[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
                     RECOVERING DICTATORS' PLUNDER
=======================================================================

                                HEARINGS

                               BEFORE THE

                            SUBCOMMITTEE ON
               FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 9, 2002

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 107-69




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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 JOHN J. LaFALCE, New York
MARGE ROUKEMA, New Jersey, Vice      BARNEY FRANK, Massachusetts
    Chair                            PAUL E. KANJORSKI, Pennsylvania
DOUG BEREUTER, Nebraska              MAXINE WATERS, California
RICHARD H. BAKER, Louisiana          CAROLYN B. MALONEY, New York
SPENCER BACHUS, Alabama              LUIS V. GUTIERREZ, Illinois
MICHAEL N. CASTLE, Delaware          NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York              MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California          GARY L. ACKERMAN, New York
FRANK D. LUCAS, Oklahoma             KEN BENTSEN, Texas
ROBERT W. NEY, Ohio                  JAMES H. MALONEY, Connecticut
BOB BARR, Georgia                    DARLENE HOOLEY, Oregon
SUE W. KELLY, New York               JULIA CARSON, Indiana
RON PAUL, Texas                      BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio                MAX SANDLIN, Texas
CHRISTOPHER COX, California          GREGORY W. MEEKS, New York
DAVE WELDON, Florida                 BARBARA LEE, California
JIM RYUN, Kansas                     FRANK MASCARA, Pennsylvania
BOB RILEY, Alabama                   JAY INSLEE, Washington
STEVEN C. LaTOURETTE, Ohio           JANICE D. SCHAKOWSKY, Illinois
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, North Carolina      CHARLES A. GONZALEZ, Texas
DOUG OSE, California                 STEPHANIE TUBBS JONES, Ohio
JUDY BIGGERT, Illinois               MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin                HAROLD E. FORD Jr., Tennessee
PATRICK J. TOOMEY, Pennsylvania      RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       KEN LUCAS, Kentucky
JOHN B. SHADEGG, Arizona             RONNIE SHOWS, Mississippi
VITO FOSSELLA, New York              JOSEPH CROWLEY, New York
GARY G. MILLER, California           WILLIAM LACY CLAY, Missouri
ERIC CANTOR, Virginia                STEVE ISRAEL, New York
FELIX J. GRUCCI, Jr., New York       MIKE ROSS, Arizona
MELISSA A. HART, Pennsylvania         
SHELLEY MOORE CAPITO, West Virginia  BERNARD SANDERS, Vermont
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio

             Terry Haines, Chief Counsel and Staff Director
       Subcommittee on Financial Institutions and Consumer Credit

                   SPENCER BACHUS, Alabama, Chairman

DAVE WELDON, Florida, Vice Chairman  MAXINE WATERS, California
MARGE ROUKEMA, New Jersey            CAROLYN B. MALONEY, New York
DOUG BEREUTER, Nebraska              MELVIN L. WATT, North Carolina
RICHARD H. BAKER, Louisiana          GARY L. ACKERMAN, New York
MICHAEL N. CASTLE, Delaware          KEN BENTSEN, Texas
EDWARD R. ROYCE, California          BRAD SHERMAN, California
FRANK D. LUCAS, Oklahoma             MAX SANDLIN, Texas
BOB BARR, Georgia                    GREGORY W. MEEKS, New York
SUE W. KELLY, New York               LUIS V. GUTIERREZ, Illinois
PAUL E. GILLMOR, Ohio                FRANK MASCARA, Pennsylvania
JIM RYUN, Kansas                     DENNIS MOORE, Kansas
BOB RILEY, Alabama                   CHARLES A. GONZALEZ, Texas
STEVEN C. LaTOURETTE, Ohio           PAUL E. KANJORSKI, Pennsylvania
DONALD A. MANZULLO, Illinois         JAMES H. MALONEY, Connecticut
WALTER B. JONES, North Carolina      DARLENE HOOLEY, Oregon
JUDY BIGGERT, Illinois               JULIA CARSON, Indiana
PATRICK J. TOOMEY, Pennsylvania      BARBARA LEE, California
ERIC CANTOR, Virginia                HAROLD E. FORD, Jr., Tennessee
FELIX J. GRUCCI, Jr, New York        RUBEN HINOJOSA, Texas
MELISSA A. HART, Pennsylvania        KEN LUCAS, Kentucky
SHELLEY MOORE CAPITO, West Virginia  RONNIE SHOWS, Mississippi
MIKE FERGUSON, New Jersey            JOSEPH CROWLEY, New York
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearings held on:
    May 9, 2002..................................................     1

Appendix:
    May 9, 2002..................................................    39

                               WITNESSES
                         Thursday, May 9, 2002

Blum, Jack A., Partner, Lobel, Nevins & Lamont...................    14
Chege, Michael, Director of the Center for African Studies, 
  University of Florida..........................................     6
Conyngham, John, Director, International Investigations, Control 
  Risk Groups LTD., U.K..........................................    10

                                APPENDIX

Prepared statements:
    Bachus, Hon. Spencer.........................................    42
    Oxley, Hon. Michael G........................................    40
    Royce, Hon. Ed...............................................    45
    Blum, Jack A.................................................    61
    Chege, Michael...............................................    46
    Conyngham, John..............................................    51

              Additional Material Submitted for the Record

CRS Report, ``Abacha Case Chronology''...........................    70


                     RECOVERING DICTATORS' PLUNDER

                              ----------                              


                         THURSDAY, MAY 9, 2002

             U.S. House of Representatives,
            Subcommittee on Financial Institutions 
                               and Consumer Credit,
                           Committee on Financial Services,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:02 a.m. in 
room 2128, Rayburn House Office Building, Hon. Spencer Bachus, 
[chairman of the subcommittee], presiding.
    Present: Chairman Bachus; Representatives Royce, Kelly, 
Gillmor, Hart, Tiberi, Waters, Sherman, Maloney of New York, 
Moore, and Lucas of Kentucky.
    Chairman Bachus. Good morning. Today we will hear from a 
group of distinguished panelists on what the international 
community is doing---- and what more can be done---- to address 
the causes and consequences of political corruption that is so 
widespread throughout the developing world. The subcommittee's 
particular focus will be on efforts to recover stolen assets 
and other proceeds of corruption and return them to the 
rightful owners in the countries that have been plundered.
    In the last Congress, Ms. Waters and I held hearings in the 
Domestic and International Monetary Policy Subcommittee on the 
transition taking place in Nigeria from a military regime 
plagued by rampant corruption to a functioning democracy marked 
by impressive economic and social reform.
    Nigeria is, of course, something of a poster child for what 
can happen to a country when it is hijacked by corrupt public 
officials who enrich themselves at the expense of those they 
are sworn to serve. The notorious military dictator, Abacha, 
aided and abetted by a host of cronies and family members, 
systematically looted the Nigerian treasury of literally 
billions of dollars over the course of his brief, 5-year rule, 
leaving behind a desperate, impoverished country when he died 
in 1998.
    Efforts to identify and repatriate Abacha's ill gotten 
gains have spanned the globe, following money trails to private 
banking departments in New York and London money center banks, 
as well as to more obscure locations such as the bank secrecy 
havens of Luxembourg and Liechtenstein.
    The bulk of Abacha's stolen treasure ended up in various 
Swiss bank accounts. To their credit, Swiss authorities 
launched an intensive investigation of Abacha's accounts in 
1999. Just last month, a landmark settlement was reached among 
Switzerland, Nigeria, Abacha's survivors and four other 
countries where Abacha funds were deposited, that will result 
in the return of $1 billion to the Nigerian government. We will 
hear more about this settlement from our witnesses at today's 
hearing.
    For countries already struggling with deep--seated poverty, 
hunger and disease, the human toll exacted when corrupt 
government officials divert public resources for private gain 
is devastating. So long as corruption thrives in so many places 
around the globe, efforts to improve the living standards and 
the conditions of people living in poverty, whether through 
debt relief, foreign assistance or capital investment, can 
never fully succeed.
    What can the United States and other developing countries 
do, and why should they do it? First, we can require as a 
condition of U.S. and international financial assistance that 
recipient countries implement meaningful anti-corruption 
measures to prevent such aid from being misappropriated or used 
for anything other than its intended purposes.
    Second, we can work with our G-7 partners and other 
governments to deny safe haven to funds that have been spirited 
out of the country by corrupt political regimes. As the Abacha 
case demonstrates, the global banking system can easily be 
exploited by those seeking to conceal or launder the proceeds 
of political corruption. A concerted international effort 
involving close cooperation among regulators, law enforcement 
authorities and financial institutions is absolutely essential 
for dealing effectively with future Abachas.
    In this regard, two key provisions of the U.S.A. Patriot 
Act developed by this committee last fall will reduce the 
attractiveness of the U.S. as a destination point for ill-
gotten gains of corrupt foreign officials. First, the new law 
expands the list of foreign predicate offenses on which the 
U.S. Government can base a money laundering prosecution to 
include the misappropriation, theft or embezzlement of public 
funds by or for the benefit of a public official.
    Second, the Patriot Act requires U.S. financial 
institutions to apply enhanced security to private bank 
accounts maintained by or on behalf of senior political figures 
and their immediate family members or close associates to 
facilitate the detection and reporting of transactions that may 
involve the proceeds of foreign corruption.
    At today's hearing, we will hear testimony from seasoned 
investigators and asset recovery specialists who are uniquely 
qualified to provide the subcommittee with a report from the 
front lines of the battle against global corruption.
    Second, and I am going to depart from my written statement 
at this time. I think the question is why is it in the United 
States' best interest? Why is it critical that we help fashion 
a solution to getting these assets back? The short answer is 
that the world is becoming a chaotic, dangerous place for all 
of us because of this very corruption.
    You take a look around the globe at all those problem 
areas, areas that we are being drawn into, areas that could 
cause us to be involved in military action, and without 
exception part of the problem has been and continues to be 
corruption of government officials.
    We will hear some testimony today about the PLO, the fact 
that the PLO has corrupt officials in it that are diverting 
money that is not going to the Palestinian people. As a result, 
a lot of what we see on TV about the unrest in the Middle East 
corruption, is a contributor to that, the fact that the 
corruption actually prevents and retards any ability to bring 
peace in the Middle East.
    Slobodan Milosevic looted his government. Argentina, one of 
our biggest economic problems in the western hemisphere, fell 
victim to corruption and looting of its national treasury. 
Afghanistan, we are trying to support and establish a stable 
government there. The Taliban looted the national treasury of 
Afghanistan recently. That compounds our problems there.
    In a number of small and not so small countries throughout 
the developing world, there are cases where the government, the 
present government, is struggling because the national wealth 
was looted, and when they came to power the resources were 
simply not there for infrastructure or for addressing the needs 
of the people.
    Finally, I say that the World Bank and the IMF, 
international agencies, could do much more. A lot of the 
assistance they are giving is being skimmed off, diverted and 
ends up in the pockets and the bank accounts of corrupt 
government officials, not for the purpose it was intended, 
which in some cases creates a worse situation or does create a 
worse situation than you had to begin with, because the 
assistance not only is not given, but the country to which it 
was supposed to have been given has got to pay that money back, 
which creates even more debt.
    [The prepared statement of Hon. Spencer T. Bachus III can 
be found on page 42 in the appendix.]
    In order to have any successful debt relief, in order to 
have any successful efforts to help impoverished countries, we 
have to, number one, put an end to the corruption. To do that, 
it is going to take a comprehensive program. Therefore, that is 
why we have brought together this distinguished panel.
    At this time I will recognize the Ranking Member, Ms. 
Waters.
    Ms. Waters. I would like to thank you, Chairman Bachus, for 
organizing this hearing on Recovering Dictators' Plunder. I 
especially appreciate your continuing interest in justice for 
the people of Nigeria and other countries that have been 
plundered by dictators.
    I first became interested in this issue when I learned that 
the family of Sani Abacha had laundered millions of Nigeria's 
stolen assets and accounts at Citibank, an American financial 
institution. General Abacha's sons, Muhammad and Ibrahim, first 
became clients of Citibank Private Bank in 1988. They began by 
opening accounts in London and later opened accounts in New 
York.
    Citibank provided the Abacha sons with a number of secrecy 
measures. According to a November, 1999, hearing by the Senate 
Permanent Subcommittee on Investigations, Citibank provided 
Abacha family members with three special name accounts and 
accounts in the name of a shell corporation, Morgan 
Procurement. The London account held as much as $60 million at 
one time. The New York accounts usually held about $2 million, 
but in one 6 month period saw deposits and withdrawals of 
almost $47 million.
    The Domestic and International Monetary Policy Subcommittee 
of the Banking and Financial Services Committee held a hearing 
on May 25, 2000, on Nigeria in Transition under the leadership 
of Chairman Bachus and myself. Extensive evidence was presented 
at this hearing regarding the laundering of Nigeria's stolen 
assets in American financial institutions. However, no action 
has been taken by the United States Government to identify 
these stolen assets and facilitate their return to the people 
of Nigeria.
    On April 17, 2002, we understand the government of Nigeria 
reached a settlement with Sani Abacha's family. Under this 
agreement, the Abacha family will return more than $1 billion 
in assets to Nigeria. The family will be permitted to keep 
about $100 million. The assets that will be returned will come 
from banks in Switzerland, Britain, Luxembourg, Liechtenstein 
and the English Channel Islands.
    Unfortunately, none of the funds laundered in Citibank or 
other American banks were included in the settlement. 
Nevertheless, the Abacha settlement does provide an 
illustration of methods to identify stolen assets and 
facilitate their return to the country from which they were 
stolen.
    It may be possible to apply these methods to assets stolen 
by other dictators such as Marcos of the Philippines, Mobutu of 
Zaire, Baby Doc Duvalier of Haiti, Slobodan Milosevic of 
Yugoslavia, Suharto of Indonesia and the Taliban of 
Afghanistan. However, future efforts to identify stolen assets 
should include assets laundered in American financial 
institutions.
    Today I will introduce the Stolen Assets Recovery Act of 
2002. This bill will require the Secretary of the Treasury to 
submit a report to the Congress on the possibility that stolen 
assets may be laundered in financial institutions in the United 
States.
    The report would include an explanation of U.S. Government 
efforts to identify stolen assets, mechanisms available to the 
U.S. Government to identify stolen assets and legislation that 
could be enacted to facilitate the return of stolen assets to 
the people of the countries from which they were stolen.
    The legislation would also require the Secretary of the 
Treasury to urge the International Monetary Fund and the World 
Bank to provide the U.S. copies of all audits and other 
information possessed by these institutions regarding the use 
of funds loaned to dictatorial governments and other 
governments where corruption has been a serious problem.
    It is essential that the United States of America support 
efforts to identify assets stolen by dictators and their 
families and facilitate the return of those assets to the 
people from whom they were stolen. I look forward to the 
testimony of the witnesses on the recovery of assets stolen by 
Sani Abacha and other dictators.
    Mr. Chairman, let me just say that there are any number of 
instances where we have learned that our banks have been in 
receipt of money that has been stolen from citizens in other 
countries. Mexico is one of them. We discovered that Citibank 
used concentration accounts where they wire transferred money 
offshore. In many of these places where dictators have stolen 
the money from people and the money ends up in our banks, we 
are giving financial aid or foreign aid or assistance to them 
in one way or the other. I think it is outrageous and 
ridiculous.
    I guess we are going to hear about the settlement that took 
place with Nigeria and the Abacha family, and I guess there is 
some justice in that, but even that is ridiculous, and still 
again it does not account for those dollars that found their 
way into American banks. There are a lot of other instances of 
that.
    I just hope that we can move forward in some way beyond 
this Nigeria settlement and not just see this Nigeria 
settlement as the way to go, but dig a little bit deeper and 
find out how we can discourage our banks from being part of the 
raping of these countries by these dictators. Sheltering these 
assets in our institutions is outrageous and ridiculous.
    I thank you so very much for paying attention to this 
issue.
    Chairman Bachus. Thank you. I would simply like to respond 
to the Ranking Member by saying I think she and I both 
recognize the incredible cost not only to the people of these 
countries, but to the United States and to the taxpayers here, 
of corruption.
    It has a direct impact on our military budget, on our 
defense budget, in that we are required to have a presence in 
countries or have military in countries where otherwise we may 
not need a military presence.
    It constitutes a tremendous security threat to our country, 
as we found out on September 11, because in some of these 
countries, and I think Professor Chege can comment, money from 
these countries actually found its way to Al-Qaida and was used 
to finance the terrorist attacks of September 11, a direct 
result of corruption in these countries where the G-7 
countries, the world organizations, apparently looked the other 
way and took no actions.
    We will continue to pay a tremendous price as a country if 
we and other countries do not move against this and clean up 
our own house. I for one believe the United States as a result 
of the Patriot Act is leading the way. I believe a lot of what 
happened in the United States could not happen today because of 
laws which we have already enacted.
    We will either as a country lead an effort or participate 
in an effort to clean this up, or we as a people will suffer. 
Whether we suffer by oil embargoes, whether we suffer by 
becoming involved in a war in the Middle East, whether it is 
another embassy bombing, we will pay the price if we ignore 
this.
    With this I will introduce the panelists. Professor Michael 
Chege is director of the Center for African Studies at the 
University of Florida-Gainesville where his principal teaching 
focus is the comparative politics of African states.
    Professor Chege, a native of Kenya who previously taught at 
the University of Nairobi in Kenya, the Graduate Institute of 
International Studies in Geneva and was a fellow at Harvard 
Center for International Affairs, currently is conducting 
research on the role of the military in the transition to more 
democratic governance in Africa.
    I believe he brings a personal perspective in that his home 
country has fallen victim to this very corruption that we are 
talking about, and his fellow countrymen are facing poverty and 
disease as a result of that very corruption, so he has seen it 
happen on a firsthand basis to his fellow Kenyans.
    John Conyngham is founder and director of the 150 member 
international corporation investigations team at the London 
based Control Risks Group, Ltd. The team, operating out of 12 
offices worldwide including three in the U.S., does 
investigations ranging from pre-employment screening through 
fraud investigation and prevention, investigative due diligence 
and asset searches for both government and corporate clients.
    A former prosecutor of tax evasion and drug related charges 
in England, he also is Deputy Principal Crown Counselor in Hong 
Kong specializing in fraud prosecutions and formerly was head 
of fraud prosecution for Crowe Associates U.K., Ltd.
    Jack Blum, an expert on money laundering and offshore tax 
haven issues, is a partner in the Washington law firm Lobel, 
Novins and Lamont where he represents individuals, governments 
and corporations on international business transactions, 
corporate fraud, recovery of losses for victims of 
international, tax and antitrust matters.
    He served as associate counsel for the Senate Committee on 
Foreign Relations and the Committee on Judiciary and was later 
special counsel to the Committee on Foreign Relations. He was 
involved in a number of well-known investigations, including 
BCCI, General Noriega's drug trafficking and Lockheed 
Aircraft's overseas bribes, which gave rise to the Foreign 
Corrupt Practices Act.
    He has been a consultant to the United Nations Center on 
Transnational Corporations and to its Office of Drug Control 
and Crime Prevention. In fact, he presently chairs an experts 
group on international asset recovery of the U.N. Center for 
Transnational Corporations and its Office for Drug Control and 
Crime Prevention. The panel which he chairs has actually been 
charged by the U.N. with looking at the very subject we are 
testifying about today.
    I welcome you, gentlemen, and we will go from left to right 
starting with Professor Chege. We welcome you to the hearing 
and look forward to your testimony.

