The EU must join the US and include corruption in its own sanctions regime on human rights, argue Sarah Gardiner and Rachel Owens.
Rachel Owens is the head of EU Office at Global Witness. Sarah Gardiner was an Investigative Analyst at The Sentry.
In kleptocracies around the world, elites control the majority of state institutions and economic sectors and derive personal profit, often using violence and repression. Their ill-gotten gains are often stashed abroad with the help of international business partners and networks.
The lack of sanctions targeting their financial interests and networks mean looters and human rights abusers have little incentive to relinquish power or allow for genuine reform.
In December 2018, the Netherlands formally put forward an initiative for the enactment of an EU global sanctions regime for perpetrators of serious human rights violations and abuses, regardless of their country of origin.
But while the Dutch initiative draws heavily from a similar program in the U.S., known as ‘Global Magnitsky,’ and is a welcome step toward increasing international accountability for human rights violations, it is unclear if it will also sanction corrupt actors.
Given the interconnected nature of corruption, conflict, and human rights violations, failure to include corruption as a criterion would largely degrade the effectiveness of an EU global human rights sanctions program.
Furthermore, the resulting gap between the U.S. and EU sanctions programs, with the former including corruption, raises the risk that the EU financial systems could be exploited to move money to the West by perpetrators of serious human rights violations.
Until recently, sanctions programs under U.S., EU, and United Nations authorities contained listing criteria for human rights violations, but not for the acts of grand corruption that enable perpetrators to turn a profit from violence.
The new notable exception is the U.S. Global Magnitsky sanctions program, which empowers the U.S. government to apply asset freezes and travel restrictions to individuals responsible for significant human rights abuses or acts of grand corruption.
It has been lauded by human rights and anti-corruption activists around the world because it fills two critical gaps in existing sanctions regimes.
First, its international reach enables the U.S. government to enact sanctions designations without relying on country-specific programs that typically guide sanctions by executive action.
Second, it empowers regulatory authorities to target the financial facilitators of human rights abuses. Since the issuance of the U.S. Global Magnitsky Executive Order in December 2017, more than 69 individuals and entities representing at least 16 nationalities have been sanctioned under its authorities.
The case of Israeli tycoon Dan Gertler is a powerful example of the importance of financial facilitators of a kleptocratic system, but also of how the EU has left itself open to exploitation.
Gertler is widely regarded as one of former Congolese President Joseph Kabila’s most important financial facilitators and an intermediary between the Congolese state and private sector investors.
While Gertler, Kabila, and an inner circle of political, commercial, and foreign elites allegedly profited from a series of opaque deals, the Democratic Republic of Congo (DRC) itself remained mired in poverty and conflict, state security forces violently repressed pro-democracy activists, and its officials repeatedly delayed the organisation of elections.
One of Gertler’s business deals involved purchasing an oil license from the Congolese state and later re-selling it back to the government at hundreds of times what he originally paid.
According to a report by Global Witness, the Congolese state lost out on over $1.36 billion in potential revenues from 2010-2012 due to the sale of underpriced mining assets to or via offshore companies linked to Gertler.
In December 2017, Gertler’s deals caught up with him, as he was included in an Executive Order issued by the White House implementing the Global Magnitsky Act.
This Executive Order sanctioned Gertler, one of his business associates and 19 of his companies for “hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals”. In June 2018, the Treasury Department announced sanctions against 14 additional entities in Gertler’s network.
The efficacy of U.S. sanctions toward Gertler, however, has been challenged by the lack of a comparable enforcement mechanism in Europe.
In June 2018, Glencore, the multinational mining and commodity trading giant and long-time Gertler business partner, announced that the company would continue to pay multi-million dollar royalty fees to Gertler. Skirting U.S. sanctions, Glencore said it would simply pay Gertler in euro-denominated accounts.
The U.S. Justice Department has since subpoenaed Glencore for information relating to its business in DRC, as well as Nigeria and Venezuela. As Glencore and the U.S. government continue what looks to be a protracted legal battle, Gertler is able to continue to receive and move money through the international financial system.
Although, following a highly contested election, Kabila formally transferred power in January 2019 to new Congolese President Felix Tshisekedi, Kabila and his close associates still wield influence over major sectors of the government and the economy – and stand to financially benefit from a continued status quo of non-transparency and grand corruption.
Without significant financial pressures on those who most stand to gain from the continuation of a kleptocratic system of government, it will be very difficult for the Tshisekedi administration to make any meaningful inroads in the areas of economic development, good governance, security sector, and judicial reform.
This will, in turn, decrease the chances for mediation to the end of the violent conflict plaguing several regions of DRC.
The EU has historically played a leading role in championing and institutionalising norms of human rights and democratic governance.
Today, it has a historic opportunity to lead in dismantling the systems that perpetuate cycles of violence and impunity, by ensuring corruption criteria—the sort that snares the grand facilitators of kleptocracy – are added to an EU human rights global sanctions regime.