B Explanatory memorandum
by Mr Sergiy Vlasenko, rapporteur
1 Introduction
1.1 Procedure
1. On 23 November 2018, the motion
for a resolution entitled “Fighting corruption – General principles
of political responsibility” (
Doc. 14639) was referred to the Committee on Legal Affairs and
Human Rights for report. I was appointed rapporteur by the committee
on 13 December 2018; following a hiatus in the participation of
the Ukrainian delegation, I was reappointed by the committee on
30 January 2020. On 29 June 2020, the committee considered an introductory
memorandum and on 17 May 2021, it declassified it. On the same day,
the committee held a public hearing with the participation of three
experts, Michael Hudson, Senior Editor, International Consortium
of Investigative Journalists (ICIJ), Drago Kos, Chair of the OECD
Working Group on Bribery, former Chairperson of the Group of States
against Corruption (GRECO), and Paul Radu, co-founder, Organized
Crime and Corruption Reporting (OCCRP). On 13 October 2021, I held
on-line meetings with interlocutors in Iceland, including Katrín
Jakobsdóttir, Prime Minister of Iceland; Birgir Ármannsson, Chairperson
of the Independence Party; Þórhildur Sunna Ævarsdóttir of the Pirate
Party (also a member of the Icelandic delegation to the Assembly);
Bryndís Kristjánsdóttir, Directorate of Tax investigations; investigative journalists
Helgi Seljan (RÚV), Þórður Snær Júlíusson (Kjarninn), Aðalsteinn
Kjartansson (Stundin), Jóhannes Kr Kristjánsson (Reykjavík Media);
academics Jón Ólafsson, Professor of Cultural Affairs and Russian, University
of Iceland, Henry Alexander Henrysson, independent advisor on ethics
and former Professor of philosophy, and Sigurbjörg Sigurgeirsdóttir,
Professor of Public Policy, Administration and Governance, University
of Iceland. The views and proposals of these various interlocutors
are reflected in this explanatory memorandum.
1.2 Scope
2. As the Assembly has previously
stressed, corruption is usually deeply embedded in a social, cultural, and
political environment. Altering attitudes and promoting integrity,
accountability, and transparency at all levels of public life are
central to reinforcing societies’ resilience to corruption. These
values are fundamental to ensuring the success of democratic institutional
reforms and anti-corruption initiatives. Thus in 2010, the Assembly
underlined that “representation can no longer be the only expression
of democracy; the latter has also to be developed beyond representation,
in particular by … renewal of politics [requiring] the development of
a new culture of civic and political responsibility.”
Note This
report aims at analysing examples of corruption, tax evasion and
fraudulent misuse of public funds amongst politicians, in addition
to money laundering mechanisms facilitating high-ranking corruption
and abuse of office for personal gain. It seeks to develop an understanding
of political responsibility in such situations and what would be
the most appropriate reaction by politicians to high-profile corruption
and offshore scandals.
2 Examples of concern in member States
3. Corruption in all Council of
Europe member States remains widespread. Recent corruption scandals,
as described in the following paragraphs, may just be the tip of
the iceberg. The number, scale and gravity of these and other money
laundering-related scandals in Council of Europe member States,
including those known as “laundromats”, illustrate that they can
no longer be considered as isolated incidents but rather as a pattern
that requires firm action in response. In my opinion, the time has
come for politicians to be expected always to take full responsibility
for this type of misconduct, which undermines public trust in our
democratic institutions.
2.1 “Panama
papers”
4. The “Panama Papers” involved
11.5 million confidential files from one of the world’s biggest
offshore service providers, Mossack Fonseca (Panama) that were obtained
from an anonymous source by the German newspaper
Südddeutsche Zeitung and later shared
with the International Consortium of Investigative Journalists (ICIJ).
Note Numerous European political
figures appeared in the “Panama papers”.
5. For instance, in Andorra,
the “Panama Papers” confirmed the former Minister of finance, Jordi
Cinca owned offshore interests. He had previously admitted to owning
an offshore company in Panama between 1999-2002; he did not resign.
In Azerbaijan, the family
of President Ilham Aliyev owned an offshore complex which held interests
in gold mining, real estate and a business conglomerate. In France, the “Panama Papers” confirmed
that Jérôme Cahuzac, former member of Parliament and former French
budget minister owned a Seychelles company in 2009. He had previously
waged a campaign against tax evasion and was forced to admit he
lied to President François Hollande, former colleagues in parliament
and the French people when he repeatedly denied owning foreign bank
accounts. He had in 2013 been expelled from the Socialist Party
and resigned from his ministerial post. In 2018, he was sentenced
to two years in prison and five years of electoral ineligibility.
