How does asset recovery fit into our interpretation of justice? Who should benefit from anti-corruption enforcement?
On the 10th of June, Just Access participated in a seminar hosted by the Asset Recovery Working Group and the UNCAC Coalition entitled ‘Repatriating the profits of corruption: The next frontier in asset recovery?’, which explored these questions and others. Inspired by that discussion, this post explores the relationship between disgorgement, compensation, and the human right to an effective remedy.
Disgorgement vs. Compensation
Both disgorgement and compensation are forms of asset recovery. A fundamental principle of the United Nations Convention Against Corruption (UNCAC), asset recovery is defined as “the process by which the proceeds of corruption are recovered and, when they were transferred abroad, returned to the country from which they had been taken or to their rightful owners”. Therefore, although these two methods form integral parts of asset recovery, they operate in different ways and have different goals
“Securing access to justice is the first step in ensuring that people harmed by corruption are fairly compensated.”
Glencore’s actions contributed to severe environmental degradation and the displacement of indigenous peoples’ communities. In such instances, the intertwining of these harms complicates the decision-making around appropriate remedies. All individuals have the right to an effective remedy if their human rights are violated, as outlined in Article 8 of the Universal Declaration of Human Rights; thinking strictly about corruption remedies is insufficient.
Through the Lens of Human Rights
In a case like that of Glencore, disgorgement is arguably not a sufficient outcome. Disgorgement may deprive corporations of illegally obtained profits, but it does not correct the human rights abuses that the victims have suffered. A heavy focus on defendants’ gains falls short of an effective remedy if it does not fully acknowledge victims’ losses.
A key difference between disgorgement and compensation is who benefits from repayment by the convicted party. Disgorgement is a legal remedy that requires a party that benefits from illegal or wrongful acts to surrender any profits gained through this wrongful conduct. This primarily focuses on ensuring that illegal or wrongful conduct is unprofitable. By contrast, compensation is a legal remedy in which the victim of a crime is repaid for losses that occurred due to another party’s illegal or wrongful behaviour. Unlike disgorgement, its primary focus is on supporting the victims of corruption and crime.
The Glencore Case and Asset Recovery
While crimes of corruption may first appear to be a strictly financial issue, they can significantly hinder individuals’ and communities’ abilities to exercise their human rights. For example, in the Glencore case, the mining and trading company Glencore bribed officials to obtain contracts and avoid audits. This enabled business operations that led to violations of the right to health and right to security, as well as complicity in child labour.
“Ideally, asset recovery would be not only a mechanism for depriving a party of wrongful gains, but also an opportunity to restore the rights of victims affected by corruption.”
A human rights-based approach should ensure that the individuals whose rights have been violated are compensated fairly. This is often difficult, however, due to issues of access to justice. Individuals and communities often face significant barriers when seeking justice against large corporations, including limited financial resources, restricted opportunities to participate in legal proceedings, and limited access to legal information.
Securing access to justice is the first step in ensuring that the people harmed by corruption are fairly compensated. Furthermore, a human rights approach requires remedies that include restitution, compensation, rehabilitation, and/or guarantees of non-repetition. This, when combined with the established means of participation for those affected by corruption, would help ensure that human rights are upheld. Ideally, asset recovery would be not only a mechanism for depriving a party of wrongful gains, but also an opportunity to restore the rights of victims affected by corruption.
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