -UNCAC• For the PRIVATE SECTOR –A12
Promote co-operation between anticorruption agency and private sectorin preventing corruption
Enhance accounting and auditing
standards with penal sanctions
Promote private sector codes ofconduct

PREVENTIVE (Continued)• For the PRIVATE SECTOR –A12
Prevent conflict of interest, eg.
Employ former public officials
Promote internal control and internalaudit
Disallow tax deductibility of bribe
payment- 46 -

PREVENTIVE (Continued)• For the PRIVATE SECTOR
Promote partnership with CSOs & NGOs –A13
Access to information – A13
Public education program- A13
Promote public reports of corruption,including anonymous reports-A13
Regulatory framework to detect/preventmoney laundering-A14Some Best Practices• National Integrity Council – strategy,action plan
• Advisory/monitoring committees• Joint task forces• Public reporting hotline/referral• Ethics Development Centre• Integrity Education Network• Corruption Watch• Multi parte code of ethics• Institutional Integrity Management- 47 -

Code of Ethic• Explain the relevant law• Acceptance of entertainment, gifts, loans &discounts• Conflict of interest• Abuse of authority• Leakage of confidential/sensitive
information• Outside work
• Declaration of investment?
• General conduct and behaviour-excessive
gambling, indebtedness etc• Confidential complaint channel• Sunshine Test

Every Institution,
Government or Private,should take up Responsibility ofCleaning their Own Houses- 48 -Ministries Anti Corruption
Action Plan
• Philippines, Mongolia, Serbia• Prime Minister’s Workshop – agreed
common action based on 4 pillars• Tailor made ministries action plan
• ACA to coordinate training needs• Quarterly progress report to ACA, thento the Cabinet• Review annually

Institutional Integrity
Plan• Institutional Integrity SteeringCommittee• Institutional Integrity Annual ActionPlan• Certified Institutional Integrity Officer(CIIO)- 49 -Role of CIIO
• Provide professional advice to the SteeringCommittee• As facilitator in the strategic planningworkshop to formulate annual action plan
• Coordinate & monitor the implementation ofthe Action Plan
• Progress report to Steering Committee• Provide in house training• Review annually• Partnership with anti corruption agency &others

Institutional Integrity Action PlanPILLAR IPILLAR IIPILLAR III

EthicalLeadership

StaffIntegrity

Systems
Integrity- 50 -PILLAR
IV
Monitoring&DeterrenceEthics Leadership• Integrity• Human rights• Equality• Rule of lawIntegrity• Honesty• Selflessness – decision based on
public/institution interest, not privateinterest• Objectivity – decision based on merit• Transparency• Accountability- 51 -

Pillar 1: Ethical Leadership
1.

The Chief Executive should publicly pledge their commitment toadopt institutional integrity by issuing a public statement on
business ethics, value and zero tolerance.

2.

The Chief Executive should allocate a fixed % of budget for
institutional integrity activities

3.

Set up a declaration system for conflict of interest, including
relatives involved in business in the same sector

4.

Set up a high level Integrity Steering Committee to formulate
ethics policy, integrity strategy and action plan5.

Establish a post of Integrity Manager (CIIO) to coordinate
implementation

Pillar 2: Individual Integrity
1. Formulate & promulgate a specific Staff Code of Ethics
including clear guidelines for gifts, loans andentertainment, and conflicts of interest
2. Open & fair staff recruitment, including integrity
vetting
3. Organize staff ethics training and development
activities, such as seminars, workshops, slogan
competitions and promoting healthy life styles
4. Integrity management will be included in the job
description, and in staff appraisal- 52 -Pillar 3: Systems Integrity1.

Set up a risk management unit to assess corruption/fraud
vulnerability in the organization, to review systems & procedures,making them more efficient, transparent & accountable2.

Set service guarantees to enhance public services delivery

3.

An anti-corruption clause will be included in all contracts

4.

Unethical Contractors will be blacklisted and published in a centralsystem5.

Job rotation systems to be implementedPillar 4: Monitoring andDeterrence
1. Mandate that employees report corruption, suspected corruption, &attempted corruption
2. Set up a hotline for receiving complaints
3. Formulate policies and procedures to protect the confidentiality ofwhistleblowers
4. Enhance internal audit & surprise check system
5. Set up an internal monitoring section to investigate complaints and tomonitor suspected staff unethical conduct
6. Consider Integrity Testing programme- 53 -

Best Practices - Law• Conflict of interest law (Canada)• Corporate liability (US)• ACA budget cannot be reduced (Mongolia)• ACA budget pegged with national budget (Malawi)• Legal obligation to report corruption：Canada,Malaysia• Reward for election bribery – South Korea• Civil servant’s unsecured loan not more than 3months pay – Singapore• Senior politician/public officials not allowed to haveoverseas bank accounts (Nigeria)• Public Hearing System – Australia NSWBest Practices - Prevention• Presidential/Prime Minister Workshop – ministries,
govt agencies, provinces, SOE, business• Public service delivery - Performance pledge – HongKong, Singapore• Government department to submit annual anticorruption action plan：New Zealand, Philippines• Integrity committee/Integrity Officer in all govt
agencies – Tanzania• Integrity Audit Review ：Australia, Philippines• Due Process Office of the President – Nigeria• Procurement Observers/Monitors – Philippines- 54 -Best Practices - Education• Publication of national anti-corruption plan - Pakistan• China Public Integrity Education Network• Tripartite code of conduct : Philippines• Anti-corruption guideline on web：Hong Kong,Australia• Anti-corruption month：Philippines• Active partnership with Civil societies & churches –Philippines, Kenya

Best Practices - Enforcement• Special Court：Pakistan, Philippines,Indonesia• Life style check campaign - Philippines• Australian Corruption & Fraud Centre• Blacklisting of corrupt contractors• “I paid a bribe” Website - India• Integrity Testing- 55 -

Thank You
Welcome to my homepage
http://www.kwok-manwai.com- 56 -