Expert Mechanism on the Right to Development Discusses Draft Thematic Study on Illicit Financial Flows and the Right to Development
The Expert Mechanism on the Right to Development this afternoon discussed a draft thematic study on illicit financial flows and the right to development.
Serges Alain Djoyou Kamga, Expert of the Expert Mechanism, presenting the draft thematic study on illicit financial flows and the right to development, said the context of this study built on the premises that the actualisation of the right to development requested resources. The right to development could not be operationalised or implemented in a vacuum, but needed adequate resources. Looking at this right from the perspective of illicit financial flows strove to bring out a new discussion space for the protection of this human right that provided a platform to explore the extent to which tracking, stopping and recovering illicit financial flows could further the development of the right to development in countries of origin.
The panellists were Elspeth Nomahlubi Berlinda Khwinana, Commissioner, South African Human Rights Commission; Mor Ndiaye, Director General, National Office for the Recovery of Criminal Assets, Senegal; Gerard Emmanuel Kamdem Kamga, University of the Free State; Max Boqwana, Thabo Mbeki Foundation; Kishani Udugampola, Rutgers University–Newark; Surya Deva, Special Rapporteur on the right to development; and Juan David Varela, Fundación Gaia Amazonas.
Speakers during the debate said illicit financial flows deprived States of the resources necessary to advance economic, social and cultural rights and to combat inequality and poverty and achieve the Sustainable Development Goals. Illicit financial flows remained among the most significant barriers to the right to development in Africa, with tax avoidance, money laundering and the illicit exploitation of natural resources, resources that should be financing education and economic opportunities diverted away from development. The implications were profound: where public resources were lost, development was lost, and where development was lost, rights were denied.
The Expert Mechanism should affirm that the recovery and return of national assets was a vital part of the reinforcement of the right to development. Stronger cooperation between international financial institutions, judicial institutions and the international community was vital. The inequalities of the global governance and the neo-colonial structures of exploitation needed to be addressed and redressed. The impactful contribution that the recognition of the right to international solidarity could give to asset recovery should be recognised.
Speaking were South Africa, African Union and Cuba.
Also speaking were APG23, Centre-Europe Tiers Monde, Africa Culture Internationale, Humanity First, International Youth and Student Movement for the United Nations, Indian Council of South America, Matti Ylönen, a development expert, and Rami Ghozlane, a youth expert on development.
The Expert Mechanism on the Right to the Development is a subsidiary body of the Human Rights Council established in 2019 under resolution 42/23. It provides the Council with thematic expertise on the right to development in searching for, identifying and sharing best practices with Member States and promotes the implementation of the right to development worldwide.
Summaries of the public meetings of the fourteenth session of the Expert Mechanism can be found here, while webcasts can be found here. The programme of work of the Expert Mechanism’s fourteenth session and other documents related to the session can be found here.
The next meeting of the Expert Mechanism will be at 10 a.m. on Wednesday, 28 October, when it will hold a panel discussion on indigenous people and the right to development.
Presentation of the Draft Thematic Study on Illicit Financial Flows and the Right to Development
SERGES ALAIN DJOYOU KAMGA, Expert of the Expert Mechanism, presenting the draft thematic study on illicit financial flows and the right to development, said the context of this study built on the premises that the actualisation of the right to development requested resources. The right to development could not be operationalised or implemented in a vacuum, but needed adequate resources. Looking at this right from the perspective of illicit financial flows strove to bring out a new discussion space for the protection of this human right that provided a platform to explore the extent to which tracking, stopping and recovering illicit financial flows could further the development of the right to development in countries of origin.
The study sought to define what illicit financial flows were, to examine the nexus between illicit financial flows and the right to development, to examine whether countries and regions had policy frameworks for addressing illicit financial flows, and to identify good practices, shortcomings, lessons learnt, challenges and opportunities in addressing illicit financial flows. The study also sought to look at whether countries had methods to recover illicit financial flows, and when they were recovered, if they were allocated to human rights, including the right to development. Lastly, the study would examine the role of international cooperation in global partnerships in addressing illicit financial flows, and advancing the right to development.