6. In Georgia, billionaire
and former Prime Minister, Bidzina Ivanishvili owned a company in
the British Virgin Islands. “For the reporting period of 2011-2012
Prime Minister Ivanishvili had no interest in the company […] and
therefore there was no obligation to report it in his declaration,”
a spokesman said. In Greece,
Stavros Papastavrou, Deputy Chief of Staff for European and International
Affairs for the Prime Minister, was found to be involved in multiple
offshore foundations, from which he has now resigned. In Hungary, while then National Assembly
member Zsolt Horváth became director of an offshore company in 2013
but did not declare his financial interests to the Hungarian Parliament
in 2014.
7. In
Iceland, Prime Minister
Sigmundur Davíð Gunnlaugsson resigned on 5 April 2016, after it
became known that he owned a British Virgin Islands shell company
which held nearly US$4 million in bonds in the three major Icelandic
banks that collapsed. Additionally, it was reported that Bjarni
Benediktsson, former Prime Minister and currently Minister for finance
and economic affairs, purchased shares in a Seychelles shell company
through the Luxembourg branch of an Icelandic bank during Iceland’s
banking crisis. The leak also revealed that Ólöf Nordal, former
Interior Minister of Iceland, now deceased, created an offshore
company to hold proceeds of her husband’s stock options. In
Italy, former Prime Minister and,
since 2019, member of the European Parliament, Silvio Berlusconi
was listed in the “Panama Papers”.
Note In
Malta, the “Panama Papers” linked
energy Minister Konrad Mizzi to a shell company in Panama. Mr Mizzi
did not resign, refuting the illegality of the structure, and Prime
Minister Muscat responded to widespread public outrage by merely transferring
him between portfolios.
8. In Poland, in 2012,
Paweł Piskorski, current Chairperson of the Democratic Party, acquired
a Panamanian company to “buy bonds of a Singapore company” which
was dissolved in 2015. Previously, mayor of Warsaw, and a member
of the European Parliament, he had been forced to leave his party
in 2006 when he misrepresented the value of assets he declared as
a member of the European Parliament. In Spain,
the Spanish Minister of industry, energy and tourism, José Manuel
Soria, resigned in April 2016 after the “Panama Papers” linked him
to offshore investments in the Bahamas, and news reports connected
him to a company in the tax haven of Jersey. Despite his prior assurances
that he did not own companies in tax havens, the “Panama Papers”
indicated that Rodrigo de Rato y Figaredo, former Minister of Economy,
vice president and director of the International Monetary Fund,
had more than €3.6 million in two offshore companies. He had previously
been arrested in 2015 for alleged fraud, embezzlement, and money
laundering. In 2017, he was found guilty of embezzlement and sentenced
to 4½ years' imprisonment.
9. In Ukraine, former
President of Ukraine, Petro Poroshenko, had pledged to sell his
confectionary business (Roshen) if elected, but the “Panama Papers”
indicate that in 2014 he had instead transferred ownership to an
offshore holding company in the British Virgin Islands, of which
he was the ultimate beneficial owner. In the United
Kingdom, Conservative life peer since 1973 Baroness Pamela
Sharples was sole shareholder of a company based in the Bahamas
that she used to make investments but had not declared to parliament.
The law firm handling Baroness Sharples' affairs said that she became
a director of the company in 2000 and that the company was registered
in the United Kingdom in the same year and now pays taxes to the
British Government. She retired from the House of Lords in December
2017 at the age of 94.
2.2 “Paradise
papers”
10. The “Paradise Papers” were
a set of 13.4 million confidential electronic documents relating
to offshore investments that were leaked again to the newspaper
Süddeutsche Zeitung, shared with
the ICIJ and made public in 2017.
Note This scandal revealed offshore
interests and activities of more than 120 politicians and world leaders.
The list included
Lithuanian member
of the European Parliament, Antanas Guoga, who held a stake in an
Isle of Man company which was not revealed in his parliamentary
disclosures. Current
Russian member of
the State Duma, Alexey Ezubov was identified as the director of
a Bermuda company and former member of the State Duma, Aleksandr
Skorobogatko was the ultimate beneficial owner of a company incorporated
in 2010. He resigned from the parliament in 2016. Former
Spanish Mayor of Majadahonda, Guillermo
Ortega Alonso, who was also implicated in the Gürtel case; resigned
following the scandal. Former member of the Parliament of Galicia,
Pablo Crespo was found guilty in the Gürtel case of bribery, money
laundering and fraud and sentenced to more than 37 years in prison.
