The restitution of ill-gotten gains should be a French - and European - priority ǀ View

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On 3 April, the French Senate was set to study a bill by Jean-Pierre Sueur. This bill, the review of which has now been postponed for a few weeks, gives us the opportunity to take stock of the legal progress for the restitution of ill-gotten property to dispossessed populations.

Contrary to the popular saying, ill-gotten assets continue to benefit the authors of misappropriations, dispossession and corruption. Despite an acceleration of citizen awareness - under the impetus of the work of NGOs and international organisations - there are still things falling through the net.

Returning dubiously-acquired property to divested populations is not only a moral requirement, but also necessary if we are to have solidarity with the people in Africa, the Middle East and elsewhere in the world robbed of their resources. It must be understood that these misappropriated goods, which by definition are now not benefiting the populations, are keeping their original owners in poverty and misery through economic and intellectual distress, depriving them of education and leaving them at the mercy of extremism (particularly religious extremism).

The fight against stolen assets and their return to plundered countries is a good example of addressing these demands [for social justice] - but voting for a bill is not enough when so many simple steps can be taken in addition.
Nathalie Goulet
French senator

By restoring to these ravaged populations the assets that belong to them by right, we not only acting in their best interests but also ours.

France has for many years adopted laws aimed at punishing corruption and economic crime through the transposition of international conventions into French statutes. These include Law No. 2007-1598 of 13 November 2007 on the fight against corruption, which transposes the obligations contracted under the Council of Europe Criminal Law Convention on Corruption of 27 January 1999 and its Additional Protocol of 15 May 2003 in addition to the United Nations Convention against Corruption which was adopted on 31 October 2003 in New York (the so-called Merida Convention). As of 3 October 2017, 140 countries or organisations had signed it and 186 countries had ratified it.

There were also other legal texts that came into play to complete the French system, not forgetting also the cumulative effects of the 2008 crisis and the Cahuzac affair. These include the law on combating tax evasion and serious economic and financial crime, the law on transparency, the fight against corruption and the modernization of economic life (Law No. 2016 -1691 of 9 December 2016, known as Sapin 2, as well as Law No. 2018-898 of 23 October 2018 on the fight against fraud).

It is in this context that the French Senate will consider - after the aforementioned delay - the draft Sueur law that provides for the creation of a fund to organize the automatic allocation of recovered assets. Until now, with some exceptions, these have been paid into the coffers of the French State but this draft law aims to ensure that the illicit assets recovered in France contribute to the development of countries that have been unjustly deprived of them, as well as reinforcing France's efforts in the fight against transnational corruption.

In short, it is a text full of good intentions - but the effects on the ground may be limited.

The proposed new Sueur law does not itself change the situation alone; there are still many drawbacks, including procedural pitfalls as detailed in the 2017 AGRASC (the French Agency for the Recovery and Management of Seized & Confiscated Assets) Annual Report.

It is for these reasons that amendments have been tabled to settle a number of purely procedural difficulties in the French plan, in particular to facilitate the actions of the AGRASC. This is to complement the provisions of the Code of Criminal Procedure, to make justice faster and more effective. It is essential to beef up our own internal law mechanisms, especially in the digital era, to use technological means to monitor and coordinate the actions carried out.

Many other steps need to be taken to combat the phenomenon of ill-gotten gains that are solely the result of our political will. There are only two examples, which are as follows.

Transfer prices

It is essential to fight more firmly against systems that allow the erosion of tax bases and to increase the control of transfer pricing practices in line with the recommendations of Action 14 of BEPS (Base Erosion and Profit Shifting) as mandated by the OECD.

Transfer prices account for between 70% and 90% of world trade. These tax optimisation tools - which are perfectly legal - lead to unacceptable situations, through operations within the same group between subsidiaries located in low tax countries. This is how the island of Jersey, despite its mild climate, is the largest exporter of bananas in the world.

Free ports in the heart of Europe

The fight against free ports is a subject often mentioned at major international meetings and just as often relegated to oblivion. We are talking about areas not subject to customs services where real fraud factories are located.

In the French Senate, we have not hesitated to advocate for their suppression. We have already denounced this particular scandal in Eric Bocquet's report on tax evasion in 2011. Nothing has really changed since; in fact, quite the opposite.

What is to be done about a European Union where member states or neighbouring countries - such as Switzerland or Luxembourg - use these instruments of fraud?

The free port of Geneva is one of the most secret but also one of the most protected places: more than 150,000m2 of warehouses - almost 2.5 times the size of Paris’ Galeries Lafayette Haussmann - house the most unlikely of goods with the most questionable of origins: from precious stones, fine wines, antiques, and paintings to archaeological works and smuggled diamonds from war zones in Africa and the Middle East with an estimated value totaling several billion euros.

A true "steel dome" that discreetly houses all manner of goods away from prying eyes, (especially those of the tax services), the free port of Geneva offers a scandalous immunity to all traffic at the gateway to Europe. A Bermuda Triangle for taxation, it is unrealistic to calculate the net value of these stored goods although a a 2016 survey estimates it could be as much as €80 billion. Silence is tantamount to consent.

And we could say the same for the free port of Luxembourg, our ally and a strategic European partner. Following a parliamentary report on money laundering, 6 MEPs visited the Luxembourg free port.

Ana Gomes (a member of the Party of European Socialists) made an alarming statement in February 2018, saying: "We are concerned about the exploitation of all warehouses of this type [because] we know that they present themselves as a new option for those who discovered that the bank accounts are controlled, who discovered that the fictitious companies are exposed and who therefore concluded that the solution is to invest in valuable goods - art, precious metals, anything, cars, wine, cigars.

Operating as grey areas, these free ports act as shelters to these goods - and it must be repeated incessantly - from around the world, which are nearly all obviously ill-gotten.

A European priority

This is why the fight against ill-gotten gains and their restitution to the rightful owners must be a national priority for France - but also a European one.

On the eve of the G7 summit in Biarritz, France should take the initiative on this subject, and see that the announcements to tackle the problem are followed by actions.

It should also be the case that in the context of fighting campaigns for the European elections, our candidates pledge to wage a merciless fight against these absurd situations. The desire for further taxation and social justice that has been expressed by the Gilets Jaunes (Yellow Vests) movement, for instance, must be satiated.

The fight against stolen assets and their return to plundered countries is a good example of addressing these demands - but voting for a bill is not enough when so many simple steps can be taken in addition.

These include accelerating our criminal procedures and coordinating our resources against these traffickers, always bearing in mind that the circuits of these frauds are also those of the financing of terrorism. Let’s fight to end free ports. Even if it seems a little utopian, this fight deserves to be had. The campaign for the European elections is an excellent opportunity. The summit of Biarritz will be another.

It is high time we give credence to the Italian proverb: "Between saying it and doing it, there is half of the sea.”

Nathalie Goulet is a Union of Democrats and Independents (UDI) senator for Orne and a member of the Finance Commission