In terms of methodology, the study was drawing on a range of sources. It built on national, regional and international instruments as well as policies on the right to development and illicit financial flows. The structure of the study presented taxonomy of illicit financial flows or the categories of illicit financial flows; the scale of the problem; how illicit financial flows undermined the right to development; analysis of regulatory and programmatic frameworks to tackle illicit financial flows; international cooperation to address the issue; and then conclusions and recommendations.
It was important to note that there was tax evasion, tax avoidance and other criminal activities that were the substance of illicit financial flows. As for the scale of the problem, it not only affected Africa or developing countries. It was a global problem as research had shown that all countries and regions in the world were struggling with illicit financial flows.
Countries around the world had legislation to address this issue, as well as United Nations policies. Illicit financial flows were still very significant despite national, regional and international initiatives to address them. The study suggested to look at the pathway to deal with this through the right to development, removing the right to development from being a victim to becoming the solution to deal with illicit financial flows. Recovered resources should not be used to violate the right to self-determination of the beneficiaries who should have full sovereignty over them. International cooperation was key. Equal participation of developing countries was critical to deal with illicit financial flows.
Statements by Panellists
ELSPETH NOMAHLUBI BERLINDA KHWINANA, Commissioner, South African Human Rights Commission, addressing the role of national human rights institutions in addressing illicit financial flows, said the role of the Human Rights Commission lay in making human rights visible: through the complaints procedure, people brought complaints about denied or deteriorating services, such as leaking water, allowing the body to investigate the alleged human rights violations. It could examine decisions and institutional failures linked to the harm done to the community where it had experienced it. This allowed an examination of whether public commitments translated into improved services for communities.
There was a need for stronger cooperation between oversight organs, law enforcement, civil society and international partners, and where resources were recovered, there must be transparency on their use when returned. There were also issues around infrastructure.
MOR NDIAYE, Director General, National Office for the Recovery of Criminal Assets, Senegal, addressing why the effective recovery of assets was a human rights issue, how recovered assets could genuinely benefit development and populations, and what lessons the Senegalese experience offered for Africa and international cooperation, said asset recovery should be at the heart of the discussion, as asset recovery was a human rights matter. There was no consensus on the definition of the term illicit financial flows. There were no concrete, tangible consequences to illicit financial flows - it was a classroom not built, a water main not mended. Countries with high levels of illicit financial flows spent less on education, with women and girls bearing the brunt of this lack of resources. The individual was the central subject, the beneficiary, and the active participant in development. The non-restitution of funds had a negative impact on the exercise of all human rights.
The criminal activity that undermined the effectiveness of the financial system was a denial of rights. Recovery was not enough - recovered assets could be lost again through personal activity, embezzlement or depreciation. The right to development could not be achieved while resources to fund it were hidden in foreign accounts or elsewhere: the political will, transparency and commitment could turn criminal products into a tool of justice, redress and development, and this should be the rule rather than the exception.
GERARD EMMANUEL KAMDEM KAMGA, University of the Free State, South Africa, addressing the definition and the scale of the problem of illicit financial flows, said Africa’s development challenges were often framed in terms of a shortage of financial resources, with considerable attention given to foreign aid, concessional lending and international assistance. However, an equally important question was what happened to the resources that Africa already generated. Illicit financial flows drained public resources, undermined governance and deprived communities of essential services, including healthcare, education, infrastructure and employment opportunities.
The realisation of the right to development should not depend exclusively on external assistance. African States must also protect and mobilise their own resources, including by recovering assets illicitly removed from their economies. Ultimately, the right to development required more than mobilising new resources. It also required reclaiming, protecting and equitably using resources that had been illicitly taken from African societies. Strong institutions, continental cooperation and accountable asset management could help transform asset recovery into an instrument of development justice.
MAX BOQWANA, Thabo Mbeki Foundation, addressing good practices, shortcomings and lessons learned in implementing the recommendations of the African Union/Mbeki high-level panel on illicit financial flows, said that, with all the technical definitions given, the issue of illicit financial flows was a deeply political issue. From the African perspective, it was a continuation of the colonial legacy, the age of draining resources from the African continent to the countries of the North. Illicit financial flows were the structures of sin, as stated by Pope Francis. Almost 65 per cent of illicit financial flows came from commercial arrangements - about 35 per cent of which could involve corruption.