Former Mayor of Barcelona and current President of the Convergence
and Union parliamentary group in the Barcelona City Council, Xavier
Trias had his name on a family trust in Switzerland allegedly to
conceal money during most of his political career. In
Ukraine, former Vice Prime Minister
Valeriy Voshchevsky was listed in Malta’s register of companies
in 2013 and Anton Prigodsky, former member of the Verkhovna Rhada,
owned a company registered in Malta in 2013.
2.3 “Pandora
papers”
11. The third and most recent scandal,
known as the “Pandora Papers”, emerged from nearly 12 million leaked
documents that were published by the ICIJ and OCCRP on 3 October
2021. The scale of this leak is said to set it apart from the previous
two scandals; it “gives an unprecedented insight into the offshore
industry, showing once and for all that cases of tax evasion, money
laundering, and other malfeasance exposed by previous investigations
are not down to a few rogue operators, but are an essential part
of how this secretive industry works.”
Note The initial reports included references
to almost 336 “politically exposed persons”, including many politicians
from Council of Europe member States: two from Azerbaijan, three
from France, four from Italy, four from Serbia, four from the Czech
Republic, five from Spain, three from Portugal, one from the Republic
of Moldova, two from Romania, sixteen from Russian, thirty eight
from Ukraine, and nine from the United Kingdom.
12. For example, according to the OCCRP, the
Azerbaijani President’s family
acquired dozens of prime London properties worth nearly US$700 million
and the family of Oktay Asadov, former Speaker of the Azerbaijani
Parliament, owns millions of dollars-worth of luxury real estate
in London, Dubai, and Moscow, along with a villa near Baku, the
real value of which is far beyond his and his family’s declared
revenues. The
Czech Prime
Minister, Andrej Babiš, loaned millions of euros via offshore companies
and acquired luxury French real estate, including a chateau, by
transactions said to bear the hallmarks of money laundering. It
is alleged that the
Ukrainian President,
Volodymyr Zelensky, owned offshore companies before becoming President
of Ukraine. Mr Zelensky transferred the ownership of these companies
to his allies before he was inaugurated as the President of Ukraine.
The “Pandora papers” provided new evidence supporting reports in 2015
that Siniša Mali, a prominent
Serbian politician,
owned 24 luxury properties on Bulgaria’s coast, registered in the
names of two offshore companies of which he was the sole shareholder.
In 2017, former
United Kingdom Prime
Minister, Tony Blair and his wife avoided paying tax on a £6.5 million
office building by acquiring it through an offshore company.
Note Other prominent European politicians
appear in the papers, such as Silvio Berlusconi, former Prime Minister
of
Italy; Wopke Hoekstra,
Minister of Finance of
the Netherlands; Delyan Peevski,
Bulgarian politician former member
of the National Assembly; Alexander Mamut,
Russian billionaire
and former advisor to President Boris Yeltsin and another Russian
politician, Alexei Chepa, Member of the Federal Assembly; Ben Elliot,
co-chairman of the Conservative Party, Lord Deighton, member of
the House of Lords, and Patrick Robertson, political advisor in
United Kingdom; Jürg Wissmann,
Swiss politician for the Christian
Democratic People’s Party; Aymeric Chauprade, former member of the
European Parliament and Nicolas Perruchot, former mayor of Blois
and former member of the National Assembly, and Sylvain Maillard,
member of the National Assembly, all
French politicians.
Note The scale of political involvement
in these offshore schemes is still to be assessed.
2.4 “Laundromats”
13. The Assembly’s report on “Laundromats”
– large-scale international money laundering schemes – illustrates
the extent of money laundering involving member States. The “Global
Laundromat” enabled the illegal transfer of at least US$21 billion,
and perhaps as much as US$80 billion, from the Russian Federation to
recipients around the world; the “Azerbaijani Laundromat” enabled
the transfer of US$2.9 billion out of Azerbaijan; and the “Troika
Laundromat” was used to transfer another US$4.6 billion out of Russia.
Note The rapporteur
for the “Laundromats” report, our former colleague Mr Mart van de
Ven (Netherlands, ALDE), had explained that the laundered money
reached a wide range of beneficiaries, including family members
of several high officials. These included Yaqub Eyyubov, Azerbaijan’s
first deputy prime minister since 2003, the sons of the deputy chief
of the Azerbaijani anti-corruption authority, Ali Nagiyev, the daughters
of Fizuli Alakbarov, Minister for Labour and Social Protection and
Azer Gasimov, President Aliyev’s press secretary. Several of these
names appeared also in the “Panama Papers”.