  STATEMENT OF PROFESSOR MICHAEL CHEGE, DIRECTOR, CENTER FOR 
       AFRICAN STUDIES, UNIVERSITY OF FLORIDA-GAINESVILLE

    Mr. Chege. Thank you very much, Mr. Chairman, Congresswoman 
Waters. I am so pleased to be here and appear before you this 
morning. I feel honored to have been asked to come and speak to 
you this morning.
    My main qualification for appearing before you, as was 
stated by the Chairman, is that I grew up amidst a lot of 
poverty in colonial Kenya when it was still a British colony. I 
did not wear my first pair of shoes until I went to high school 
at age 15.
    I have now a position as Professor of Political Science and 
Director of African Studies at the University of Florida. I 
have seen it all from a theoretical perspective. I have seen it 
all in practice, and it pains me that dictators in Africa and 
in other parts of the developing world continue to impoverish 
the poor people.
    My principal qualification for appearing before you is that 
I grew up amidst poverty in colonial Kenya. I know it from a 
practical point of view.
    It pains me, as somebody that studies Africa and studies 
the developing world, to see that dictators take resources and 
bank them abroad when children go hungry, when children that 
need vaccinations do not get them, when AIDS in some African 
countries affects a third of the population and nothing is 
being done about it.
    Mr. Chairman, everybody who studies the developing world 
knows by now that bad governance is the root source of all the 
problems that afflict these countries from political 
instability to poverty to inability to provide schools and 
health services.
    Most of the developing world has a population growth rate 
that is much, much higher than the rich developed countries of 
the west; a 2.6 percent population growth rate in Africa, 2.2 
in the Middle East, two percent in South Asia.
    Mr. Chairman, a growing population is a young population. 
Fifty percent of Africa's population is under 25 years old. 
When I appear on a street in Johannesburg or Nairobi I look 
old, Mr. Chairman, because everybody else is so much younger.
    A young population requires vaccinations when they are 
children. They require health. They require education in grade 
school, in high school, in college. They require jobs. In an 
age where electronic transformation of information across the 
globe is so fast, they watch the wealthy countries on 
television, on video, on cable television, and they want it. We 
may not like what we see on those channels, but, believe me, 
they would love to have some of it.
    A government that does not provide those services risks 
provoking a chain reaction of instability leading onto 
terrorism and into political instability, thuggery, drug 
trafficking and arms trafficking that affect us here in the 
United States as well.
    I cite the case of Sierra Leone, Mr. Chairman. The 
dictators who misruled and abused the wealth of that country, 
which is based in diamonds and steel and iron and coffee and 
cocoa, between 1965 and 1992 produced a young and angry 
population that had nowhere to go, that had no jobs and that 
had lost any sense of hope.
    In came Charles Taylor, the incumbent dictator of Liberia, 
a country that you know was founded by the United States as a 
colony after the end of the Civil War for freed American 
slaves. Charles Taylor, who is a drug kingpin and a war lord, 
sponsored the RUF, the Revolution United Front, in Sierra 
Leone.
    While these young people were taught to collect diamonds, 
those diamonds eventually found their way to Charles Taylor 
and, as we now know, into and through his intermediary, Mr. 
Sanjivan Ruprah, who is now being detained by the government of 
Belgium; the pockets of Mr. Victor Bout, ex-KGB, who runs the 
largest arms bazaar underground in the whole world, the 
official supplier to Al-Qaida; Abu Sayyaf in the Philippines; 
and sundry terrorist groups in the Middle East.
    Diamonds are the terrorists' best friend, Mr. Chairman, and 
now we are learning. Although Sierra Leone looked like a 
country that is way, way far away that we do not care about, we 
learned that through the linkages manufactured by Charles 
Taylor that we, too, became victims of this little, nasty war.
    I will say something about President Mobutu of Zaire, who 
passed away in 1997 and had secreted $4 billion of that poor 
country into Swiss accounts, chalets on the French Riviera, 
chateaus in Switzerland, buildings in Europe, vineyards in 
Portugal, to leave the country poorer than he found it in 1964. 
The people of that country have not recovered.
    There is no infrastructure to speak of, nor roads, nor 
telecommunications, nor schools, nor hospitals. In the midst of 
that, they are caught up in one of the largest and most 
barbaric wars on the African continent.
    The saga of Sani Abacha has already been mentioned. The 
Honorable Waters referred to it. It is already a well known 
story in the press. I could go on to my own country, Kenya.
    Kenya, Mr. Chairman, was a showcase of African economic 
prosperity and development, the land of the safari, of 
hollywood movies, yes, of Lion King even. Today, Kenya is a sad 
situation. It is a sad situation because of the dictatorship of 
Daniel arap Moi, whose leader, Mr. Moi, is reputed to have $3 
billion abroad, has systematically ruined the economic 
prosperity of that country; he, his family and his cronies.
    Goldenberg, which we mentioned a little bit about earlier, 
is a case in point. Between 1991 and 1994, the government of 
Kenya, which is to say the dictator and his minions, decided to 
pass a law to give anybody who exported gold out of Kenya a 35 
percent rebate of the value of that gold. That was by way of 
diversifying the export commodities of Kenya, which the World 
Bank and IMF had urged.
    Some $3 billion, $4 billion, $5 billion dollars was paid 
out to cronies of the president through this way, but there was 
one problem, Mr. Chairman. Kenya has no gold. When the press 
and the courageous people of that country went over to Dubai 
and Switzerland to inspect the dummy corporations that 
supposedly received this gold, they found none of them.
    Mr. Moi and his cronies have wealth secreted abroad that is 
equal to the total national debt of Kenya, which is rated at $8 
billion. In the meantime, poverty has come to Kenya. It is no 
longer the golden land of the safari makers that it used to be. 
Aid coming into Kenya has been squandered systematically. HIV 
rates go up to 30 percent in some parts of the country; no 
support from the government that is worth talking about. 
Schools are falling apart.
    Crime is rampant; so rampant that it has completely 
destroyed the prospect of tourism that used to earn that 
country a lot of money. I could go on, Mr. Chairman. We 
concentrate on Africa because Africa now has got the worst 
cases in these matters. It is also a region where the poor are 
growing poorer.
    We could talk about the family dictatorships in our 
neighboring Middle East, which are also experts in this, the 
Duvalier dynasty in Haiti, the Marcos, the Samozas in 
Nicaragua, Suharto in Indonesia, Saddam Hussein--yes, he is an 
expert in this, too--the Russian ``oligarchs'' in the 1990s, 
all players in this macabre and tragic drama of Robin Hood in 
reverse, stealing from the poor in your own country to bank it 
to your rich self and your cronies abroad. Robin Hood in 
reverse ought to be stopped, Mr. Chairman.
    What can your subcommittee do? A lot. I thank you for the 
work that you have done already. It gives me, my colleagues, my 
countrymen, a lot of poor people out there, a lot of heart that 
this great country has people in its own legislature that care.
    Number one, let us never forget the courageous people who 
work in these countries to fight these dictatorships. Please, 
let us support democracy, transparency, accountability, civil 
rights, human rights. The most effective firewall against 
dictators who steal from their own people is democracy. 
Democracy, Mr. Chairman, is good for your pocket. It is good 
for mine. It is good for the poor people in those countries.
    Democracy empowers people to fight so that their taxes are 
not stolen. It empowers them so that they can write stories 
when the dictators steal money. It encourages them to shame 
their leaders when they fail to act.
    Remember South Africa. We never gave up on Nelson Mandela 
and his colleagues. We applaud them because they have brought 
stability to that country and good governance, and the banking 
system works sufficiently. Another example is Aung San Suu Kyi 
in Burma. The list goes on. The United States Government should 
identify itself with those who fight for the rule of law, for 
transparency and for democracy.
    Number two, Mr. Chairman. My suggestion. The era of 
unquestioned support for the U.S. Government for dictators 
abroad has come to an end. The IMF and the World Bank have 
unwittingly become the principal instruments in the 
multilateral international organization system to help in 
financing of development to promote government. They have 
succeeded in one respect, and that is to give Third World 
countries information technology, as well as technical support, 
to realize the market is the single, most important tool for 
lifting the poor out of poverty.
    Poor people in Africa, Mr. Chairman, know how to work the 
market. If you give them a chance, they will do wonders. I have 
seen that in Africa. Many illiterate market women in West 
Africa are millionaires as I speak. It is their governments 
that impoverish Africans.
    The IMF and the World Bank, insofar as national governance 
and cooperative governance are concerned, however, are a 
spectacular failure. In some cases they have utterly been 
complacent in the theft and depravity that these countries have 
suffered. The IMF and the World Bank continued giving money to 
Mobutu even as they knew that that money was going to 
Switzerland into secret bank accounts and to impoverishing the 
people of Zaire.
    Right now, Mr. Chairman, the World Bank's president is on a 
first name basis with Mr. Moi. Can you believe that? Also, 
because the World Bank is providing its own employees and 
technical support to the Kenyan government they think that they 
can outsmart him.
    Mr. Chairman, it is very difficult to outsmart these crooks 
and dictators. They did not get to where they are from nothing. 
From Saddam Hussein to the Duvaliers to Mobutu, they are 
smarter than we think. We may not admire what they do, but you 
cannot fault them for playing it well.
    The Alan Meltzer report that was submitted to Congress in 
the year 2000 had some very interesting ways about how to 
reform this institution so that it --and the IMF--become 
accountable to us in the United States and also to the poor 
people that they serve. Please, let us use it as a way of 
getting reform.
    Mr. Chairman, I want to stop there, but I want to conclude 
by saying that I know that I speak on behalf of a lot of poor 
people in Africa who I see and speak to every time I travel 
there. They look up to this country because it is a beacon of 
freedom, and no institution is a greater sign of that freedom 
than this legislature.
    Mr. Chairman, please do not fail them.
    [The prepared statement of Prof. Michael Chege can be found 
on page 46 in the appendix.]
    Chairman Bachus. Thank you. I appreciate your testimony 
very much.
    Mr. Conyngham.

