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Open-Ended Intergovernmental Working Group on Asset Recovery
Asset Tracing & Recovery A Case Study
17 December 2010
Vienna
Challenges for Asset Tracing & Recovery
• Bank secrecy laws and the lack of developed treaties and legislation in some jurisdictions mean there is still ample scope for criminals to conceal the proceeds of crime.
• Criminals may have substantial resources available with which to hide their assets and protect themselves vigorously against legal action.
• Assets will often be 'parked' in the names of nominee individuals or companies.
• Proof of the ultimate beneficial ownership trail – or evidence that assets represent the proceeds of a fraud or other crime – are fundamental to successful asset recovery.
• The impact of cost benefit considerations on the selection of legal strategy.
Asset Tracing & Recovery: Challenges
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Asset Tracing & Recovery: Evidence
Collecting Evidence
• What evidence will be required?
• When will the evidence be obtained?
• How will the evidence be obtained?
• What type of evidence will be obtained?
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Asset Tracing & Recovery: Recovery Process
Suggested Investigative/Recovery Process
• Initial Planning Phase
- Collect and interpret available evidence
• Secure the Asset
- If possible, consider injunctive relief (Freezing Order) against original asset OR the perpetrator’s assets in jurisdictions favourable for offensive action
• Gather Evidence from Hostile Parties
- Consider using pre-trial discovery remedies
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Bank of Credit & Commerce International
Strategies to recover UK Commercial Property
Syed Ziauddin Ali Akbar
Former Head of BCCI Central Treasury (1982-86)
Oct 88: Charged and convicted of laundering drug money at UK Trading House
Sep 91: Charged and convicted of false accounting at BCCI
Nov 94: Declared Bankrupt
Nov 96: Attempted extradition to the USA fails.
Jun 99: Liquidators obtain $423.5m judgment in USA
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Bank of Credit & Commerce International
Position after Criminal Proceedings
“The prosecution are unable to identify any funds in respect of which I could make even the most modest compensation order. Any question of compensation will therefore be left to [the] civil process. Take him down.”
Mr. Justice Scott Baker, Central Criminal Court [Case No. T930727]
28 September 1993
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Bank of Credit & Commerce International
Strategies to recover UK Commercial Property
Initial Planning Phase
• Review of BCCI Records
‒ Mortgage documentation secured UK Commercial Property against 3
loans from BCCI affiliate to Akbar-controlled nominee company
‒ Investigations showed loans were inappropriately credited with
misappropriated funds and had not been repaid by the borrower
• Cooperation with Criminal Investigative Authorities
‒ Documents subpoenaed from:
Serious Fraud Office and HM Customs & Excise, the prosecuting
authorities in Akbar’s criminal convictions
Commodities Futures Trading Commission as due diligence around
alleged derivative losses
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Bank of Credit & Commerce International
Strategies to recover UK Commercial Property
UK Commercial Property
Located in London
Sole asset of, and nominally owned by, a Vanuatu registered company
Nov 86: Purchased for cash by UK Brokerage owned by Akbar
Nov 87: 3 loans for $10m raised from BCCI affiliate in Kuwait secured on property
Aug 88: Ownership transferred to Vanuatu registered company
Jan 89: Bearer shares of Vanuatu company transferred to Akbar’s brother
Jan 01: Receiver appointed by BCCI Liquidators
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Bank of Credit & Commerce International
Tracing the Misuse of BCCI Funds
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Account #1
Account #2Panama Company
Mortgage
US Trading House
Formed: July 1985
UK Trading House
Formed: April 1984
Broker
Formed: April 1985
UK Commercial Property Vanuatu
Company
Bank of Credit & Commerce International
Strategies to recover UK Commercial Property
• UAE
• London
• Pakistan
Vanuatu .
$$$
$
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Gathering Evidence from Hostile Parties
• Court Appointed Fiduciaries of BCCI (s.236 IA 86)
Nominee Director (Swiss Lawyer) of Panamanian Company
Previous Management Companies of the UK Property
Lawyer/Business Associate of Akbar (Vanuatu Company)
London branch of Overseas Bank (Accounts of Akbar’s brother)
• Court Appointed Fiduciaries of BCCI (Post Judgment Discovery)
Deposition of Akbar
• Trustee in Bankruptcy for Akbar (s.366 IA 86)
Examination of Directors of Management Company (Akbar’s Children)
Bank of Credit & Commerce International
Strategies to recover UK Commercial Property
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Asset Recovery - Summary
• Appointment of receivers “froze” asset in place and prevented sale of the UK Commercial Property
• Suit filed in London by Trustee in Bankruptcy for Akbar against the Vanuatu company, Akbar and Akbar’s brother alleging that Akbar was the true owner of the UK Commercial Property and that his brother was merely his nominee
• Faced with the strength of evidence, Akbar’s legal advisers made arrangements for the property to be transferred to the Trustee
• Property sold for several million dollars and the net proceeds were shared between the creditors of the bankrupt’s estate including the Liquidators of BCCI
Bank of Credit & Commerce International
Strategies to recover UK Commercial Property
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Contact Details
John Gilkes
Principal
Deloitte FAS LLP
Office: Washington DC, USA
Tel: +1 202 378 5020
John Gilkes has more than twenty years experience in asset tracing and recovery and in the management and conduct of financial/fraud investigations involving wire transfer fraud, bribery/corruption, and extortion. From 2003 to 2006, John co-led an ongoing effort at the Audit & Assurance Services National Office of Deloitte & Touche LLP to enhance audit quality throughout Deloitte & Touche LLP. Specifically, John provided subject matter experience in the areas of fraud detection, prevention, and deterrence and participated in the development of new processes, tools, and training designed to enhance the consideration of fraud throughout the audit process.
In 2009, John joined the expert group of the Stolen Asset Recovery (StAR) initiative to consult on matters relating to asset tracing and recovery. StAR was launched in September 2007 by the World Bank and the United Nations Office on Drugs and Crime (UNODC) as a collaborative arrangement to promote the ratification, domestication, and implementation of the United Nations Convention against Corruption (UNCAC) which in turn provides the legal framework for international collaboration in asset recovery of proceeds of corruption.
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