14. The “Azerbaijani Laundromat” also provided money that contributed
to corruptive activities within the Assembly, as was established
in the report of the Independent Investigative Body (IBAC).
Note Five former Assembly members
most clearly seem to have received some of this money, all of whom
have been sanctioned by the Assembly for breaches of its ethical
rules. Luca Volontè’s prosecution by the Italian authorities for
bribery and money laundering remains pending. The German Parliament
has found that Karin Strenz violated its ethical rules and fined
her a record €20 000. Transparency International Germany also filed
criminal complaints against both Ms Strenz and another former member,
Eduard Lintner for the offence of corruption of public officials.
Mr Lintner is accused of having received €4 million from Azerbaijan
through British shell companies between 2008 and 2016. In January
2020, the public prosecutor's office in Frankfurt am Main launched
a criminal investigation into Ms Strenz and Mr Lintner.
Note It
is, however, not known thus far whether any action has been taken
against Slovenian politician Zmago Jelinčič Plemeniti, the last
of the five.
2.5 Other
country-based examples
15. Apart from these large-scale
media revelations, numerous individual cases have emerged in recent years.
16. In 2019, the European Commission ordered the
Czech Republic to repay €17 million
in EU subsidies received by a company owned by the incumbent Prime
Minister, Andrej Babiš.
Note This was the result
of investigations by the Czech Police and the European Anti-Fraud
Office (OLAF) from 2015 to 2019 in the case known as the “Storks
Nest”. The Prime Minister’s immunity was lifted on several occasions
during these investigations and the prosecution was eventually discontinued
on the grounds of absence of the elements of a crime. In April 2019,
following repeated police requests to charge the Prime Minister
with fraud, the latter replaced the then Czech Minister of Justice,
which according to some commentators was intended to obstruct the
investigation. This led to large protests across the country demanding
his resignation, but he declined.
Note The charges against him were eventually
dropped in September 2019 and he remained in office. Now he is again
subject to journalist investigation in the context of the “Pandora
papers” scandal
Note.
17. In October 2019, the
Republic
of Moldova's National
Anti-Corruption Centre and special prosecutor declared that Vladimir
Plahotniuc, a former member of parliament and Chairperson of the
ruling Democratic Party of Moldova, was wanted for money laundering
on an exceptionally large scale. Other persons, including public
officials and MPs involved in massive illegal transfers of money
from the Moldovan banking system in 2014 (the so-called “theft of
the century”), have not yet been brought to justice.
Note In 2019, the Assembly regretted
that, five years later, the investigations have remained inconclusive.
Only recently, Mr Vladimir Andronachi, an ex-MP affiliated to the
former ruling Democratic Party, was officially charged with arranging offshore
transfers of almost €1 million from that banking fraud
Note. Ilan Șor, another MP connected to
this fraud, despite being under criminal investigation since 2014
and having been convicted in 2017 by the first instance court, has
been able to use legal loopholes to get elected first as a mayor
in local elections of 2015 and then as a MP in two subsequent parliamentarian
elections, including this year’s. He still holds his status as a Moldovan
MP
Note at the same time as being a fugitive
from justice.
Note
18. In
Romania, the leader
of the ruling Social Democratic Party, Liviu Dragnea, was in May
2019 ordered to begin serving a 3½ year prison sentence for corruption
and abuse of power.
Note Mr Dragnea joined
a long list of politicians convicted between 2014 to 2018: seven
ministers, one deputy prime minister and three MPs were sentenced
for bribery, money laundering, tax evasion, selling public goods,
influence-peddling, embezzlements, and other corruption-related
offences. These convictions had resulted from an unduly long and
tenuous process of investigation and prosecution which had been
harshly criticised by European institutions. The European Commission,
for example, in 2013 expressed serious concerns about the level
of corruption in the country, underlining that the “National Integrity
Agency (ANI) reports relating to ministers and senior officials
did not lead to their resignation” as would normally be expected
when their integrity was questioned.
Note Even worse, the significant progress
in fighting corruption that had been achieved by Romania was overshadowed
in 2018 by dismissal of the anti-corruption chief prosecutor, who
had opposed to decriminalisation of certain corruption related offences
back in 2016 by the then newly elected parliament. She was subsequently
appointed as the EU’s chief prosecutor.
19. In
Spain, the ongoing
“Gürtel case” helped “shatter the nation’s two-party system, transform
how the public viewed the people running the country and, eventually,
[brought] down a government”.
Note This case involves
Francisco Correa, a powerful business magnate, who conspired with
local politicians to rig lucrative public contracts. In May 2018,
27 defendants – including two former People’s Party mayors, one
former parliamentarian – were given more than 300 years jail time
in total. The Prime Minister, Mariano Rajoy, had to step down after
a vote of non-confidence.