     STATEMENT OF JOHN CONYNGHAM, ESQ., GLOBAL DIRECTOR OF 
   INVESTIGATIONS, CONTROL RISKS GROUP, LTD., LONDON, ENGLAND

    Mr. Conyngham. Mr. Chairman, Members of Congress, good 
morning. As you rightly stated, I am the Global Director of 
Investigations from an English company headquartered in London, 
Control Risks Group.
    May I begin my comments this morning by thanking the 
subcommittee very much indeed for the kind invitation to appear 
before you. It is indeed an honor to be here, and in the last 
few moments it has been a privilege to hear your opening 
addresses and indeed the moving address of Mr. Chege.
    I have, Mr. Chairman, submitted some written testimony, and 
I would ask if that could be made part of the record of the 
hearing today.
    Chairman Bachus. That will be made a part of the record 
without objection.
    Mr. Conyngham. Thank you.
    Mr. Chairman, what competence, if any, I have to appear 
before you today is from my past 12 years as an international 
investigator. During that period of time, companies that have 
employed me have been retained on a very significant number of 
asset tracing assignments. Some of those assignments have 
involved assets stolen from their countries by very highly 
placed government officials, if not heads of state.
    I have mentioned in my written testimony some of the trials 
and tribulations of conducting that type of work where one 
comes across the secrecy of individuals, of companies, of 
financial institutions, and the complexities of offshore 
jurisdictions, of laws and of politics.
    If I might present some brief personal thoughts at the 
outset of my comments, I think probably the most important 
thing that I may have said in my written testimony was the 
final words that I wrote, that with these monies they can build 
a far better future; they being the citizens of countries who 
have had their assets stolen by their former rulers.
    Mr. Chairman, as citizens of our respective countries, we 
regularly witness the appearance of individuals who through 
honest endeavors and great skills accumulate great personal 
wealth, and we applaud them. As an international investigator, 
I have had the misfortune to witness on occasion the grotesque 
extravagances of those who have accumulated wealth through the 
practice of grand corruption, the diversional theft of huge 
sums of state monies for the personal enjoyments of those who 
have held the highest positions of trust in those countries and 
who the evidence has shown have abused such positions of trust 
from day one of that position in office.
    The private palaces? I have been in some of them. The vast 
automobile collections and multi-story carports running into 
hundreds and hundreds of vehicles? I have seen them. The gold-
plated everythings? I have on occasion had to touch them. When 
set beside the poverty of the countries that these individuals 
were elected to govern, in my experience, these objects become 
objects of very great distaste.
    Mr. Chairman, may I thank the subcommittee for taking on 
this subject today. May I say that in a small piece of research 
that I conducted before I came here that you are not alone in 
the interest that you are showing. A year ago in January, 2001, 
the International Development Committee of the House of Commons 
held a series of hearings on corruption, corruption both 
internal and external to the United Kingdom. I have extracts 
from those hearings which I might pass up at a later stage that 
may be of some interest to you.
    Can I just quote that a primary finding of the committee 
was that their investigation into corruption had revealed a 
lack of coherence, focus and determination across Whitehall, 
the area in London where our great Ministries of State are 
located, in tackling this subject. They went on to say, ``This 
lack of focus and coordination is hampering efforts to tackle 
corruption and money laundering in the United Kingdom.'' I 
wonder if those comments could possibly be echoed elsewhere.
    Moving from the domestic United Kingdom scenario to the 
world stage, it is my belief that major success in recovering 
the assets of corrupt former leaders will only truly succeed 
when there is focus, commitment, coordination, determination 
and coherence on an international basis.
    If I could briefly address you on three issues that I 
touched upon in my written testimony which gets us maybe down 
to the mechanics of this exercise. First, the advantages of 
civil procedures over criminal procedures in asset recovery 
matters; second, the difficulties that can be caused by 
inappropriately presented evidence; and, lastly, and I do not 
wish to avoid this, the cost of worldwide asset recovery 
investigations.
    In terms of the advantages of civil procedures or criminal 
procedures in these matters, sir, the traditional approach in 
cases of grand corruption is that the perpetrators of the acts 
must be publicly prosecuted. As a former prosecutor, I can 
readily identify and sympathize with that sentiment.
    As an investigator, I have come to learn over the last 12 
years that solely pursuing the criminal route does not 
necessarily bring the best results for the actual physical 
recovery of assets, and in the event of criminal action failing 
it may not return any assets at all.
    For the provisions of mutual legal assistance treaties to 
come into play, in many instances charges must be in place. 
Charges must have been laid in the originating country, and for 
all sorts of reasons for an incoming administration to lay 
charges swiftly and with competence is in many instances very 
difficult indeed.
    Have we seen President Suharto being charged with criminal 
offenses? I believe we have not. In the Abacha matter, the 
matter was further complicated by the fact that the gentleman 
concerned had died by the time recovery actions were being 
commenced. That has proved to be a major hurdle at least in the 
United Kingdom when it came to the implementation of assistance 
under the Mutual Legal Assistance Treaty that was there.
    The government departments that actually deal with mutual 
legal assistance requests are under resourced. The latest 
figures I have in the United Kingdom, there were 1,500 requests 
for mutual legal assistance in the United Kingdom, and there 
were eight members of the department that were meant to handle 
that and respond adequately to them.
    The alternative or parallel approach to the civil law route 
has in fact many attractions. In the United Kingdom, the civil 
law approach provides the recovery team with powerful and 
speedy weapons. Freezing orders and civil search warrants can 
be secured from High Court Judges on ex parte, single party 
proceedings with worldwide applicability.
    This means that identified assets can be frozen prior to 
the defendant being aware that they have been located, and 
authorized search teams can enter the defendant's property and 
seize documents that may further assist in the tracing of 
assets before the defendant knew that anyone was coming.
    The tests that the plaintiff must satisfy is that there is 
a strong prima facie case, a good, arguable case. The financial 
penalty for getting it wrong is heavy, but these are potent 
weapons that can be readied and activated at short notice. I 
commend this thought to you as the equivalent powers I am told 
do not exist in the United States.
    Finally, as it regards civil proceedings, the standard of 
proof, that of the balance of probabilities, is far more 
achievable in many cases than the rigorous criminal standard in 
common law jurisdictions of proof beyond a reasonable doubt.
    Moving on to inappropriately presented evidence, in my 
written testimony, as I said, I have tried to present a flavor 
of the complexities and hurdles of the investigative trail. If 
the investigative team confronts these complexities and jumps 
these hurdles, all will still be to no avail if on presenting 
the evidence in overseas jurisdictions it is found to have been 
prepared in a manner that is inappropriate for the procedures 
of that particular tribunal.
    Why do I pick up on such a seemingly small matter? I do so 
because time and time again I have seen proceedings delayed or 
even abandoned because of unnecessary flaws in the evidential 
bundle. This type of detailed requirement puts a heavy 
responsibility on the domestic investigative team in a 
developing country that has just gone through a period of major 
political upheaval.
    It is not a question of competence. It is simply a question 
of experience. The investigator may be dealing with the same 
small government teams overseas that I referred to a minute 
ago, or he will be dealing with external lawyers in multiple 
jurisdictions, many of whom will have had very little 
experience of these types of proceedings.
    What is needed are the tools to collate the substantial 
volume of evidence that has been collected, the knowledge that 
insures that rules of evidence have been adhered to and the 
experience of having been there and done that before.
    That, I suggest, leads to the need for a form of public/
private sector initiative that combines the real experience of 
government anti-corruption specialists, the private sector 
probe and experience of relevant professional advisors, be they 
lawyers, accountants or investigators, coupled with the civil 
society demand, and I believe right, for better results in this 
area.
    It would be seen in my view to be proof positive that the 
developed countries were prepared not merely to mouth good 
intentions, not simply to demand high standards of governance, 
but were prepared to provide practical assistance that produces 
tangible results.
    Finally, sir, on costs I would touch on that matter very 
briefly, because I do not wish to avoid it. The costs of such 
work are high. Why is that? It is because these investigations 
are complex, they are time consuming, and they are multi-
jurisdictional.
    For real success to be achieved, they need seasoned, multi-
disciplinary professionals with the armory of experience. Such 
individuals are entitled, in my view, to a fair market rate for 
their services.
    This is a real concern for victim countries I have no 
doubt. I have personally heard that concern expressed in Abuja, 
Nigeria, I have personally heard it expressed in Islamabad, 
Pakistan, and I have personally heard it expressed in Jakarta, 
Indonesia.
    For my company and many others in the field of operation, 
this field of operation's contingency fees are not an option. 
We have costs to bear today, as well as tomorrow, and the 
operational costs of investigation are very high, from travel 
to accommodation to the cost of documentation, translation, the 
collation of the evidence together using sophisticated software 
and increasing the costs of forensic examination of computers.
    These things, Mr. Chairman, cost significant sums of money, 
and it is my belief that any international public/private 
partnership must contain within it the facility that will 
assist at least on an interim basis the costs of the asset 
recovery exorcist.
    In conclusion, Mr. Chairman, I have no doubt whatsoever 
that this subcommittee can seek to influence in the right 
places and put in train a series of actions that could vastly 
improve the rates and amounts of recovery of dictators' 
plunder.
    To speed you on your way, may I briefly return to the House 
of Commons' International Development Committee deliberations 
of January of last year. That committee discovered that the 
United Kingdom had ratified the OECD 1997 Convention on 
Corruption in 1998, but it had managed to do so, the United 
Kingdom, without enacting any new legislation stating that the 
legislation of 1889 and 1906 sufficiently covered the wording 
of the OECD Convention.
    The International Development Committee was horrified when 
it heard that. Within a matter of months, the Secretary of 
State had put out a statement saying that it would be reviewed, 
and in November last year after the very sad and tragic events 
of September 11 when we were putting through our Anti-Terrorism 
Crime and Security Act the necessary amendments to cover the 
need to have extra territorial provisions against corruption 
was also enacted at that time so they had, sir, a real success. 
I wish this subcommittee a similar success.
    Thank you.
    [The prepared statement of John Conyngham Esq. can be found 
on page 51 in the appendix.]
    Chairman Bachus. Thank you.
    Mr. Blum.