In the bigger scale of things, poorer Governments or those of developing countries were the ones blamed for the phenomenon; the enduring legacy of exploitation endured. The negative impact had already been discussed, but in the end, if this phenomenon continued, it would continue to make Africa the home to the least developed countries, the hungriest children, the most displaced, the brutalised women, and the population suffering from disease. Most countries were today developing plans and strategies to enhance domestic resource mobilisation, and had adopted strategies to combat corruption and enhance domestic institutions. The work to end illicit financial flows was not one of charity, but one of justice and redress.
KISHANI UDUGAMPOLA, Rutgers University–Newark, on sanctions, shadow economies and the right to development: rethinking financial crime and the human rights nexus, said she proposed a policy framework that connected financial crime prevention with human security, institutional resilience and sustainable economic development. The objective was to move beyond a narrow focus on detecting and disrupting illicit financial activity and toward a more comprehensive approach that also considered recovery, reinvestment and measurable development outcomes. Financial crime drained development resources. Sanctions sought to change behaviour and restrict harmful financial capacity. But sanctions circumvention could create alternative networks, while over-compliance could reduce access to legitimate finance.
The risk arose when legitimate economic migration reduced transparency and created spaces that illicit actors could exploit. The innovation was to measure both the harm caused by illicit finance and the potential developmental consequences of financial exclusion, while also asking whether recovered value actually became development value. Financial integrity was stronger when legitimate activity remained visible, viable and connected to the formal financial system. A resilient system was one that could identify and disrupt illicit finance without unnecessarily pushing legitimate economic activity into the shadows.
SURYA DEVA, Special Rapporteur on the right to development, on examining illicit financial flows as barriers to the operationalisation of the right to development and on how illicit financial flows impacted the realisation of the right to development all over the world, said it was widely documented that many countries lost significant amounts of resources from various causes, including tax avoidance and money laundering. If there were gaps in realising the right to development or a lack of funds for the transition to a green economy, one of the reasons was the transfer of illicit funds; but the impact was not just on the economic dimension; it also impacted the political dimension, as often illicit financial flows involved corruption.
On how the right to development could be used to combat illicit financial flows, the right to development was not merely a victim, it also provided some concrete solutions. International cooperation was a key component of the right to development; States had a duty to cooperate, including in the combatting of illicit financial flows and corruption, along with money laundering. States must collaborate effectively, including on enforcement and prosecution. On how the right to development and other human rights should be used as a guiding torch to realise how recovered assets were spent on the Sustainable Development Goals and others, Mr. Deva said the right to development required active, free and meaningful participation in decision-making processes, so when funds were recovered, it was crucial for people to be able to participate actively in how those funds were to be spent, and their spending should benefit everybody, with a fair distribution of benefits.
JUAN DAVID VARELA, Fundación Gaia Amazonas, speaking on illicit financial flows and indigenous peoples’ right to development in the Amazon Basin and in Latin America, said the draft of the International Covenant on the Right to Development stated that all people had the right to the use of their natural resources, and should not be denied their resources. Illicit financial flows had enriched criminal networks, to the detriment of indigenous communities in the Amazon basin over decades, despoiling the natural environment, with consequent effects on human health. This went hand in hand with illegal armed actors causing displacement, violence and forced recruitment, a cross-border phenomenon. Where illicit financial flows were seen, profits went to the criminal gangs.
Inter-cultural dialogue was vital between the indigenous authorities, the public authorities, and others, and the instruments of the indigenous governments must be implemented. There was a need for public bodies and entities to have financial, technical and human resources to fulfil the needs of all involved in the combat against illicit financial flows.
Discussion
Speakers said illicit financial flows deprived States of the resources necessary to advance economic, social and cultural rights and to combat inequality and poverty and achieve the Sustainable Development Goals. Illicit financial flows remained among of the most significant barriers to the right to development in Africa, with tax avoidance, money laundering and the illicit exploitation of natural resources, resources that should be financing education and economic opportunities diverted away from development.
The implications were profound: where public resources were lost, development was lost, and where development was lost, rights were denied. This was why illicit financial flows must not only be viewed through the lens of financial regulation or anti-corruption: they were also a rights issue. The cost was measured not only in terms of financial issues but also in terms of loss of opportunities. Vulnerable communities often bore the greatest burden when funds were diverted, and therefore combatting illicit financial flows was essential for realising economic, social and cultural rights and human rights for all.