3 Examples
of situations in which politicians were held politically responsible
3.1 Impeachments
20. In the following paragraphs
I will cover only examples from the members States of the Council
of Europe, but it could be useful to draw inspiration from other
non-European democracies where impeachments have proved to be effective
in fighting high-level corruption.
Note
21. The case of the former Lithuanian President
Rolandas Paksas is probably the first and the most well-known example
of impeachment for corrupt behaviour attributed to a Head of State.
He was dismissed from office for gross violations of the Constitution
and banned from running for parliament.
22. In the
Republic of Moldova,
after a series of corruption scandals in 2013, Vladimir Filat resigned
as Prime Minister following a motion of no confidence on the basis
of allegations of corruption. He was again proposed as a candidate
for the office of Prime Minister by the ruling party of which he
was the leader. The parliamentary opposition, however, contested
this nomination before the Moldovan Constitutional Court, which dismissed
him as a candidate and as a prime minister ad interim pending the
nomination of a new head of the government. It ruled that a politician
dismissed from high-ranking office on the basis of allegations of
corruption, even without criminal investigation, can stand neither
as a candidate for the same office nor as ad interim new nomination
Note.
Two years later, Mr Filat’s party lost many of its seats in Parliament
and he was stripped of his parliamentarian immunity, charged in
the context of the “theft of the century”, and convicted for corruption.
23. In 2013, the Senate of the Czech
Republic voted to impeach the then President Václav Klaus
for his controversial amnesty law, which among other effects ended
many on-going high-profile corruption cases. The impeachment occurred
shortly before the end of his second term of office, after which
he could not seek re-election, and thus had little practical effect.
The Czech Constitutional Court ruled that it cannot impeach the President
whose mandate had already expired.
24. There have been two attempts to impeach Romanian President Traian Băsescu,
on the basis of public accusations about his alleged tolerance of
corruption. In 2007, the Romanian Parliament voted in favour of
his dismissal, after which he was suspended and his dismissal was
put to popular vote in a referendum. The impeachment procedures
failed in the referendum with participation of less than required
proportion of eligible voters. Mr Băsescu remained in office and
later was elected as President for the second time. In 2012, the parliament
initiated another impeachment proceedings for various forms of serious
misconduct. He was again suspended and a majority of Romanians voted
to impeach him. However, the Romanian Constitutional Court invalidated
the whole referendum on procedural grounds. This verdict led to
protests unsuccessfully calling on the president to resign. Nevertheless,
the various impeachment proceedings against him having failed, Mr Băsescu
was able to continue standing for elected office despite the persistent
suspicions and allegations against him.
3.2 Political
customs
25. In
France,
the so-called “jurisprudence Bérégovoy-Balladur” or the “Balladur
rule” involves the tacit removal or automatic resignation of indicted
politicians from their government positions. In 1992, French Prime Minister
Pierre Bérégovoy asked Bernard Tapie, a government minister, to
resign after he was formally charged with abuse of corporate assets
for personal gain. Seven months later he returned to government
after having been acquitted of these charges. This example served
as a precedent for Prime Minister Edouard Balladur to oblige various
ministers of his cabinet to resign after they were charged with
corruption. The “Balladur rule” establishes the moral duty to resign
only if a minister is formally accused, even without such an obligation
under the French Constitution. Prime Ministers Jacques Chirac, Lionel
Jospin, and François Fillon also applied this rule to ministers
from their governments, sometimes even before formal charges were brought.
Application of the rule has since been extended to local authorities
and low-ranking public officials,
Note underlining the importance of preserving
public trust and ethical political conduct.
26. There has been also criticism of this practice, however, as
some commentators and politicians have claimed that it could be
easily manipulated by bringing ill-founded criminal charges for
political purposes. It is said that recently opened criminal cases
“have gradually led some of the political staff to distance themselves from
the tacit rule of automatic resignation in the event of an indictment,
which is far from being synonymous with conviction.”
Note In addition, this practice does not
apply to high-ranking officials under the functional immunities,
such as the President of the Republic.
3.3 Individual
resignations
27. It seems that in European countries
only two resignations followed the “Panama papers”. The first was in
Iceland where the former Prime
Minister Sigmundur Davíð Gunnlaugsson eventually resigned after
being urged to do so by his Party colleagues and under the pressure
of large anti-government protests in front of the parliament building
Note (see paragraph 7 above). During my
meetings with Icelandic politicians, academicians, and investigative
journalists, all considered that the former Prime Minister should
have resigned as a matter of ethical obligation because he was not
able to disprove the allegations against him of using offshore companies for
tax evasion. They also confirmed that the code of ethics for the
Icelandic MPs was silent in this regard and ineffective in practice.
