Asset recovery, reconciliation and economic truth commissions in transitional Egypt - An Interview with Ruben Carranza*

Mohamed El-Shewy

Osama Diab

As a lawyer and international expert, Ruben Carranza, the director of the Reparative Justice Program at the International Centre for Transitional Justice, has been working for long years on justice in transitional and post-dictatorship settings. From 2001–2004, he was the commissioner in charge of litigation and investigation in the Philippine commission that managed to successfully recover $680 Million of former Philippine president Ferdinand Marcos' ill-gotten assets hidden in banks in Switzerland, the U.S. and other foreign countries. He at the same time served in the UN Ad Hoc Committee that drafted the 2003 UN Convention against Corruption. He was also involved in litigation against the Marcos family in the U.S. filed by victims of the Marcos dictatorship based on the Alien Tort Claims Act (ATCA).

Ruben Carranza argues that the revolution in Egypt was motivated by economic grievances, and many of those who were in Tahrir Square went there because they were able to connect repression under the Mubarak regime with economic issues such as unemployment, rising food prices, etc. In their own minds, Carranza says,  these people did not distinguish between Mubarak the dictator and the person who committed corruption together with his cronies.

Therefore, Carranza thinks that this context should determine what kind of transitional justice mechanisms Egypt should explore and what kind of abuses and patterns of human rights violations and economic crimes these mechanisms should address. “In other words, transitional justice is very contextual; to be relevant, it should take into account the time, place and forms of human rights violations that happened. It shouldn't rely so much on foreign models that had different contexts, whether in Latin America or in South Africa, but should be locally based and determined largely by what happened in Egypt and how its past should be addressed,” he says.

Carranza stresses that distinguishing between economic crimes and corruption on one hand and physical integrity and human rights violations on the other in processes of transitional justice is a fallacy and a shortcoming of the existing transitional justice practice and of the general human rights movement. He argues that both economic crimes and violations of physical integrity are mutually reinforcing and cannot be separated, as there is a necessary correlation between them. Hence, Carranza advocates that economic crimes should be in the mandate of any transitional justice process and of any truth commission looking at the past crimes of an overthrown dictatorship.

Currently in Egypt, successive governments are taking a more flexible approach towards economic crimes compared to traditional human rights violations, which is apparent in allowing reconciliation in corruption crimes but not in crimes which violate physical integrity such as torture and the killing of protestors. Reconciliation in corruption crimes, the recovery of Mubarak’s looted assets and justice in a transitional post-dictatorship setting, are all imperative topics now in Egypt. Ruben Carranza talks to us about them. 

EIPR: So, let’s start with you explaining to us why do you think it's important to include economic crimes in the mandate of transitional justice rather than just traditional human rights violations?

RC: In many transitions, the dictatorship that has fallen, or armed groups that were involved in armed conflict, often do no limit themselves to human rights violations that are physical in character; they are also involved in economic crimes. I've seen, through my own experience and in the work that we do, that economic crimes committed by dictators and by combatants in an armed conflict often have a mutually reinforcing relationship with the human rights violations that they carried out. So, it is this mutually reinforcing relationship that transitional justice ought to address. In this relationship, the impunity of perpetrators of economic crimes is reinforced by human rights violations committed by the same persons or their subordinates, who often also enjoy the ill-gotten gains of corruption.

EIPR: If the laws that are in place already are the ones that were made by people who are now under investigation for corruption, how can the legal basis for any truth commission operate and how can there be a retroactive basis for such crimes, especially that the Egyptian constitution prohibits having laws with a retroactive effect, so how do we overcome this? 

RC: In general, truth seeking isn't a judicial inquiry; it is truth seeking, not a criminal or even a civil case. That makes it different from prosecuting a criminal case or even from litigating a civil case before a regular court. While previous truth commissions dealt with specific cases and specific individuals, they did so in order to establish the pattern and systematic character of violations and abuses that these cases and individuals represent. If the focus is on patterns of abuse and on systematic violations that were committed, then both human rights violations and economic crimes committed by a dictatorship ought to be dealt with. Examining the past this way doesn’t mean setting out to prove the guilt or innocence of anyone, although it could lead to recommendations for prosecution and reparations. Truth seeking necessarily deals with the past, and in that sense it is and has to be retroactive. The law that creates a truth commission obviously has to apply to the past. It doesn't mean that you are applying a law criminalizing something that wasn't a crime before. Now, there could be situations where perpetrators of human rights violations or economic crimes, in a dictatorship for example, would try to shield themselves by passing decrees or persuading their dictatorship-controlled parliaments to pass laws that effectively grant the dictator or the perpetrators amnesty. Some of these self-amnesties have been declared contrary to international human rights law in other countries. In some cases, some of these self-amnesties have been overturned because they violate higher constitutional principles and, certainly, international human rights standards. So it has increasingly been the case that amnesties that dictators give to themselves haven’t stayed intact when a society begins a transitional justice process.