The Expert Mechanism should affirm that the recovery and return of national assets was a vital part of the reinforcement of the right to development. Stronger cooperation between international financial institutions, judicial institutions and the international community was vital. It was necessary for the human rights perspective to always be included in related policy discussions and decisions. Illicit financial flows were a shared problem between developing and developed countries: the magnitude of the resources that could be retrieved and retained could finance the commitments of the developing countries that they had, to date, not been able to fulfil.
The inequalities of the global governance and the neo-colonial structures of exploitation needed to be addressed and redressed. The impactful contribution that the recognition of the right to international solidarity could give to asset recovery should be recognised. There was a need for normative frameworks that could address the gaps between national jurisdiction and international law to address illicit financial flows, reforming the international financial architecture, including on international tax cooperation.
The implementation of economic, social and cultural rights and the right to development in particular was undermined by illicit financial flows, as it was often centred around organised crime and the underground economy, representing colossal sums. Fiscal justice was vital: a paradigm shift was required. Development was a fundamental right: every embezzled resource was something that was not built or constructed, with social programmes, for example, lacking resources.
It was possible to recover assets successfully and still fail the persons who should benefit. The Expert Mechanism should address this in its forthcoming study: there should be a clear public account of what had been recovered, how it would be used, and who would be responsible. Reporting should show whether services were delivered, rather than simply if the budget was spent. Consultation had limited value if priorities had already been agreed beforehand. Independent scrutiny and a reasonable route for raising concerns must be an agreed part of the return of assets, although this should not be used to determine a country’s priorities nor as a pretext to retain the assets.
Concluding Remarks
SERGES ALAIN DJOYOU KAMGA, Expert Mechanism Expert, said the Expert Mechanism was grateful for comments, questions and recommendations which would enrich the study. All would be considered.
ELSPETH NOMAHLUBI BERLINDA KHWINANA, Commissioner, South African Human Rights Commission, said the one question that touched her was regarding the right to education, which was definitely a human right, and it was vital to ensure that young people participated meaningfully as rights holders.
MOR NDIAYE, Director General, National Office for the Recovery of Criminal Assets, Senegal, said combatting illicit crime, money laundering and so on started at a very specific point with the financial investigation nationally and internationally. There was a need for national and international provisions to ensure the funds necessary for this effort.
GERARD EMMANUEL KAMDEM KAMGA, University of the Free State, South Africa, said illicit financial flows were a structured deviation of funds, and it was a real challenge to repatriate the money. However, there were avenues that could be explored, and there were precedents which could be used as a basis for encouraging results.
MAX BOQWANA, Thabo Mbeki Foundation, said all the people involved in illicit financial flows were lined up against the poor in developing countries, which showed the mammoth scale of the problem. Providing aid was a futile process if the countries receiving it could not stand upon their own feet, depending on their own resources. A collective effort, whether it was advocacy or working in the environment where it came from, was required when facing this very serious enemy.
KISHANI UDUGAMPOLA, Rutgers University–Newark, said she was working on ways to determine whether efforts were effective in terms of developing nations. All needed to work together to fight these battles.
XIAOHUI LIANG, Expert Mechanism Member, said companies should adopt a way to prevent risks of illicit financial flows when they identified risks related to human rights, using due diligence.
RAMONA BIHOLAR, Expert Mechanism Member, said she appreciated the relationship drawn by speakers between illicit financial flows and reparatory justice, colonialism and the realities today.
SERGES ALAIN DJOYOU KAMGA, Expert Mechanism Expert, said he would like to see the fight against illicit financial flows as a way forward in dealing with global injustice. Poverty everywhere was fuelled by illicit financial flows. Africa must be brought to be able to look after itself without asking any other country or institution to fund its development. Addressing illicit financial flows would not only address the debt crisis, but strengthen nations’ ability to determine their path without having to be a burden for the world. This was an issue that needed to be confronted.
__________
Produced by the United Nations Information Service in Geneva for use of the media;
not an official record. English and French versions of our releases are different as they are the product of two separate coverage teams that work independently.
M26.004E