According to the incumbent Prime Minister Katrín Jakobsdóttir, since
the “Panama papers” scandal, the Icelandic authorities have become
more committed to reviewing fiscal regulations and rules on conflicts
of interests requiring politicians to declare their offshore possessions
and all other relevant financial interests. In the same context,
Mr Ármannsson, Chairperson of the Independence Party’s parliamentary
group, the majority party in the Icelandic Parliament, agreed that
the MPs’ code of conduct may need revision to compel politicians
to bear consequences for unethical conduct.
28. The second resignation following the “Panama Papers” revelations
took place in Spain, where
José Manuel Soria, Minister of Industry, Energy and Tourism at the
time, resigned after the disclosure of his and his family’s ownership
of companies in offshore.
29. Other political scandals and corruption-related accusations
have led politicians to present their resignation. Moldova’s justice minister, Alexandru
Tănase, resigned after a leaked recording of a telephone conversation
revealed him chatting, at the time that he was president of the
Constitutional Court, with a well-known criminal who was later convicted
in the context of the “theft of the century”. Lithuania's
Minister of Justice, Milda Vainiute, resigned following revelations
of opaque public procurement dealings in the prison administration. Spain's Minister of Culture, Maxim
Huerta, resigned after less than a week in office over media revelations
that he had evaded thousands of euros in taxes. Bulgarian Energy Minister Temenuzhka
Petkova resigned after confirming undeclared conflict of interests
relating to negotiations over a big energy contract. Aleksandar
Andrija Pejovic, Minister of Foreign Affairs of Montenegro, resigned after the
country’s anti-corruption agency discovered that he was holding
two positions and receiving an additional income. Ukrainian Interior Minister Arsen
Avakov resigned amidst growing speculation over a conflict with
President Volodymyr Zelenskiy, as well as public accusations of
corruption. Recently, Austria's
Chancellor Sebastian Kurz has stepped down, after political and
public pressure triggered by accusations of corrupt behaviour, namely
using public funds to obtain political coverage in mass-media.
30. In comparison with the above examples, other political resignations
happen which do not involve corruption-related accusations. For
example, the resignation of United Kingdom Health
Secretary Matt Hancock, who resigned after being accused of breaching
restrictions he imposed on the rest of the population to curb the
spread of the coronavirus. A number of German public
officials resigned over the plagiarism scandals, such as Franziska
Giffey from the office of Minister of Family, Annette Schavan from
the post of Education Minister, Karl-Theodor zu Guttenberg resigned
from Minister of Defence position. Hungarian President
Pal Schmitt resigned after having his PhD title revoked for plagiarism.
In the Slovak Republic, after criticism
for mishandling the Covid-19 crisis, four government ministers stepped
down from their posts.
4 Council
of Europe standards on fighting corruption, money laundering and
related offences
31. The strategic importance of
the fight against corruption to the Council of Europe as a whole
was underlined by the Secretary General of the Council of Europe,
who, in a speech to the Assembly, warned against the “rampant corruption,
ineffective public administration and efforts to undermine the checks
and balances required in any healthy democracy”; an area where member
States, including parliaments, have a “responsibility to act”.
Note
4.1 Parliamentary
Assembly
33. The Assembly stressed that “corruption jeopardises the good
functioning of public institutions and diverts public action from
its purpose, which is to serve the public interest. It disrupts
the legislative process, affects the principles of legality and
legal certainty, introduces a degree of arbitrariness in the decision-making
process and has a devastating effect on human rights.”
Note It
recognised that “frequent corruption scandals, both in national
and European institutions, have led populist leaders to exploit
the disenchantment of the people with the ‘corrupt elite’.”
Note One must note with concern that
corruption has a toll on democracy, and threatens the rule of law
and public institutions. Tax evasion and the association of political
figures with offshore accounts also cause public disappointment
with democratic institutions and these public figures. Even in member
States where there are legitimate, legal uses for offshore companies,
the mere association of a public figure with an offshore company
has an extensive effect on the public perception of the
politicum as a whole. It is an established
practice that most offshore accounts are used for tax evasion or
avoidance. Top politicians involved in such practices, display reluctance
to ensure the State’s economic stability, distrust towards the national banking
system and stability of the national currency by not keeping their
own money in banks, as well as establish a precedent of tax evasion
for other politicians to follow and create uncertainty and instability
in the country. Consequently, the radicalisation of politics, derogation
from democratic values, misconduct of public figures and advent
of the populist parties consisting mainly of opinion leaders with
no professional background rather than competent politicians, are
a few of the apparent repercussions of public disillusionment towards politics.