   STATEMENT OF JACK A. BLUM, ESQ., PARTNER, LOBEL, NOVINS & 
                     LAMONT, WASHINGTON, DC

    Mr. Blum. Thank you, Mr. Chairman. I very much appreciate 
the opportunity to be here this morning, and I want to thank 
the subcommittee for its continuing attention to and interest 
in a subject which I think is one of the most important issues 
you could be dealing with.
    I have a prepared statement. I ask that it be put in the 
record. Rather than reiterate what is in the prepared 
statement, I would like to focus on a couple of key points. 
Some of them pick up on the testimony you have just heard.
    When a new government comes in after a country has been 
looted, they do not have very much to work with. I remember 
being in Guyana shortly after a new government came in, and the 
old crowd had taken everything--the chairs, the tables, the 
light bulbs, even the toilet paper. They did not know where to 
begin, much less how to go about trying to find where money had 
been taken, and where it had disappeared to.
    The chaos that they have to deal with is such that they 
cannot do what has to immediately be done if you are to make a 
proper case to go recover money, which is immediately seize the 
relevant records, immediately get at the witnesses and get 
focused on how you are going to make your case.
    The first thing a country needs in a change of government 
is immediate expert help in doing a proper investigation of 
what happened to the money and what are the problems. This 
means things like auditing what happened at para-statal 
companies like the Nigerian National Oil Company or one of the 
national mining companies.
    Now, the second thing that the country needs is help in 
structuring the international piece of the investigation. We 
now have in place a whole series of mutual legal assistance 
treaties which a country can use to reach out and say please 
help us get this information, but the knowledge of how to meet 
the technical requirements of those treaties is very 
specialized.
    Every country has technical requirements for mutual legal 
assistance requests. If you get it wrong, they bounce it back. 
They say get more stuff. Fill in the blanks. Give us more 
paper. Sometimes these treaties can only be triggered if you 
bring certain kinds of charges in the country that has been 
victimized, so there is a question of how to coordinate the 
criminal case in your own country with your efforts to gather 
information abroad.
    Then there is the question of coordinating that with an 
effort to get the money, so in the Abacha case the problem was 
that everything that was done was done through the criminal 
process. In Europe, continental Europe, that makes a degree of 
sense because in the criminal process in the continental 
countries criminal and civil complaints are combined. It is 
very different than it is here, and most Americans cannot even 
conceive of this situation.
    The victim of a crime is considered what is called a party 
civile. He can be a party to the criminal investigation. He 
sits with the examining magistrate as the examining magistrate 
interviews witnesses. He has access to all of the documents 
that have been gathered by search warrants and investigative 
orders of the examining magistrate, and he can use those in 
ongoing civil actions.
    In the United States, it is a crime to reveal whatever a 
Grand Jury has found, so the prosecutors cannot share any of 
the material they get in the course of a criminal investigation 
with civil lawyers who are involved in the same process. It is 
an utterly different track.
    In the case of Nigeria, what they did was they brought 
criminal complaints and then asked for mutual legal assistance 
and had subsequent criminal complaints of their own in the 
European countries, and that enabled them to get data and 
information through the criminal process in Europe.
    Now, the problem that then ensued was that the countries 
that seized the money subject to these mutual legal assistance 
treaties and the criminal investigation said OK, we have the 
money, but we will not turn it over until you get a conviction. 
Of course, the criminal process in Nigeria is hopelessly 
broken. Ten years is a minimum time line for a criminal case. 
How do you get a conviction and then get the money if you have 
to wait 10 years? Maybe there will be a different government; 
and the money--who knows what will have happened.
    That was a real problem for the Nigerians, and finally 
there was a problem that the principal perpetrator had died. 
Now, I visited Liechtenstein where some of this Nigerian money 
was, and I talked to all of the Liechtenstein officials who 
were dealing with it. They, in the wake of various laws that 
had been passed and the pressure from the international 
community, turned over a lot of information, and they froze a 
lot of money, but they were not going to turn it over to the 
Nigerians because Abacha's family had filed 24 different 
lawsuits in Liechtenstein to prevent the Liechtenstein 
government from releasing the money.
    You can see that it became a huge legal tangle, and there 
were huge legal bills for the Nigerians to try and sort out 
what was going on in these different countries. In the United 
States and the U.K. the problem was that the Nigerians were not 
meeting either the standards of charging or the standards of 
proof required to do the freezing and carry forward with the 
case, and in the U.K. and the United States the Nigerians could 
not afford to hire proper counsel to do the job.
    What do we need to solve this kind of problem? Well, we 
assembled, and John Conyngham was part of the group, a group of 
experts from around the world who participated in a variety of 
legal systems and recovery efforts, and they talked through a 
number of things that could be done to speed this process.
    For example, in cases of grand international corruption why 
not allow evidence, Grand Jury evidence, to be used in a civil 
case? Why not allow the government access to some of that 
information that has been gathered so that they can go forward 
with a civil proceeding and freeze the money and maybe under 
Court supervision with proper protective Orders and use that 
machinery to get around existing bank secrecy?
    There was also the idea put forward that every banking 
institution, when it takes money in from someone who is 
potentially a person who is corrupt, should know that it takes 
that money in as a constructive trust for the victim of a 
crime. This is a concept that the Courts in the U.K. have 
adopted.
    What they say is you, the bank, have taken this money and, 
therefore, if you give it out and let it out of your hands you, 
the bank, will be liable for the money because you have it in 
trust for the people of the country that was victimized, so 
perhaps an expansion of that concept of constructive trust 
would be useful.
    Finally, what we need is some sort of driving engine to 
make this happen, the problem being that who has this 
expertise, where does a country go, who is going to give them 
the money and how will they get their feet on the ground to 
make things work, and how will they know as the many lawyers 
come in and have deals set up of I will do it on a contingent 
fee or the investigator says this is what it is going to cost. 
How do they know they are dealing with people who they can 
trust, and how do they fund the operation?
    I put forward a proposal which is strictly my own which is 
an idea of creating an international revolving fund perhaps 
funded by donor countries, the World Bank, which would act as a 
funding mechanism for a country in this kind of mess to be 
replenished out of the recovery money. If you put enough money 
in to start with, you will get plenty of money back. That is 
our experience.
    The revolving fund would enable also the country to either 
hire or perhaps through some sort of international agency, let 
us call it a public interest law firm or a foundation or 
perhaps some entity created under the U.N., to provide case 
management for the country.
    Country X has a problem. You pick up the phone. You call 
this group, and you say look, we have a problem. Will you help 
us sort through what it is that we need, what we have to do, 
who we have to call and what are the likely jurisdictions we 
have to go to? Then the case management entity helps begin to 
help a country hire on the lawyers, the accountants, the 
investigators, the forensic experts who put the case together 
and get the money back.
    Now, another alternative idea which has some appeal to me 
is the idea of setting up a foundation for recovering these 
assets and getting the country that has been victimized to 
assign the right to recover to the foundation. If you do that, 
you take away the political pressure to kill the investigation.
    In a couple of countries, what we have seen is they start 
off hell for leather, and about 6 months out, the old corrupt 
folks pull things together and say ``Wait a minute. We do not 
like what is going on.'' The investigation suddenly dies. All 
of the zeal that was shown initially to recover Suharto's 
assets suddenly sinks into nothing, and you do not hear about 
it anymore. If you assign it to another entity and it becomes a 
political problem to stop the investigation, it is a different 
matter, and that is another way of going at it.
    I will give you one more thought, and that will be the 
concluding one, which is that we have to deal with the problem 
of the international lending institutions. The international 
lending institutions commendably have been talking about the 
corruption issue. They have also hired auditors, and lots of 
them, to investigate the disappearance of funds that they have 
lent. We all understand that a very substantial portion of the 
money has in fact disappeared.
    The problem is under the existing system in the 
international lending institutions none of this is made public. 
They did an audit of Haitian loans. The upshot of the audit, 
everyone who knows about it has heard, is all the money 
disappeared, but they have refused absolutely and resolutely to 
make those loan documents and that record public.
    My view is the problem is that all of the people who are 
the perpetrators are also sitting there as executive directors, 
or at least representatives of many perpetrator countries, and 
that really if you put together the question of do we go out 
and sue the folks who stole the money with guys who either are 
in the same situation or potentially stole it themselves, of 
course they are going to vote no.
    We have to put into the international lending institutions 
a mechanism which says if you find that money has been stolen, 
you are going to assign the recovery to this international 
institution, and there is no going back, and there is no voting 
no, and there is no walking away from it. You will take every 
effort to find the money and really get it back for the country 
involved because the alternative is to lend them more money and 
then to take it out of the hides of the poorest people in the 
victim country by saying well, we have to send the IMF in to 
restructure.
    If I look at some of the IMF proposed remedies for 
Argentina and I think of all the money that has been looted 
from that country, I think what an unfair thing. Go in and 
punish the victim for the fact that the money has been stolen 
when what you should be doing is chasing the crook. That to me 
is the direction we have to move in.
    I really advocate the creation of an entity that can take 
on this effort and one that comes in under a kind of neutral 
international civil service status, but also that has the 
flexibility and the capability of what I would call an elite 
law firm that can move quickly and knows what it is about and 
is a little more nimble than perhaps the usual bureaucracy of 
the United Nations.
    I have been searching for the way to create this and to get 
a debate going on the need for it because I think the need is 
obvious and essential. There have been efforts by the banks, by 
the way, to clean up what has gone on. They have assembled the 
Wolfsburg Group. They have come up with lists of people who 
should not have bank accounts. All of this is well and good, 
but I should remind you Europe has not yet passed key 
provisions of the Patriot Act.
    I was in Brussels a couple of weeks ago talking to key 
officials of the European Union. They still have shell banks. 
They still have a whole series of arrangements that this 
Congress has quite commendably outlawed. I think that we have 
to talk to the Europeans, and we have to say look, this is the 
new international standard.
    I think that this subcommittee has done an incredible job 
of closing a lot of loopholes and doors. What we now have to do 
is move it out, get it into the international arena and find 
the machinery to implement what has been done here and find the 
ways of helping the countries that need the help.
    Thank you for giving me the opportunity to testify.
    [The prepared statement of Jack A. Blum Esq. can be found 
on page 61 in the appendix.]
    Chairman Bachus. Thank you, Mr. Blum.
    Mr. Tiberi.
    Mr. Tiberi. Mr. Blum, you mention in your testimony asset 
recovery and the World Bank. Do you think that the World Bank 
has a serious problem when it comes to this type of fraud?
    Mr. Blum. I think there is a real problem in terms of loan 
money that does not wind up going for the purpose intended or 
loan money that goes into projects and the projects are three 
times what they cost, three times what they ought to, or the 
bids are rigged, or there is something wrong, and somebody is 
taking a piece off the top.
    I have seen it personally. I was in Kenya a number of years 
ago, and I was called later by a Kenyan who said help me. We 
are bidding on a contract to supply the material for a new 
hospital. They have asked us to put all of the equipment in the 
hospital, and we want to prepare a bid.
    What we have discovered is they have specified certain 
brand names for certain equipment, and there is only one 
supplier who offers those brand names. They are telling us we 
cannot offer alternatives and that if we do not bid the whole 
package we cannot be accepted as a bidder. That is corruption.
    I wrote on behalf of this company to Mr. Wolfensohn, and I 
got what I would consider a snotty letter back from the World 
Bank manager in Kenya who said it is none of our business it is 
a problem for the Kenyan government. Well, indeed it was a 
problem for the Kenyan government. It was probably the Kenyan 
government that was doing it. You are in a perfect Catch-22. 
There is no way to recover the money.
    Mr. Tiberi. Why do you believe this problem exists that has 
not been rectified?
    Mr. Blum. The problem is that the people who have to vote 
on the issue of asset recovery and pursue it are the executive 
directors of the bank, and that includes a large block of 
people from countries where this problem is pandemic. You 
cannot get the people who are the heart of the problem to vote 
for the solution.
