At the G8 Summit in Deauville in the spring of 2011, the Group of eight wealthy nations recognised the need to address corruption in North Africa. However, they failed to recognize their own complicity. The hunt for assets of former Egyptian, Tunisian and Libyan rulers has revealed a tangled web of global assets invested throughout our economy: from shares in a prominent UK newspaper and an Italian football club to hundreds of top properties from London and Paris to the Spanish coast and Africa. That is the tip of the iceberg.

It takes a second to wire money to an offshore bank account. If it is taxpayers’ money stolen by a corrupt official or leader, it can take a decade to get it back. Financial havens whose gross national product is to a large extent dependent on markets of secrecy have little incentive to dedicate time to cooperating with authorities trying to recover assets for developing countries, so it is perhaps not surprising that only five billion dollars of stolen money has been returned to the countries looted by corruption over the last 16 years.

The big questions

The big question, however, is how the proceeds of corruption become so deeply woven into the global economy in the first place? Clearly, dictators have plenty of places to look if they want to profit from their power.

Banks have to develop a sense of proportion. They are not expected to turn away every political client, but they cannot stay quiet when a leader like Suharto steals at least 32 billion dollars or Nigerian leaders five billion dollars. In total, dictators are calculated to have stolen up to 180 billion dollars in recent decades, and that figure does not including corrupt officials.

Tunisians, Egyptians and Libyans, like Nigerians, Indonesians and Filipinos before them, may be forgiven for wondering why their public coffers could face a loss the size of a bank-bailout just because they toppled their leader. G8 governments eventually responded to asset recovery requests from North Africa by freezing tens of billions of dollars of suspicious assets. These should be transferred to escrow accounts managed by an independent third party like the World Bank or the African Development Bank, so that banks do not profit from the interest.

Waiting for governments to act

What is surprising is that the international community has not acted to stop stolen public money getting to offshore banks in the first place.

After September 11, the international community took action to stop terrorists cashing in on the opaque financial system by cracking down on money-laundering. After the financial crisis hit in 2008, the new, expanded global forum, the Group of 20 pledged to eliminate tax havens. It claimed the days of banking secrecy were over. The G20 includes emerging “BRICS” countries, who are now recognised as stakeholders in the international financial system, and so must also take responsibility for making it transparent.

Has the new group delivered more than the G8? Although the G20 has at least delivered an action plan to fight corruption, we are still waiting for steps that will ensure banks ensure that leaders and officials are not depositing the proceeds of corruption on their books.