In the midst of the “Panama Papers” scandal for instance, the Assembly
expressed its concern “about the scope of tax avoidance, tax evasion,
and even tax fraud in modern societies, which nowadays involves public
personalities, who should be role models of ethical behaviour”.
The Assembly considered that a “higher standard of ethics in politics
and in the business world is essential to uphold our economic, social
and democratic systems”. It called “for measures to ensure transparency
in the business activities of politicians, since opaque relationships
between business and politics undermine people’s trust in democratic
structures”.
Note
34. The Assembly’s ethical standards for members are set out in
its Rules of procedure, with its appended Code of Conduct for members.
Pursuant to paragraph 17 of the Code of Conduct, members are required
to declare every year any remunerated professional activities, offices,
and positions, in the public or private sector, regular or occasional,
whether as an employee, liberal professional or as a self-employed
person, including the parliamentary mandate and local elective offices,
and any other interests. At the request of the Committee on Rules
of Procedure, Immunities and Institutional Affairs of the Assembly
the GRECO assessed the Assembly’s Code of Conduct, notably as regards
the issues related to conflict of interest; declaration of assets,
income, liabilities, and interests; prohibition or restriction of
certain activities; effectiveness of supervision and enforcement
mechanisms; and advice, training and awareness. In its assessment,
Note GRECO found that as a
regulatory framework, the 2015 compendium on the Code of Conduct
needed improvement. In 2017, the Assembly addressed GRECO’s concerns
by providing for new rules of conduct and declaratory requirements
to prevent possible future corruption in the Assembly.
Note
35. In response to the IBAC report and conclusions concerning
the individual conduct of members or former members, the Committee
on Rules of Procedure convened several hearings in order to hear
the Assembly members and former members concerned and decided to
take action (namely stripping titles of Honorary Associate of the
Assembly, and depriving of the right to access the Council of Europe
and the Assembly premises for life), within the strict framework
of the Assembly’s ethical regulations. The Assembly recalled in 2018
the “principle of individual political responsibility, including
the possibility for those elected to relinquish their mandate”.
The Assembly also invited “political groups of the Assembly, as
well as the political groups within the national parliaments, to
each draw the consequences of any allegations against their members”.
Note Also noteworthy, is the
Assembly’s anti-corruption platform launched on 8 April 2014 in
Strasbourg, to create a space for dialogue on how to deal with new
forms of corruption, and help promote transparency and honesty in
public life. A series of seminars and workshops – with a regional
or national focus – were already organised on topics such as: mechanisms
available to national parliaments to counter corruption, code of
conduct for parliamentarians, the integrity of parliamentary staff.
This platform is currently dormant for lack of adequate resources.
Note
36. Last but not least, the Assembly distinguished earlier between
political and legal responsibility, underlining the importance of
politicians being “effectively protected from criminal prosecutions
based on their political decisions, [which] ... shall be subject
to political responsibility.” Still, the Assembly recognised that ‘politicians
shall be held to account for criminal acts or omissions they commit
both in their private capacity and in the exercise of their public
office’.
Note Fighting
impunity remains the guiding principle to hold any person accountable
for a breach of the law, irrespective of his or her status or political
affiliation. In this later sense, the Assembly recognised that the
need to eradicate impunity also concerns corruption, both in the
public and in the private sectors, which is widespread and remains
largely unpunished, undermining the rule of law and presenting a
serious risk for the prosperity of countries and their democratic
institutions.
Note
4.2 Legal
instruments
37. Three treaties developed by
the Council of Europe deal with corruption from the point of view
of criminal, civil and administrative law. The Criminal Law Convention
on Corruption (ETS No. 173) of 27 January 1999 and an Additional
Protocol (ETS No. 191) provide for measures to be taken at national
level for active and passive bribery of domestic public officials,
members of domestic public assemblies, and international parliamentary
assemblies and officials of international organisations. Its preamble
emphasizes that “corruption threatens the rule of law, democracy
and human rights, undermines good governance, fairness and social justice,
distorts competition, hinders economic development and endangers
the stability of democratic institutions and the moral foundations
of society.” The Civil Law Convention on Corruption (ETS No. 174)
of 4 November 1999 requires each Party to “provide in its internal
law for effective remedies for persons who have suffered damage
as a result of acts of corruption, to enable them to defend their
rights and interests, including the possibility of obtaining compensation
for damage”. It deals in particular with liability (including State
liability for acts of corruption committed by public officials)
and international co-operation.