    Mr. Tiberi. What type of language would be appropriate to 
require the bank to recover these funds?
    Mr. Blum. I think it is necessary to say as a condition of 
the loan you must, if there is an audit finding of some sort of 
fraud or irregularity, turn the matter over to a team separate 
and apart from the bank that will then engage in the civil 
effort to recover the money.
    That should be irrespective of the wishes of the borrowing 
country and irrespective of the wishes of the bank itself. If 
there is evidence of fraud, the politics are out. It is not a 
matter to be voted on. It is a matter to move forward on.
    Mr. Tiberi. Are you aware of any fraud involving U.S. 
export assistance?
    Mr. Blum. I cannot say that I have had that experience 
directly, but I would guess, knowing what I know, that one 
could find it if one looked.
    Mr. Tiberi. Should we be concerned about fraud with the IMF 
as it applies to the IMF?
    Mr. Blum. I think the IMF has had some brushes with serious 
fraud. There was that marvelous case of the money that was 
given to Russia turning up in the Channel Islands. There was an 
audit report that was put out on that money disappearing. The 
next thing we knew was the audit report had been on the website 
for the IMF, and it suddenly disappeared. It went from being a 
public document to being a private document, and I thought that 
was kind of astonishing. I know although the report was public, 
I do not know what happened in terms of recovering the money.
    I was in St. Petersburg about a year ago and talked to a 
number of Russian officials who are extremely interested in the 
problem of asset recovery because they understand that an 
enormous amount of the Russian national wealth disappeared over 
the last couple of years, and it has been floating around in 
Swiss banks and Austrian banks, and they have not got the 
expertise or the capability of going back and getting it.
    Mr. Tiberi. There are some on Capitol Hill who would argue 
that because of problems both at the World Bank and IMF we 
should pull back as a set of policy. Would you concur, or do 
you believe reform is preferable?
    Mr. Blum. I think that if you travel the world and you look 
at the need, if you visit, as I have recently, places like 
Lagos, places like Kingston, Jamaica, you can see levels of 
poverty, despair and need that are just so overwhelming it is a 
folly for the United States to think that you can just walk 
away from it.
    There is a basic premise that I have, which is that foreign 
problems become domestic problems. Whether it is the terrorists 
on 9-11, whether it is a disease that starts in a country where 
there is terrible poverty and then gets imported on a flight 
into the United States, whether it is a pollution problem that 
blows across an ocean.
    Where there are huge economic and social problems, they 
will come to the United States. If they do not come in the form 
of a problem, they will come in the form of illegal immigrants. 
We have to face the fact that the problems of the world are 
ours, and we have to fund the international lending 
institution.
    Mr. Tiberi. Based on past history, how do we begin down the 
path of insuring that there is some accountability on the other 
end?
    Mr. Blum. The accountability I think is in this prospect of 
civil recovery. You say to people look, you are borrowing the 
money. What we are going to tell you is if this money is stolen 
we are going to hound you to the end of the earth.
    There will be no bank, no investment player who will be 
immune. We are also going to hound the lawyers, the accountants 
and the business people who will try to help you hide the money 
and help you steal the money because we are going to hold them 
accountable, too.
    Mr. Tiberi. Thank you. One last question. We heard this 
morning about the role of the Swiss government and the Swiss 
banking industry in efforts to identify and return the assets 
stolen from Nigeria.
    Give us your assessment and track record of our government 
and the U.S. financial services industry in relation to 
assisting an international corruption.
    Mr. Blum. We have been quite proper in the way we have gone 
about responding to requests for mutual legal assistance. The 
problem has been we have very high legal standards, and we are 
approaching it from a point of view have they met our 
requirements for giving them the information? Have they given 
us exactly what we need? Have they charged the case in exactly 
the right way in the country where the request originated? That 
is one problem.
    The second problem is resources. Just as in the U.K., we 
have a very small number of people who handle these requests. 
They are farmed out to Assistant U.S. Attorneys, and typically 
it goes to the junior U.S. Attorney in the office who has a 
significant other case load.
    I, in fact, worked with a Swiss examining magistrate in a 
case, in fact a corruption case, where I helped him make an 
appointment directly with the Assistant U.S. Attorney so he 
could explain the requirements of Swiss law because the problem 
was that the U.S. Attorney had gathered the material, packed it 
up and sent it to Switzerland, but he met none of the 
evidentiary requirements of the Swiss court.
    The Justice Department tries, but what we need are training 
programs for people which tells them what the evidentiary 
requirements are in foreign courts. We need more manpower. We 
need speedier responses.
    Just to give you a sense of that, in a mutual legal 
assistance request the process goes from the police to the 
Justice Department to the State Department or foreign office of 
a foreign country, then over to the counterpart foreign office, 
then to the Justice Department, then down to the police. My 
rule of thumb is 2 weeks for every time a piece of paper moves 
from one desk to another minimum, usually a month. You can see 
that in a rapidly moving case that is disaster.
    Mr. Tiberi. Thank you. I yield back the balance of my time.
    Chairman Bachus. Ms. Waters.
    Ms. Waters. Well, I would like to first thank our witnesses 
here today. Your testimony has been riveting.
    I guess much of what I have heard I have discovered some of 
that in the past, and I am always very, very pained as I hear 
the graphic descriptions of the corruption and the plundering 
on the continent of Africa as I have heard today, but I also 
get very, very angry about our own financial institutions who 
accept the money from the dictators and help to shelter it with 
private bankers, and so forth.
    I have put a little time in on one such case with the 
Salinas brother out of Mexico who had I think something in the 
neighborhood of $80 to $100 million in Citibank, and we are 
supposed to be the country that is strongest on ``know your 
customer.'' As I recall, the Salinas brother did not even have 
a card on file, had no visible employment and was a drug dealer 
who eventually ended up in prison for the murder of someone.
    For the life of me, I do not understand why that money was 
accepted in the first place at Citibank and how and what 
private bankers do in helping to purchase assets for many of 
these crooks in forming these concentration accounts where they 
lose identity and money is wire transferred offshore.
    I do not like our domestic banks playing a role in this 
kind of money laundering or plundering or protection of money 
that is plundered from other countries, so I have concentrated 
a little bit on trying to figure out what we could do to make 
sure that we do not continue to play that kind of role.
    While we talked today about Abacha and I am alluding a 
little bit to Salinas, there are other countries, particularly 
in Africa, who still have assets in our American banks. For 
one, I would like to see that money not only returned to the 
country where it was stolen under the right circumstances, and 
I do not know what you do about returning money to the same 
government that stole it in the first place. But I would also 
like to see some way by which a percentage of that money could 
be used to help establish organizations that would be involved 
in recovery so that it is not an additional cost to the United 
States or the countries, but it would be self-supporting, 
number one. Number two, that this money would be substituted 
for foreign assistance that we may be giving in some of these 
cases.
    This is very complicated, as you have mentioned, but let me 
just try and ask this question. I guess someone alluded to some 
of these funds as supporting the Al-Qaida organization and 
supporting terrorism. I have heard that Al-Qaida was very 
involved in the export of a gem called tanzanite, and then I 
read recently that one of the well known jewelry chains in 
America, Zales, had stopped at one time selling tanzanite, but 
they are back as of a few days ago selling tanzanite again.
    I understand this is a number one gem that somehow the 
Taliban and the Al-Qaida forces have access to in working with 
some of the leaders in Africa. I want to know what do you know 
about that, and if that is still going on what should we do 
about it?
    Mr. Chege. Thank you very much, Congresswoman Waters. The 
case of tanzanite, again, is typical of the problem I was 
referring to in my testimony. And that is, terrorist 
organizations using African resources. When I say diamonds are 
the terrorists' best friend, I mean these terrorist groups just 
do not specialize in terror. They are also into regular 
business making money that finances these operations. We know 
here in the United States after 9-11 there was money coming in 
to fund the people that were living here and getting ready for 
those horrible, horrible deeds that day.
    In the case of tanzanite, this is what we know. It is a 
precious stone that is mined in Tanzania and hence the name 
tanzanite. What the people in Al-Qaida and the terrorist 
movement did was they have dummy companies. These dummy 
companies are set up primarily in the Gulf Region, the United 
Arab Emirates, Dubai, that sponsor people to come into Tanzania 
and exploit these minerals.
    They do not do it legally. They--the frontmen and dummy 
companies--do it under the shadow and through the instruments 
of bribery into government so that they more or less secure 
mines of their own, they get the minerals and then ship it out 
of the country. Corruption within the Tanzanian government, and 
neighboring states, must be seen as a fast principal avenue to 
which these sort of operations are allowed to happen.
    Second, because the terrorists and their front corporations 
do not want any of this stuff to appear in public, they would 
not want to go and be documented through customs of Tanzania, 
so it is brought out of the country through jet planes and 
through small planes, just like in the drug industry in South 
America and the United States that fly out undetected without 
logging in when they have come or left the country.
    I would like to say that I am very, very pleased that you 
have been following the case of tanzanite, because it is 
another case, once again, that shows that illegalities taking 
place in faraway countries that we do not often think that 
affect rich countries do come back to haunt us. That applies as 
well to the case of diamonds in Sierra Leone in West Africa 
that I spoke about.
    Ms. Waters. Thank you very much. Thank you. I intend to 
continue to follow the tanzanite to see what we can do with 
that. I would like to talk with you a little bit more about 
that.
    Thank you, Madam Chairwoman.
    Ms. Kelly. [Presiding] I thank you. Your question is a very 
good one. I think it is very interesting. My colleague brought 
up the fact that Zales had stopped selling tanzanite. I suspect 
that had every jeweler in the United States of America joined 
Zales that would have been able to put an enormous amount of 
pressure, and perhaps we would have had a better resolution 
than having Zales wait it out for a bit and then come back in.
    I am only sorry that there was not more unanimity on that, 
but perhaps that is one of the problems that we need to address 
with regard to the U.S. Patriot Act. The Patriot Act may need 
some tweaking. We tried to do some things with it.
    Actually, Mr. Blum, that is really the question that I have 
for you. I was talking the night before last with the 
Ambassador of the European Union, and he, in presenting to this 
group, raised issues himself of transparency and questions of 
regulation. There are great problems because they are dealing 
with so many different governmental structures, but these 
governmental structures, if I understand your testimony 
correctly, created the context for the opportunity for theft.
    It seems that perhaps we need to work through the IMF, 
through the World Bank, through our Patriot Act and through the 
EU to try to get everyone on the same line in terms of some of 
these, and it does not need to be large changes in our 
governmental laws in each country, but perhaps there is a way 
of our drawing up some kind of legislation that would help 
remove that context because the context in and of itself also 
creates a chill factor for U.S. investment in other countries 
to invest in a country where they know they are going to get 
involved in corruption.
    I wonder, Mr. Blum, if you would elaborate on that a little 
bit. Do we need more teeth? Do we need more funding? Can we 
tweak that a little bit? How can we encourage nations to join 
us?
    Mr. Blum. We need some very expert thinking and a lot of 
mutual conversation. Let me try to explain that a little bit.
    It is awfully hard to go to France and say gentlemen, you 
have to change a structure of your criminal law. That does not 
get you very far. Likewise, if you come to the United States 
and they say well, why do you not amend your criminal law to 
make it look like ours, that does not get you very far.
    What we need are ways of getting people to agree to common 
themes and agree to accept each other's work in their own 
court. We need a working concept. NATO has a concept called 
interoperability where weapons of all NATO countries are 
similar so that NATO units can work together as a combined 
army.
    The same kind of thing needs to go on in law enforcement. 
We need concepts of cross designation so a police officer in 
one country can be designated temporarily as working with the 
police force in another country and have police powers. We need 
the ability to move information from the criminal side to the 
civil side.
    Now, there is a real opportunity here. There is a 
negotiation of a global anti-corruption convention that is 
about to begin. Those negotiations will begin this summer, and 
it is possible I think to use that as a way of figuring out how 
do we create better international machinery for cooperation not 
just in terms of facilitating the most formal kind of mutual 
legal assistance, but how to take a look at all of the 
different pieces of the puzzle, how to put the civil case in, 
how to find a machine for moving forward with asset recovery, 
what kind of mechanism will we use and again to set some 
standards. I think that is the place and the time that we can 