EIPR: Yes, but how can you bring the Mubarak regime to justice when you don't have a legal basis for it?

RC: That precisely calls for the entire breadth of transitional justice mechanisms. A post-dictatorship society can have a truth commission, can have criminal prosecution, can offer reparations to victims and can have institutional reforms that would include the vetting and removal of individuals who may be responsible for the large scale violations that happened in the past. Other countries have combined these mechanisms. There are examples where truth commissions have operated side-by-side with criminal prosecutions, as in Sierra Leone. There are many examples where a truth commission was then followed by prosecution. In Peru for example, the regime of ex-dictator Fujimori was investigated by a truth commission and Fujimori was later prosecuted for both human rights violations and corruption using the findings of the commission. In the Philippines after the Marcos dictatorship, separate commissions dealing with human rights and economic crimes were established. In post-Habre Chad, a single truth commission investigated both violations of human rights and corruption and came out with a report on both after two years. 

So the problem, I think, isn't so much the legal basis for truth seeking or the legal basis for prosecution; I think the problem is summoning the political will in order to establish a truth commission or in order to pursue prosecution. Now, in Egypt as I understand it, one difficulty that I've been informed about is that many of the economic crimes that were committed under Mubarak were in effect legitimized by decrees and laws that allowed him, for instance, to privatize property and then acquire it for himself or for associates or to take certain self-serving economic decisions that were authorized by his own regime.

Examining the past necessarily requires an approach that challenges the underlying validity and basis for the unlawful acts that were committed by a dictator. It is a way of saying that a dictatorship cannot legitimize itself. This has been done in some countries, such as Argentina, with respect to self-amnesties for human rights violations. If amnesties that were given by dictators to themselves have been overturned in the cases of gross human rights violations, I don't see why this cannot be done with respect to serious economic crimes.

EIPR: In light of all this, what is the definition of an economic crime? And what are the criteria for distinction between one-off corruption cases and systematic and wide-scale economic crimes that should be under a mandate of a truth commission? 

RC: There have been a few truth commissions that address economic crimes, but they are not yet the dominant approach in transitional justice. Because of the history of transitional justice, most truth commissions have focused on human rights violations involving physical integrity and civil and political rights. But even those types of truth commissions, in some cases, have ended up dealing with economic crimes anyway, either because they interpret their mandate that way or because they simply couldn't dichotomize the past and separate the economic crimes from the human rights violations committed by the same people. This was the approach in Chad, where the truth commission had a mandate to look at the economic crimes of Hissène Habré as well as the physical integrity violations committed by his regime. The truth commission in Sierra Leone, which was meant only to focus on human rights violations and humanitarian law violations during the conflict there, ended up examining illegal resource exploitation and corruption in the years of the conflict. The truth commission in Timor-Leste held hearings on violations of economic and social rights and economic crimes. The Kenyan and the Liberian truth commissions both had economic crimes mandates and took different approaches at investigating these crimes.

Having said that, not all economic crimes should certainly be the subject of investigation by a truth commission, in the same way that not all human rights violations are investigated on a case-by-case basis; it would be impossible, there would be no time, and that would raise expectations too high among individual victims or communities that are involved. As I said, what you want to do is to be able to establish patterns of violations and how systematic these were. This means you need to set criteria for how you approach and how you select the cases to investigate. In the same way that we consider the massive and systematic character of human rights violations by a dictatorship as the basis for deciding which cases to examine, perhaps we can speak of “large-scale corruption” under a dictatorship versus the day-to-day or individual acts of corruption that take place within any kind of government. This of course still begs the question: what is “large-scale”? How large should large-scale be?

