INVESTIGATIONS

US lawmakers want to pay up to $5 million for foreign corruption tips

Pin it

Are you sit­ting on a trove of infor­ma­tion about glob­al klep­toc­ra­cy? Do you like the idea of up to $5 mil­lion and wit­ness pro­tec­tion? If so, a bipar­ti­san group of US law­mak­ers has the bill for you.

Modeled on exist­ing pro­grams to reward peo­ple who give tips to the State depart­ment on ter­ror­ism, or to the IRS on tax eva­sion, the Kleptocracy Asset Recovery Rewards Act aims to help return assets stolen from for­eign state cof­fers, by encour­ag­ing whistle­blow­ers to talk to US author­i­ties. The bill, intro­duced in the House on Feb. 27 by Democrat Stephen Lynch and Republican Keith Rothfus, would let the Treasury give asy­lum and cash to peo­ple who come for­ward with infor­ma­tion about stolen assets that are stored in the US.

In the last 15 years, only about $5 bil­lion in cor­rupt assets has been repa­tri­at­ed. That is out of an esti­mat­ed $20–40 bil­lion that is lost annu­al­ly due to cor­rup­tion,” Lynch said in an emailed state­ment. “The goal of this pro­posed rewards pro­gram is to recov­er and return more of these funds to the peo­ple of the coun­tries from which the funds were stolen.”

The bill would allow a max­i­mum of $25 mil­lion to be paid out to klep­toc­ra­cy whistle­blow­ers per year, with the pres­i­dent able to approve more. An indi­vid­ual whistle­blow­er can earn up to $5 million—or more if the Treasury sec­re­tary signs off on it. The cash would be tak­en from assets seized by the US gov­ern­ment. It would also let the Treasury sec­re­tary pro­vide pro­tec­tions for whistle­blow­ers and their fam­i­lies. The bill doesn’t allow rewards to be paid to peo­ple employed by a for­eign gov­ern­ment, how­ev­er.

The bill offers the kind of pro­tec­tion called for by the anony­mous whistle­blow­er who leaked the Panama Papers to German news­pa­per Süddeutsche Zeitung, instead of to the gov­ern­ment. “Until gov­ern­ments cod­i­fy legal pro­tec­tions for whistle­blow­ers into law, enforce­ment agen­cies will sim­ply have to depend on their own resources or on-going glob­al media cov­er­age for doc­u­ments,” he wrote in a 1,800-word state­ment about the leak.

The US is a haven for laun­dered mon­ey from for­eign coun­tries, and ranks sec­ond on a world list of secre­cy juris­dic­tions by anti-cor­rup­tion NGO the Tax Justice Network. According to the orga­ni­za­tion, America’s com­plic­i­ty in a sys­tem of glob­al cor­rup­tion drains crit­i­cal resources out of devel­op­ing countries—for every dol­lar Africa receives in for­eign aid, it los­es between three and ten dol­lars (pdf, p.63) to mon­ey being mag­icked out of the coun­try.

The sys­tem also harms America. Its weak anti-mon­ey laun­der­ing pro­tec­tions have allowed Russian trolls to buy social media ads via Paypal in their 2016 elec­tion dis­in­for­ma­tion cam­paign, the Iranian gov­ern­ment to rake in mil­lions in rent on a Manhattan sky­scraper it secret­ly owned, and a $2.5 bil­lion human traf­fick­ing indus­try sell­ing chil­dren for sex through anony­mous com­pa­nies based in Delaware.

Anti-cor­rup­tion NGOs wel­comed the bill, while not­ing that much work needs to be done to stop mon­ey-laun­der­ing in the first place. “We also need to stay laser focused on crack­ing down on the kind of cor­po­rate anonymi­ty allowed in the U.S. and else­where that enables cor­rupt indi­vid­u­als to steal and laun­der such ill-got­ten gains in the first place,” said Mark Hays, lead anti-mon­ey laun­der­ing cam­paign­er at Global Witness.

Corporate secre­cy allows states like Delaware, Nevada, and Wyoming to func­tion as inter­nal tax havens. These let peo­ple to set up US shell firms and bring cash into the coun­try from off­shore with total anonymi­ty. Bills aim­ing to tack­le this by forc­ing com­pa­nies to dis­close their own­ers to law enforce­ment were intro­duced last year, and one had a hear­ing in the Senate Judiciary Committee last month.

A pre­vi­ous ver­sion of this bill was intro­duced in 2016 and picked up some bipar­ti­san co-sig­na­tures, but didn’t go any­where. Lynch’s office didn’t explain why they felt it had a bet­ter chance this time around.

Written by Max de Haldevang

US law­mak­ers want to pay up to $5 mil­lion for for­eign cor­rup­tion tips

Tagged under:

Log In or Create an account