really come up with something.
    Ms. Kelly. Thank you.
    Mr. Conyngham, I would like to know if you have anything to 
add to that. I am going to ask you to try to condense what you 
say. Perhaps you could think about this because I need to go to 
the floor and vote, so I am going to ask that the subcommittee 
recess for a short recess. Either the Chairman or myself will 
be right back, but we have a vote on the floor, and it is a 
double vote, so I am going to have to go.
    If you would think about what you would like to add to Mr. 
Blum's answer, and I would really like both of you to do that. 
I think this is a point of focus where we need to be, and we 
need to be thinking about it so we can send the people into 
this convention perhaps in a way with some fairly clear 
guidelines that might help us all.
    With that, I am going to recess the hearing for a short 
recess. Thank you.
    [Recess.]
    Chairman Bachus. [Presiding] Thank you. Mr. Conyngham, if 
you would like to respond to the question?
    Mr. Conyngham. Just to follow up, I think in terms of the 
opportunity that comes up this summer with the beginning of 
negotiations on the Global Anti-Corruption Treaty, then I 
think, sir, I would urge the United States to build on the huge 
work you have done with the Patriot Act and try and convince 
the European Union and other states to come in line with that.
    We still have the position where shell banks cannot be 
forced to disclose their ownership. You have taken steps to 
change that in the United States, so that would be one very 
positive move. I think we need clarity as to the nature of 
offenses that adequately capture the nature of criminality that 
is encompassed within the concept of grand corruption.
    I think, sir, we need to begin to think of ways as to how 
can we get banking institutions to really begin the change in 
the culture to say that a culture of secrecy in the world of 
2002 is not as important as it was. That cultural change can 
only come from the very top, and I do not think we have total 
buy in to that. I do not think we have total buy in with banks 
that it matters that it ultimately affects their overall 
worldwide reputation as to who they bank with and why they bank 
with them and where that money is coming from.
    If that message could begin to get around in stronger terms 
around the world, I think we would be in a better position. It 
is a culture that is there, the mode of secrecy, and it has to 
be changed.
    Chairman Bachus. Thank you.
    Mr. Blum, you have said that the Palestinian authority is 
riddled with corruption. Would you comment on that? I know that 
they have received hundreds of millions of dollars in aid from 
Arab countries, and the Palestinian people have little to show 
for it.
    Mr. Blum. A number of years ago I was approached by people 
who were involved in trying to set up as part of the peace 
process industry and housing development in the West Bank and 
Gaza, and their complaint was that every time that they tried 
to get something going they were up against corruption.
    I have heard it from people all over the Arab world that 
there is a real personal corruption problem among officials of 
the Palestinian authority. Now, I do not view that as terribly 
different than corruption in other places except when you think 
of the implications of it and the consequences for the United 
States and for peace in the region.
    What you have is a situation where corruption is protected 
by ongoing conflict, and, therefore, the incentives to make 
peace and build are limited because then you have to actually 
use the money for the purpose you are talking about.
    I really think that one of the unintended consequences--
unintended is the wrong word. One of the other consequences of 
corruption is that it hides and masks violence, war and terror, 
and I think we have to address that. That is why I am so intent 
on trying to figure out what can be done to prevent corruption.
    Chairman Bachus. The war and the violence cover the 
corruption. As you understand the PLO, and, Mr. Conyngham, if 
you or, Mr. Chege, if you have any personal knowledge of this 
or what you have heard, there seems to be no accountability 
within the PLO, no transparency.
    Mr. Blum. It has that in common with dozens of other 
governments, but in this particular case the continued flow of 
money in is utterly dependent on continued difficulty and 
continued strife.
    My point is that if you cut the strife, to cut the strife 
you have to cut the incentives, the business incentives, to 
keep the strife going. If you cannot steal the money and you 
have to use it, maybe you will begin to focus on how to use it 
properly and forget about worrying about how to get more of it.
    Chairman Bachus. Should we as a country in our dealings 
with the Palestinian authorities as, you know, we have 
designated them as the voice of the Palestinian people, should 
we or should other countries which are working toward peace 
demand some accountability on the part of the----
    Mr. Blum. I think it is part of the conversation. I think 
it is part of the overall conversation that we have to have, 
and it is part of what has to go on in the peace arrangement.
    I see the solution not as particularly targeting them, but 
as setting in place the global machinery because I think there 
are so many examples of it around the world that to look at any 
particular situation really does not get you very far.
    What we have to do is talk about what are the global 
answers, and what we also have to focus on is the fact that the 
money invariably winds up in the markets of the OECD countries. 
Almost none of that money is kept on the ground on the spot, so 
really the issue will turn on how well we change our culture in 
the wealthy countries of the world and how we change the 
culture of the banking system and the legal culture.
    What I would like to see is perhaps the prosecution of that 
infamous lawyer in Geneva who when you are elected head of 
state you go check in with him, and he will work out the plan 
for hiding the money. I would love to see that guy prosecuted. 
I would love to see him sued by some of the countries that were 
victimized. The day you get that lawsuit or that prosecution is 
the day every lawyer in the world goes out of that business.
    Chairman Bachus. Mr. Conyngham.
    Mr. Conyngham. Mr. Chairman, yes. I think there is a danger 
in going to these countries and saying you will have these 
standards of governance, this is what we require, this is the 
way we operate, when we have not in many parts of the developed 
world got our act together yet either.
    I think in relation going back to the Abacha matter, when 
it was discovered that there were some 42 accounts linked to a 
batch of families in 23 banks in the United Kingdom, 15 of 
those banks had controls that fell beyond what was required 
under the anti-money laundering legislation and seven had 
serious discrepancies, and yet the regulator did not even name 
who those banks were, then I think we have a lot to get right 
on our own back door before we go perhaps preaching elsewhere.
    I think it is the developed world that has got to take the 
lead in this and has to have the commitment to say we will take 
steps, we will stop these practices, and we will do it with 
legislation or conventions that have with them real teeth.
    Chairman Bachus. Several countries, including the United 
States, and I think we mentioned this, have outlawed the 
payment of bribes. It is my understanding that there are 
actually countries that allow you to take a bribe as a 
deduction on income tax.
    Do you have any comment? Is it true that there are such 
countries?
    Mr. Blum. Mr. Chairman, there were until recently, but the 
OECD convention has now put that to rest. Germany was one 
country that was notorious for that very proposition. The 
delightful term that the Germans had for that kind of payment 
was Schmear Geld. It speaks for itself.
    That has now changed because of the regional conventions, 
and virtually all of the developed countries in the OECD group 
and certainly everybody in the OAS has outlawed the paying of 
bribes. Now we have a convention coming that will be a global 
convention that will probably codify for every other signatory 
the same proposition.
    The warning I would give you is while that is very positive 
and very good, the problem is that it is not just the payment 
of bribes. This is not just an issue of big companies wanting 
to sell an airplane, wanting to sell a weapons system, each one 
bribing and, therefore, that is the source of corruption.
    It is a matter of skimming on the export of natural 
resources. It is a matter of stealing wealth internally in the 
country and taking it out, so it goes way beyond the bribery 
issue. I think it is a mistake to focus on it as a commercial 
bribery problem. It is much broader than that, and we have to 
look at it in a broader frame.
    Chairman Bachus. I see.
    Mr. Sherman.
    Mr. Sherman. Thank you. I would like to go to this OECD 
convention and the idea that it will prevent bribery. I am told 
that the usual business practice is you find a local person, 
perhaps a cousin of the dictator, you make that person your 
sales agent, you pay that sales agent five to 25 percent, and 
what that sales agent does for the money or with the money is 
beyond the understanding of anyone in the OECD countries, 
whether it be those examining tax collection or otherwise.
    Is there anything in this convention that prevents the tax 
deduction or prohibits the payment of a Schmear Gell channel 
through a sales agent?
    Mr. Blum. In theory, yes. Your question about----
    Mr. Sherman. So what particular law in say, Germany, would 
make it illegal for a German firm to pay a commission of up to 
25 percent?
    Mr. Blum. The question I think in the end is really 
enforcement. It is can they do it.
    Mr. Sherman. No. Is it even illegal? The German company can 
claim that it knows nothing. It pays the commission only if a 
sale is made, so it is hardly a risk. It builds its profit in 
the contract large enough so that a 25 percent sales commission 
or even a more modest sales commission.
    Is there anything in all this window dressing and 
international kum-ba-yah singing that gets at this problem at 
all, or does it simply provide a little bit of work for the 
cousins of dictators?
    Mr. Blum. I would like to answer the question in the 
context of U.S. law. The way we deal with it is saying know or 
should have known. I think that there is a standard of that 
variety in the OECD convention.
    Mr. Sherman. Has any company been prosecuted in the United 
States on the theory that having paid a sales commission they 
should know whether the sales agent is being paid for charm and 
persuasive articulateness or whether that articulation takes 
the form of playing poker with the dictator and losing?
    Mr. Blum. I think the answer is yes, there have been, but I 
cannot cite that chapter and verse.
    I think the essential point here is not just the 
criminalization of paying the bribe. It is finding a mechanism 
so that when the bribe has been paid and now a new government 
comes in giving you the machinery to----
    Mr. Sherman. Yes. I realize the focus of this hearing----
    Mr. Blum. Let us sue that company. Sue them for corrupting 
the country involved and make them pay back. Let them be 
subject to a RICO action let us say here for their----
    Mr. Sherman. Again, the most innocent of companies and the 
most guilty of companies doing business in the Third World are 
told you need a local partner or you need a local sales agent. 
An examination of exactly how many minutes of work this sales 
agent does or exactly what gratuities and entertainment they 
engage in--should have known is an interesting phrase, but it 
is the usual practice of American companies and especially 
European countries not to inquire.
    I want to shift to another line here, and this may be more 
of a statement than a question. I think that these hearings are 
a subset of a whole bank secrecy/asset secrecy. I do not think 
that turning to a particular lawyer in Switzerland and 
prosecuting them as long as there is an avenue, a huge avenue 
or several, many huge avenues. The idea that the world will 
lack for road maps and guides available to dictators or others 
I think is absurd. The road is there.
    If democracy means anything, it is the rule of law. If the 
rule of law means anything, it is that the laws not give just 
the appearance of creating a particular result, but that we 
actually plug the loopholes in them. We as a developed world or 
a world system have embraced this idea that dictators should 
not have secret accounts, that petty thugs should not be able 
to launder their money, that socially acceptable people should 
not engage in tax fraud, and yet the reality is the exact 
opposite. We believe in the rule of law, and yet we maintain 
huge loopholes in that law.
    The result is that people in Europe and the United States 
who play by the rules pay taxes, and yet we have opened wider 
and wider highways, loopholes, tunnels for everyone engaged in 
entrepreneurship, whether it be honest entrepreneurship by 
someone who then cheats on their taxes or whether it be the 
entrepreneurship of stealing from the government of a Third 
World country.
    We have these huge tunnels or openings or loopholes where 
it is entirely acceptable for Switzerland and the Cayman 
Islands to be in the business of laundering money, and then we 
give Switzerland maybe a few kudos because at the very highest 
profile criminals after they leave power and when they become 
incredibly unpopular in the world happen to have their money in 
a Swiss bank they might have wished that they put it in a 
Cayman Islands bank.
    As long as the United States, and there is substantial 
support in this country and in this Congress for allowing tax 
fraud. There is hostility toward actually making the upper 
classes in this country pay their taxes. If the United States 
were serious about this, we would be realizing that doing 
business with countries that have these bank secrecy laws is 
nothing more than an invitation to all the types of crimes I 
have mentioned.
    I do not know if the panel has any comment. I know I am out 
of time, so the Chairman will have to decide whether the 
comment will be allowed.
    Chairman Bachus. You can respond to Mr. Sherman's question. 
I would be curious also to know what is your assessment of the 
Swiss and their willingness to cooperate and comply?
    Mr. Blum. We have as part of our experts group a Swiss 
examining magistrate who had actually worked on the Abacha 
case. He was getting complaints from the citizens of his 
canton, the Canton of Geneva, that Geneva was being asked to be 
policeman to the world.
    His job is an elected job, so you can understand that this 
is a very complicated problem. He was trying to do that job in 
a very straightforward way and actually made considerable 
headway. I daresay it was the Swiss effort-- his effort, Mr. 