The same debate took place when the UN Convention against Corruption (UNCAC) was being drafted; I was involved in that debate as a member of the ad-hoc United Nations committee that drafted the UNCAC. It will be useful in dealing with economic crimes in a post-dictatorship setting to look at what the UNCAC defines as a “politically exposed person” (PEP). The important aspect of the definition of PEP is that it doesn't confine itself to elected or appointed government officials. It includes persons who are associated with officials, their family members or their close associates in a business. This can become the basis to investigate whether in these roles these people may have been complicit in acts of corruption.

The second aspect would be to look at the amounts involved. This criterion of course is always very relative; you have very poor countries where corruption involving a million dollars would be significant versus countries that are relatively well off where that would not be a huge amount. In certain countries, the Philippines for example, they've passed laws that would define corruption of a certain amount as a higher scale of corruption than others. For example, in the Philippines, there's a crime called ‘plunder' that involves at least a US one million dollar threshold to qualify as a more serious crime than other instances of corruption.

A possible third criterion would be to examine the complexity of the transactions being investigated, including the extent to which state institutions are captured for illicit gain and the manner in which these ill-gotten proceeds are moved and concealed. For example, how many ministries and agencies had to be involved in carrying out an illicit transaction in the guise of privatization? What layers of public and private institutions and businesses were used to conceal and carry out these transactions? This criterion of complexity can often be connected to anti-money laundering standards and the ‘predicate offenses’ that are typically linked to laundering, including corruption. In some of the countries where economic crimes have been part of their transitional justice process, what's been most important is what both the public and policymakers see as the most serious economic crimes because of the impact they have. In Kenya, land grabbing was seen as a very serious economic crime because of its consequences of marginalization and violence. It was incorporated in the mandate of the truth commission. In Liberia, natural resource exploitation by armed combatants was seen as one of the most important crimes during the conflict because of its impact and the way it sustained armed groups. In Egypt, a good way to start would be to ask: what are the types of economic crimes that had the greatest, most adverse, impact on the population?

EIPR: Has it happened before that transitional justice included crimes like tax evasion and odious debt? Or do you think those are the type of crimes that shouldn't be included?

RC: I haven’t really come across truth commissions that have examined odious debts, but there has been interest among some academics and transitional justice practitioners to examine the role, for example, of bank lending in Argentina that propped up the military junta there or businesses in South Africa that knowingly provided equipment and technology that was used to enforce and prolong apartheid. In Morocco, the truth commission examined the deliberate economic marginalization of communities that opposed the regime. If it is an economic policy that targeted and was meant to marginalize specific communities, particularly if it can be demonstrated that it led to physical integrity violations, then it ought to be the subject of truth seeking.

EIPR: You mentioned earlier that Kenya has an open-ended clause that leaves it open to include all kinds of corruption. Are you in favor of this, or do you think it should be strictly defined?

RC: The problem with having an open ended clause is that it invites an infinite number and types of economic crimes, if not cases, that everyone can bring to the truth commission or to any investigative body set up to investigate them. A truth commission cannot last for years; if it keeps going on the public will lose interest, policymakers will not pay attention to what it recommends and the momentum that you could otherwise have had with a limited-term truth commission will be lost. So I would not advise an open-ended clause; it would be better to accurately enumerate the types of economic crimes that you seek to investigate and to decide which patterns are the most emblematic. This should not preclude the possibility of a more specialized commission or agency investigating specific cases for purposes of prosecution, asset recovery or institutional reform. 

EIPR: You mentioned earlier that there were cases of one commission investigating economic and physical crimes,  and in some other cases they have been separate. What do you think are the advantages and drawbacks of the two different examples?

RC: The advantage of addressing both types of violations within one commission is that this commission, at least theoretically, can link human rights violations involving physical integrity – torture, killing, disappearances, sexual violence and displacement – with the motivation of gaining financial advantage or preserving impunity for corrupt or repressive regimes. In other words, a truth commission dealing with both human rights violations and large-scale corruption can examine their mutually reinforcing relationship.

On the other hand the problem with that is that it may call for some level of competence, knowledge and investigative skills that are required to address both types of violations. This is of course necessary and is done with respect to transitional justice mechanisms that address human rights violations; there is no reason not to do the same with respect to economic crimes that are part of a transitional justice process. But this also suggests that both abuses may be addressed separately, through complementary and parallel mechanisms depending on resources, capacity and context.

Having separate commissions will allow for more in-depth investigations that can, in turn, provide a more robust basis for prosecutions or, in the case of economic crimes, asset recovery as well. The interplay of mechanisms will be an important consideration to look at. In some countries, the investigation of economic crimes was not only about asset recovery but has contributed to reparations for victims of human rights violations. In the Philippines for example, the separate economic crimes commission that I was a part of was able to carry out prosecutions against Marcos family members and associates across several jurisdictions and involving different legal systems. We were able to freeze Marcos accounts in Switzerland, examine documents in Panama, identify assets in Hong Kong and elsewhere; a truth commission that is limited to a two-year or three-year mandate would probably not be able to do that. It would only be able to establish patterns, it can't establish or procure evidence in specific cases, so you have trade-offs in either case.

EIPR: How do you view the reconciliation deals underway now in Egypt, and in your opinion, could it achieve justice and lay a foundation for introducing serious mechanisms of fighting corruption? 

RC: I am always wary about making reconciliation an explicit goal in a transitional justice mechanism, whether it involves policies on prosecutions and amnesties, reparations for victims and forgiveness for perpetrators or the idea of truth in exchange for pardon. I am wary because reconciliation – whether for human rights violations or economic crimes – isn't something you try to look for and then find. It is something that will happen when it happens. Not all types of violations need to be addressed with a reconciliation objective in mind, such as those involving war crimes, crimes against humanity, or large scale economic crimes that might constitute pillage or other inhumane acts in international criminal law. In Tunisia, for example, there have been calls for reconciliation with those seen as having been complicit in economic crimes with Ben Ali’s regime and to go into an arbitration process to ‘resolve’ these crimes. This seems to be starting on the wrong foot. It may be more important, and more consistent with justice, to begin a truth seeking process or a commence criminal investigation to determine the extent of individual accountability, accompanied by a policy – which is encouraged in the UNCAC – of giving incentives to whistle-blowers to come forward and testify against other perpetrators. Only then, when there is evidence to either proceed with prosecution or to consider pre-bargaining, can any kind of negotiation be justified; perpetrators can opt to plead guilty to a lesser offence, or perhaps even come forward, surrender their assets and ask for reduced or suspended sentences. But this is different from an arbitration process that is non-transparent, transactional and can easily be instrumentalized for partisan political or even corrupt purposes.

EIPR: Egypt is now trying to recover some of its looted assets abroad, and so far there have been around a billion dollars frozen in several countries. What is the best way in your opinion to involve the community in efforts to recover such assets and the best way of spending it when it’s recovered (development, reparations, etc.)?

A truth commission should first of all focus on the broader objective of establishing how economic crimes, if that's part of its mandate, were committed. If it is able to establish the patterns of economic crimes, and maybe begin to identify individual and institutional responsibilities, then it may be able to build the political capital and public support for the long and difficult process of asset recovery that should happen parallel to, but also beyond, the truth seeking process. It can help recover assets, but it need not be the institution that itself should try and recover assets, because that will take a number of years, likely to be more years than a truth commission should be in existence. What a truth commission can do is to bring the kind of political support and public acknowledgment of the commission of these crimes and the complicity of persons and institutions involved, so that the longer effort to recover assets has public backing and can generate the kind of political will that will always be required if you are going to pursue assets over a long period of time.

Having said that, a truth commission can, nonetheless, recommend certain steps that can be taken in relation to corruption-obtained assets or to the proceeds of economic crimes. The Sierra Leone truth commission, for example, identified taxes on the proceeds of resource exploitation as one source of funding for reparations to victims. In Peru, some of the assets taken back from Alberto Fujimori were applied to both the operations of the truth commission and to later reparations programs. In the Philippines recently, a new law sets aside one third of the assets recovered from the Marcos family – about $200 Million of the $680 million that were recovered – to fund the reparations programme there.

Another link that is being discussed in Tunisia right now is the possibility of using assets that are recovered from Ben Ali and his family to fund reparations for communities in the interior regions that have been targeted for repression and marginalization in the past. The point is that once you specify how assets that are recovered will be spent and the public understands that they will be specifically spent for victims of human rights violations, I think you can generate enough backing and enough public support for that objective than if you just say those assets will just go back to the treasury or go back to the government, because then everyone will be concerned about how those assets could be lost again through corruption.