Zucehin's effort and then his successor, Mr. Bertosa--who put 
enough pressure to get the money returned.
    They have also brought under Swiss law cases against 
Russian gangsters, against a number of other malingerers, and 
they have opened up others. The Swiss require the 
identification through a Form A in the opening of any account 
of who the beneficial owner is. If you were to talk to the 
Swiss, and I am not here to defend the Swiss, they would say if 
you guys did the same things for Delaware corporations, we 
would be in a lot better shape.
    They complain about our lack of speed in responding to 
mutual legal assistance. It is a very interesting thing to hear 
this coming from the other side. I think what we have to 
appreciate is not the problem of how we point fingers at each 
other and who has a loophole here or a loophole there; it is 
the fact that we are all fixated on our own legal systems, 
quite properly, and we tend not to see things from the 
perspective of other people. We tend then not to talk about how 
we are going to bridge those gaps. That is really the kind of 
conversation that has to occur.
    I would say we have come a very long way on issues of 
offshore secrecy and tax evasion, but we have a ways to go. The 
way to go now is how to implement, how to enforce and how to 
make it work. The Patriot Act did some amazing things in that 
category. Now we have to get the Europeans to follow suit. We 
have to see if we cannot get people to do what has to be done 
on the ground.
    Mr. Conyngham. Mr. Chairman, I think, too, I am no 
apologist for the Swiss, but I do think they get very bad press 
in this kind of area. I think actually like many other 
jurisdictions, if the rules are followed and you know the 
procedures then you will get the result.
    I can personally recall some now 12 or 13 years ago when I 
was still a prosecutor in Hong Kong getting assets in a fraud 
matter frozen temporarily by way of a phone call to the Swiss 
authorities, so I do believe that in the right circumstances 
that they comply well.
    Chairman Bachus. Thank you.
    Mr. Chege. I just wanted to comment on the question of 
transparency in the developing countries and to stress once 
again that you have to attack this problem from two ends.
    We focus a lot on what ought to be done in the OECD 
countries, but in countries of Africa, Middle East, Asia and 
Latin America there are people in the legal system, in civic 
groups, in church groups, in anti-poverty groups, that lay down 
their lives every day because they want to reverse this trend 
publicly and in the press. Let us think about it and write 
about it.
    What we ought to do is give more support to those people so 
that they can make this fight a success. It is their own fight, 
but they need an extended hand of support from people that are 
working on the program from the other side. They have a lot of 
information. They are willing to do a lot, and it is important 
that we open up avenues of communication with them.
    Chairman Bachus. Mr. Royce.
    Mr. Royce. Thank you, Mr. Chairman. I want to thank you for 
this hearing today.
    I think that our witness who just made the point that we 
need to be giving our support to those people laying down their 
lives fighting for transparency rather than spending our time 
trying to focus on excusing those who are in the business of 
money laundering is a good point.
    I think we should, frankly, be more into the business of 
naming and shaming, of going after first those who are stealing 
from their people and, second, those who provide the 
wherewithal for them to hide the funds.
    You know, when we look at what General Abacha did to 
Nigeria, when we look at currently what Charles Taylor, Inc., 
as he is called, what Charles Taylor is doing to Liberia and to 
Sierra Leone in terms of diamond smuggling and clear cutting of 
forests and so forth, when we look at the same issue in terms 
of what Robert Mugabe is doing in Zimbabwe to the people there 
and Mugabe's cronies taking money out of that country, we are 
faced with the same reality, which is if we did a better job of 
removing the safe havens and exposing those who helped the 
Salinas take $100 million out of Mexico and then hide that 
money as the Congresswoman mentioned earlier. We are basically 
empowering people to rip off their countrymen.
    One of the things that I think we ought to look at is 
changing the way in which business is done perhaps. You know, 
there comes a time where it is no longer sustainable for a 
foreign company to do business with corrupt regimes and then 
see the revenues plundered by certain people in government and 
then turn their heads.
    A few weeks ago, the Africa Subcommittee that I chair held 
a hearing on the Chad-Cameroon pipeline, which is a new 
approach. I would just like to get your opinion on this. This 
project is the largest private sector investment in Africa. I 
think it is an innovative approach that is an unprecedented 
partnership between energy companies and NGOs and the World 
Bank and the governments of Chad and Cameroon, and it aims to 
maximize the development benefits of Chadian oil while avoiding 
the pitfalls that have plagued other such projects in the past, 
including the pitfall of corruption.
    Specifically what happens here is at the World Bank's 
urging the Chadian government instituted a legal framework 
whereby 72 percent of the project revenue is devoted to 
education, is devoted to health and other social services and 
to infrastructure, and then ten percent is set aside for future 
generations.
    There is an oversight committee including Chadian civil 
society members that monitor the project revenue. The World 
Bank will play a role in auditing oil accounts, which is a 
striking departure from the norm for the developing world, and 
that is to be made public. This is all to be totally 
transparent.
    For these reasons, the World Bank has described the project 
as an unprecedented framework to transform oil wealth into 
direct benefits for the poor, the vulnerable and direct 
benefits to the environment.
    I would like to know if our witnesses are familiar with the 
project at all and what they think of it in concept.
    Thank you, Mr. Chairman.
    Mr. Chege. I am familiar with the Chad-Cameroon project, 
and I agree with Congressman Royce that in fact when the World 
Bank says that it is an innovative project it really is because 
we are witnessing for the first time an element of 
accountability in the use of incoming money to a very weak 
government and a government that has a terrible record in human 
rights and democracy, being held accountable in how it uses its 
oil money.
    There are two things to note about how the project came 
about. First, there was a huge outcry from international human 
rights groups and from global environmental organizations. 
Second, there was a huge outcry, especially from environmental 
groups in Africa, there was a huge outcry from Africans, from 
individual poor people, communities in the region who were 
going to be transplanted as this all was taking place that said 
please, for heaven's sake; you cannot trust the governments in 
these two countries with our money, with our resources, with 
our forests, with our game reserves that this pipeline is going 
through.
    The elements of open discussion and debate weighs in, and 
that is what made this decision possible. Otherwise the World 
Bank was going to fund it like they had done elsewhere before 
and could have cared less about that accountability element.
    Second, Mr. Chairman, the point I want to stress is that 
has this worked? Yes, up to a point. A few years ago the 
Chadian government went and bought arms with complete impunity 
and complete contravention of the allocations of the oil 
revenues. What could World Bank do about it? World Bank does 
not have an army. They cannot very well arrest the leaders of 
that country. There is a limit to how much and how far they can 
go. It is a test case, and we should see about it.
    I should perhaps add as a footnote that the United States 
Government right now is very concerned with what is going on in 
the Sudan. We all know the tragic, tragic conditions there. Oil 
is a key player there because the Canadian company, Talisman 
and the Chinese and the Malaysians have put money into there.
    Former Senator Danforth of the United States has been 
commissioned by the Bush Administration to be the key 
intermediary in that process, and they are also thinking about 
the same Chad model in that country. I would not place a dime 
on the government of the Sudan honoring it. I am sure they will 
sign, but I cannot trust them to honor it.
    Mr. Royce. Myself and Tom Sheehy, who is the staff director 
of the Africa Subcommittee, had a chance to talk to Senator 
Danforth on this subject, and it seems to me that I agree with 
you in concept about the likelihood that we are going to have 
trouble with the Khartoum government, but if the Khartoum 
government is going to go forward anyway in terms of developing 
the oil resources in the south is it perhaps not wiser, just 
like with Chad-Cameroon, to use what leverage we have if the 
Khartoum government is saying we are going to set aside 30 
percent, or I think it is one-third of the oil revenue, for the 
people of southern Sudan, and we can pull into that NGOs and 
the World Bank and the international community?
    Is it not wiser to try to leverage out of that an 
arrangement that commits that for infrastructure building and 
for health and education in the south? I mean, it is a bit of a 
Hobson's choice because, as you say, the corruption that we 
have seen in the north and certainly the hostility and the 
murder of 1.9 million people to date would lead you to believe 
it could be next to hopeless, but, on the other hand, if we 
have an opportunity here to try afresh if the government in 
Khartoum perhaps is saying, you know, this has been a lose-lose 
all the way around.
    In Sudan, the standard of living is not increasing. Here is 
an opportunity for the south and the north to be prosperous, 
for the entire nation to be prosperous. If we can get an 
allocation that ends the civil insurrection, then perhaps it is 
worth us all doing all we can do and then trying to create as 
much transparency as possible in order to at least see if this 
could help the problem.
    Mr. Chege. Mr. Chairman, I agree entirely with the 
Honorable Congressman, but it is better for the United States 
and U.S. corporations to be involved because it gives the 
United States much more leverage.
    I do not agree with those who say cut out and leave because 
this government is so horrible, because if we do that then who 
is going to get in there? It is going to be the Malaysians and 
the government of China, and those countries are not--or the 
governments there--are not accountable to anybody, and they 
will physically get away with murder.
    It is so much better to have U.S. companies, to have 
Canadian corporations involved in that project over there, 
because I think the leverage we have of getting something much 
better done than otherwise is always there. It is important 
that we support that.
    Mr. Royce. I thank you. I thank the panel. My time has 
expired.
    Thank you, Mr. Chairman.
    Chairman Bachus. Of course, we are financing the Malaysians 
and the Chinese in their oil exploration, so we are involved.
    I relate the Sudanese government to Hitler. They both 
practice genocide on a grand scale. I am very uneasy as a 
matter of values for the American Government to do anything to 
share revenues with such a government that practices slavery 
today. The price of a slave in Sudan is $33 today.
    Ms. Waters.
    Ms. Waters. I wanted to ask a question of Jack Blum, first 
of all, to thank you for your years of work. We have had the 
opportunity to work together on some other issues.
    This may be taking us a little bit off of the beaten track 
here, but since we have worked on the problem of drugs, 
particularly as it related to Nicaragua and the crack cocaine 
explosion and all of that, I am just as worried about what is 
happening in Afghanistan.
    Why is it we do not hear about what is happening with the 
poppy fields? If in fact those fields are being cultivated, why 
are we not saying something about it? Are we just turning a 
blind eye in the interest of the economy of Afghanistan?
    Mr. Blum. This is possibly one of the most complicated, 
atrocious problems that anyone could ever imagine. The gross 
national product of Afghanistan is heroin. In fact, that is 
their major export.
    Now, for one year it ceased, but the Taliban government was 
built on the export of heroin to Europe and the money laundered 
by that export. That was the money that flowed back to support 
the Taliban.
    The governments of Europe by and large paid no attention to 
what was going on or limited attention because for the most 
part the users of that heroin in western Europe were illegal 
immigrants in western Europe, so you had North Africans and 
other people in Paris who were there who were the prime users. 
The French say ``Oh, we do not have a heroin problem.'' They 
just do not look at the whole population of France.
    The problem we now have is that the revenue from this poppy 
is an essential element of the ability of the war lords who are 
supporting us and going after the Taliban, and we are in the 
dilemma of what do you do? Do you try to wipe out their crop 
and leave them broke and then pay them money, or do you let 
them grow the poppy and export the poppy?
    That is the kind of stuff that is being debated and worried 
by various people in government positions. I daresay, it is a 
terrible, terrible dilemma because it is the only source of 
revenue these folks have. I think you are going to have to ask 
the State Department, and that is a set of questions where the 
people in INL and Narcotics Control should be put to the test. 
You know, what are you doing about it, and how are you going to 
handle it? It is a very thorny problem.
    Ms. Waters. Are they exporting through Pakistan, our ally 
in the fight against terrorism?
    Mr. Blum. That has been the route. In fact, one of the 
elements of the civil war leading up to the events after 
September 11, one of the elements was a lot of that civil war 
was based on a war over which way the heroin would flow. Would 
it go north through Uzbekistan, through the Northern Alliance 
country, or would it go south through Pakistan?
    An awful lot of the insanity that was going on in Kashmir 
was financed out of that heroin flow because the Pakistani 
Secret Service was involved in helping support the flow. There 
were seizures of heroin coming down from Afghanistan along the 
Macran coast and then later in shipments to western Europe that 
were so large they could account for almost the entire world's 
heroin supply.
    Ms. Waters. And I understand we have an agreement that we 
will not chase anybody into Pakistan. We stop at the 
Afghanistan border.
    Mr. Blum. The problem of the corruption surrounding drugs 
on that route is absolutely astonishing. I have no faith at all 