EIPR: There is a debate on the economic problems associated with transitional justice in economic crimes. I mean that the financial and economic tycoons of the Egyptian economy were historically made in the past two decades in context of crony capitalism, that is to say in context of political corruption, how can we undo this while not causing economic chaos?

First of all, the fear that investigating cronies of a dictator can lead to economic collapse is often very exaggerated, and is often very self-serving on the part of those being investigated. It assumes that their role in the economy is so indispensable that they should be given impunity. That shouldn't be the case at all. With that said, there is always some hesitation on the part of foreign investors or creditors to transact with a country where there is still political instability, where investigations could affect economic decisions and the creditworthiness of institutions. But I think one aspect that is often overlooked is that the instability often comes from those connected to former regimes or armed groups who fear accountability and who have the financial resources to agitate armed actors or communities against the new government. This precisely brings up the question of how they are able to do that. Very often they are able to do that because they have the ill-gotten assets to fund instability, to fund those who will bring back dictators or the political parties that will grant impunity to dictators. This might explain, for example, why the daughter of Alberto Fujimori or the son of Ferdinand Marcos were able to sustain expensive political campaigns in Peru and the Philippines respectively.

As long as efforts to recover, freeze and investigate assets are done in a transparent way, and are done in a way that ensures that all cronies and suspects are treated equally, then I think this sends a signal to creditors and investors that even as you deal with your transition and those who are perceived as associates of a dictator, you are conscious of how this process is being carried out. In other words, transitional justice is not something to be feared, it is something to be welcomed. You need to show the international community and the Egyptian public that transitional justice requires the participation of people who are concerned with what happens in the future.

EIPR: There are several arguments against reconciliation, but they all focus on it as morally corrupt, but could it, in your opinion, reap economic benefits? Is there in your opinion an economic, rather than just a moral, argument against it?

The reason there is moral indignation at the thought of reconciliation is that those who are indignant know that dictators couldn't have carried out repression, and couldn't have lasted for as long as they did without exploiting the power they had for their own economic gain. So the indignation is at both abuses: the repression that was committed and the corruption that was shielded through repression. Of course there can be an argument that ‘reconciliation’ would allow businessmen or cronies of the dictator to come back and invest some of their assets. But again that might not be as sustainable as simply opening up a process of accountability and ensuring that those who were able to reap economic gains unlawfully are held accountable, because if you don't do that and you simply "reconcile" with them, there is no guarantee that the same practices and the same relationships between oppression and economic crimes won't happen again in a post-dictatorship setting. Therefore, there is more to be gained by pursuing accountability than by pursuing this very short-sighted approach to reconciliation.

EIPR: How should a truth commission or investigative body link economic crimes and physical integrity violations? Would it be from the perspective that economic crimes/policies lead to physical crimes (so still the emphasis would be on physical crimes), or taking a more 'fluid' approach (that they both feed into one another and create a system of abuse)?

I think a fluid approach is better. You have a hypothesis: political leaders and security agencies and economic actors have relationships that reinforced each other's motivations. You want to test this hypothesis. You want to be able to show that it happened, but you should also be ready to agree that perhaps some of these connections might not have existed. It is of course easier to hypothesize if you are familiar with how your security agencies operated and how business cronies of the dictator profited from the transactions. For example, in Indonesia it was clear that many of the corporations that were being established in the name of military units within the Indonesian armed forces were really owned by military and civilian cronies of the dictator Suharto. He then distributed spoils to the many generals who supported him, the closest of whom were his own family members, and they continued their acts of repression to enable the Suharto dictatorship to survive. There is now the phenomenon of those Suharto generals being in power themselves in post-dictatorship Indonesia, with neither the Suharto family members nor its military leaders being held to account for both corruption and human rights violations. If you don't address these together the outcome could be impunity in a post-dictatorship setting.

* Ruben Carranza is from the Philippines. He obtained his B.A. and LL.B. degrees from the University of the Philippines and an LL.M. from New York University (NYU) in 2005 as a Global Public Service Law Program scholar. He currently works with victims’ communities and reparations policymakers in Nepal, Timor-Leste, Indonesia, the Philippines, Iraq, Palestine, Liberia, Ghana, South Africa, and Kenya. He also provides advice on issues involving reparations and war crimes tribunals including the Extraordinary Chambers in the Courts of Cambodia (ECCC) and the International Criminal Court (ICC).