that any agreement to chase or not to chase would make any 
difference.
    Ms. Waters. Thank you. I yield back.
    Chairman Bachus. Thank you.
    Mr. Conyngham, you mentioned the Bermuda Triangle in your 
testimony, which is formed by offshore jurisdictions that 
refuse cooperation with investigators from other countries 
seeking to trace dirty money.
    Mr. Royce mentioned the ``name and shame''. I think there 
was an initiative taken by the G-7's Financial Action Task 
Force to name and shame those jurisdictions.
    Do you know the status of that? Has that been done, and has 
it had any effect on the fight against money laundering?
    Mr. Conyngham. I do not know the exact status of it. I 
believe Singapore has done something similar and so I do 
believe it is a way forward.
    To tackle the idea of corruption, my own company about 3 
years ago published a report called ``Corruption Integrity, 
Best Business Practice in an Imperfect World.'' We put out 
fliers saying this book was coming out, and we got a lot of 
advance orders for it so it seemed to be very successful.
    We said we will hold a seminar, and we will launch it 
properly. We put out the invitations to the seminars, and we 
got very few responses. We even got one fax that just had big 
letters on it. No. No. What seemed to be happening was that we 
had the companies that wanted to understand the issue, but they 
were not going to stand up in public and say we are actually 
dealing with it ourselves as well in Indonesia or in Malaysia 
or wherever it is around the world.
    I think what we have to do now, and the name and shame is 
part of that, is to say the developed world is saying very 
firmly this is an issue. If you do not begin to deal with it, 
then maybe we cannot come and do business in your country, and 
maybe we cannot let you do business in our country.
    I think there is obviously a balancing act through all of 
that, but I would be in favor. If you are not FATF compliant, 
then the money has had some effect, and can we do it with the 
corruption as well.
    Chairman Bachus. All right. Mr. Blum.
    Mr. Blum. I think that we have made some headway with that, 
and the countries that have been put on the list, many of them 
have said OK, we will cooperate.
    The test now is can they cooperate, do they have the 
infrastructure for cooperation and have they done anything more 
than put up some window dressing in the front of well, we 
passed the laws you asked us to pass, and we have a guy you can 
call if you want information, but truth be tell he is working 
from 2:00 to 4:00 in the afternoon on alternate Tuesdays, and 
if we get 8,000 requests maybe in a year or two we will get to 
you.
    That kind of thing is the problem that I see next, so the 
next step will be to force some kind of real compliance and 
then tell some jurisdictions they have no business doing it.
    The smallest republic in the world is the Republic of 
Nauru. They have 10,800 people. The ratio of banks to people in 
Nauru is still outrageous. They are in non-compliance, and they 
have not given any interest in compliance.
    Now, many of those banks are cutoff, and many will be 
cutoff in the next number of months because of the OECD 
initiative, but I do not believe Nauru could ever be compliant 
no matter what it did, not with 10,800 people. You cannot run a 
center.
    Chairman Bachus. What do we do to those notorious offshore 
banking centers?
    Mr. Blum. I think you treat them as hopeless cases instead 
of acting like a country with 10,800 people is a sovereign 
state on a par with Russia or a place that has let us say a 
billion people or 500 million people. We should make it very 
plain. You are out there in the middle of the ocean by yourself 
if you do not play by the rules we will cut you off. I do not 
think that is that hard to do.
    I think what it is hard to do is get the attention of the 
people focused on the need to do it because everybody says if I 
am dealing with the Middle East why the hell should I deal with 
Nauru.
    Chairman Bachus. Mr. Conyngham, do you agree?
    Mr. Conyngham. I agree with that. I think you just have to 
say this is not the way we can do business. Therefore, we 
cannot allow people to do business with you, and we will not do 
it ourselves.
    Chairman Bachus. Could the three of you identify some of 
the countries you think are the worst actors? I am not talking 
about in testimony, but just in a written response and what you 
think this subcommittee ought to suggest the policy of this 
country be.
    My final question is this. In your testimony, Mr. 
Conyngham, you pointed out the role, and I think, Mr. Blum, 
actually Mr. Conyngham in his written testimony and you 
referred to it, the role played by professionals--lawyers, 
accountants, private bankers--who actually are in the business 
of helping rich and powerful clients, including corrupt 
dictators or government officials conceal and profitably invest 
their assets.
    You know, these are the people who are actually making the 
arrangements with Nauru or whatever, with these offshore 
banking centers. In your view, how widespread is that? I mean, 
is there a whole industry out there in the business of serving 
these people? What are governments or professional 
organizations doing to discourage these attorneys and other 
professionals from offering these types of services?
    Mr. Blum offered the idea of a lawsuit, a civil lawsuit. 
What is your suggestion?
    Mr. Conyngham. Well, I believe I actually brought it onto 
the table. I think I said in my written testimony I attended 
the International Bar Association meeting in Cancun, Mexico, 
last October, and there was a session on how they should 
respond to issues of banking secrecy and what advice they 
should be giving. It appeared to me they had not even begun to 
understand the issue outside of what their immediate 
relationship with their particular clients might be.
    The National Criminal Intelligence Service gets the report 
of suspicious transactions, and our money laundering 
legislation refers to lawyers and accountants as having a 
responsibility under that legislation. I think 2 or 3 years ago 
it had 15,000 suspicious transaction reports. One hundred and 
seventy only came from lawyers, and that I do not believe 
reflects the number of situations that lawyers in the United 
Kingdom might have been involved in in that particular year and 
might have thought this does not sound or this does not look or 
I am being asked to do something that I am not too comfortable 
here, and maybe I ought to say no.
    I am afraid maybe I am the worst kind of animal. I am a 
retired lawyer, but I do believe that the professions have to 
take their responsibilities in this area far, far more 
seriously than they have been to date. They cannot sit at 
conferences and talk about a professional privilege and issues 
of that nature without at least trying to understand why it is 
that there is concern as to where probably a very small 
minority of their brothers are behaving.
    Chairman Bachus. Mr. Blum.
    Mr. Blum. I think there is a bit of a crisis in all of the 
professions these days. I mean, the Enron case alone should 
tell you that it is not limited to dictators who want to 
launder money.
    What we have is this fundamental problem of people who have 
forgotten that the purpose of being a lawyer is to teach people 
how to obey the law and to help them keep their transactions 
within the scope of the law. Somewhere in my professional 
career that message got lost, and an awful lot of people now 
believe the job of a lawyer is to help people break the law.
    I have tried at various ethical meetings and discussions on 
ethics to raise the point that the minute you do that you cease 
being a lawyer, and you become a co-conspirator and that you 
have to go back and remember what the professional's job is 
supposed to be and hold that standard. When a client says but I 
will go down the street, you have your colleagues down the 
street who will say the same thing. They have to say ``You 
cannot do it. It is illegal.''
    We have a real ethical crisis here. I think that leadership 
is needed in the bar, and public discussion of that ethical 
crisis is needed. Every major accounting firm has had an entity 
that incorporates people offshore, that sets up offshore 
arrangements, that helps people. Whether those skirt the law in 
one place or another is something that is very hard to tell.
    Chairman Bachus. Mr. Chege.
    Mr. Chege. Mr. Chairman, you asked for some of the 
countries and some of the actors in this and what initiative we 
should have toward this.
    Closer to the region I specialize in, I am very concerned 
with what is going on in the United Arab Emirates. Some of the 
evidence just in the open sources coming out of 9-11 is that it 
is a haven of financial activities for terrorist groups, and 
also I just mentioned to Congresswoman Waters some of the 
activities of tanzanite and illegal diamonds and that sort of 
activity over there and, of course, the strategic position that 
country is in with the Middle East, Africa, Asia, as a trading 
hub.
    Malaysia. I do not have the full details, but again going 
by the press you see an awful lot of activity between agents of 
that government with some of the nastiest dictators in Africa--
Robert Mugabe, the government of the Sudan, even Charles Taylor 
in Liberia. I do not know what that again is about. I think 
they want to corral some of the funding and use it for their 
own internal development.
    Mr. Blum mentioned Enron and Anderson. It might have 
skipped the notice of some people that in this rather seemly 
deal some of the Enron money, an account was secreted in 
African countries, including Mauritius.
    It now seems to me that some of the illegalities are done 
in places where we least expect to look--the Arab Emirates, off 
the East African coast, a whole lot of other places.
    I think it is important, as my colleague Jack Blum said, to 
have an international initiative that looks into all these 
activities to see what legislation can be brought to bear with 
us here in the United States taking the lead and other 
countries that are concerned with this problem, especially in 
the OECD countries.
    Chairman Bachus. Thank you.
    Finally, I would like you---- if you all have any comments 
you would like to reduce to writing to tell us any suggestions 
you have about how to move against lawyers, accountants and 
other professionals who are facilitating this asset seizure. 
Actually not asset seizure, but stealing of the assets.
    Finally, I will close with this. Mr. Blum, Argentina. There 
have been charges of widespread corruption there. Could you 
give us, and, Mr. Conyngham or Mr. Chege, if you have comments 
on that, but we will close with that.
    Mr. Blum. There were indications that there had been 
widespread trading in Argentine foreign debt where people would 
buy the debt at 20 cents on the dollar or 30 cents on the 
dollar and then make some sort of arrangement inside the 
government to have the debt redeemed at 100 cents on the dollar 
either in the form of hard assets or in the form of payment, 
and all of that would be in exchange for a payoff of a rather 
substantial amount.
    Some of this surfaced in the hearings of the Permanent 
Investigation Subcommittee, but there have been many other 
elements of corruption, especially under the Manem government, 
which have helped lead to the current collapse.
    To put money into Argentina at the moment without fixing 
some of that, without trying to go after some of the people who 
perpetrated it, seems to me to threaten to be putting money in 
a leaky boat or putting water in a sieve. You are not going to 
get very far. It is not going to help you.
    Mr. Conyngham. Mr. Chairman, I do not have any specific 
comments on Argentina, but as it is the last moment perhaps I 
could just say this. There are things that we can see coming up 
on the near horizon in addition to Argentina.
    What is going on in Zimbabwe and Mr. Mugabe there; at some 
point we will need to look almost certainly at maybe his 
assets. Things going on in Angola, in Equatorial Guinea and 
possibly even again in Iraq. In many ways, this is where to a 
degree some of this started.
    If you remember going back to the Gulf War and Saddam 
Hussein at that time, there was a major asset search conducted 
in related to Mr. Saddam Hussein so that the Kuwaitis, when 
peace was restored, could also go after that country and after 
that gentleman for reparation because it was believed that he 
had in fact stolen funds that belonged to the country. Maybe 
his time will come again.
    What I would urge on this subcommittee is that there is 
some urgency in putting together something along the nature of 
what Mr. Blum is suggesting so that when these countries have 
the opportunity to address this issue when they can go after 
the assets of these despots there is a mechanism that makes it 
a lot easier for them to do so than was the case for the 
Nigerian government who literally to a degree had to go around 
the world not cup in hand, but with great difficulty saying 
could you help us and, by the way, we have not got too much 
money to pay for it.
    I would ask that there is urgency about it. Thank you.
    Chairman Bachus. Thank you.
    Mr. Chege, any final comments?
    Mr. Chege. My final comment has to do with the role I think 
that the IMF and the World Bank should play into this. I 
mentioned in my written testimony, Mr. Chairman, the Meltzer 
Report that was commissioned by the U.S. Congress which, in my 
view, is the best and most thorough report on the activities of 
those institutions and what ought to be done to reform them.
    We basically have two international institutions that deal 
with international finances in the developing world that were 
thought of immediately after the Second World War. The world 
has changed a heck of a lot since, and we need to restructure 
them with the United States taking the lead so that they can 
address some of these issues.
    Everywhere we have international finance meetings with 
these institutions playing a role, you have young people coming 
out in droves to demonstrate. You have seen the national 
capitol of the United States having been shut down sometimes 
because there are so many angry young people, not so much at 
these institutions and the information about what they do, but 
over the anger about poverty out there in the developing world 
and what ought to be done to address it.
    I believe that it is time to revisit the functions of those 
institutions in addressing the other issues of poverty, but 
also the issue that this subcommittee is dealing with this 
morning, and that is the stolen and plundered loot that the 
dictators have secreted abroad.
    Chairman Bachus. We thank you, gentlemen, very much for 
your testimony.
    At this time the hearing is concluded.
    [Whereupon, at 12:23 p.m. the hearing was adjourned.]
                            A P P E N D I X



                              May 9, 2002
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