38. Another relevant treaty is the 2005 Council of Europe Convention
on Laundering, Search, Seizure and Confiscation of the Proceeds
from Crime and on the Financing of Terrorism (ETS No. 198), which
provides that States Parties “shall adopt such legislative or other
measures as may be necessary to require that, in respect of a serious
offence or offences as defined by national law, an offender demonstrates
the origin of alleged proceeds or other property liable to confiscation
to the extent that such a requirement is consistent with the principles
of its domestic law. (Article 3 (3))”. This Convention obliges States
parties to ‘adopt such legislative and other measures as may be
necessary to ensure that the measures to freeze, seize and confiscate
also encompass: (a) the property into which the proceeds have been
transformed or converted; (b) property acquired from legitimate
sources, if proceeds have been intermingled, in whole or in part,
with such property, up to the assessed value of the intermingled
proceeds; (c) income or other benefits derived from proceeds, from
property into which proceeds of crime have been transformed or converted
or from property with which proceeds of crime have been intermingled,
up to the assessed value of the intermingled proceeds, in the same manner
and to the same extent as proceeds. (Article 5)”.
4.3 Committee
of Ministers
39. The core Council of Europe
treaties are complemented by certain legal instruments adopted by
the Committee of Ministers. In its Resolution (97) 24 setting out
Twenty Guiding Principles for the fight against Corruption, the
Committee of Ministers invited the member States, inter alia: “to provide appropriate
measures to prevent using legal persons being used to shield corruption
offences; to limit immunity from investigation, prosecution or adjudication
of corruption offences to the degree necessary in a democratic society;
…to ensure that the fiscal legislation and the authorities in charge
of implementing it contribute to combating corruption in an effective
and co-ordinated manner, in particular by denying tax deductibility,
under the law or in practice, for bribes or other expenses linked
to corruption offences; …to ensure that the rules relating to the
rights and duties of public officials take into account the requirements
of the fight against corruption and provide for appropriate and
effective disciplinary measures; promote further specification of
the behaviour expected from public officials by appropriate means,
such as codes of conduct; …to ensure that the system of public liability or
accountability takes account of the consequences of corrupt behaviour
of public officials”. The Model Code of Conduct for Public Officials
(Committee of Ministers’ Recommendation No. R(2000) 10) also emphasises the
requirement for a public official to “take care that none of his
or her political activities … impairs the confidence of the public
and his or her employers in his or her ability to perform his or
her duties impartially and loyally”. The Committee of Ministers
Recommendation Rec(2003)4 on Common Rules against Corruption in the
Funding of Political Parties and Electoral Campaigns states that
the funding of political parties should be transparent and accountable.
40. The Committee of Ministers Guidelines on public ethics, adopted
in March 2020, set out a series of recommendations applicable to
all public officials, including elected representatives, based on
the principles of legality, integrity, accountability, transparency
and honesty. The guidelines recommend to set up standards of conduct
in the areas of “public officials’ individual interests and those
of connected persons, the declaration of such interests and the
handling of conflicts of interest [and] public officials’ activities
which are outside their function or mandate, the declaration of
these outside activities, the classification of permissible and
prohibited outside activities for different categories of public
officials, and the arrangements and conditions for participation
in outside activities”. They further state that: “In the performance
of their duties, all public officials should: … avoid any situation
where there could be a conflict of interest for them, and remove
themselves immediately from any potentially problematic situation,
while complying with relevant rules for handling conflicts of interest
including rules of disclosure”. The guidelines provide that public
officials who are members of national governments should “make themselves
accountable to their respective legislature for their actions and decisions,
and for the actions and decisions taken by the ministries and entities
for which they are responsible” and “give accurate and truthful
information to their legislature, and be open and transparent to
that legislature and to the general public…”. Referring to public
officials who are members of national parliaments, the Guidelines
require them to “ensure [that] their actions and decisions are open,
transparent and accountable to their electorate” and “attach importance
to acting in conformity with the rules and obligations on their declarations
of assets, income, liabilities and other interests”.
4.4 European
Commission for Democracy through Law (Venice Commission)
41. The Rule of Law Checklist adopted
in 2016 was elaborated by the Venice Commission as an operational tool
for assessing the level of Rule of Law compliance in member States.
It covers issues such as the prevention of abuse or the misuse of
powers, corruption and conflict of interest. The Venice Commission
has also adopted reports on the “scope and lifting of parliamentary
immunities” (2014) and the “exclusion of offenders from parliament”
(2018). Its Code of Good Practice in Electoral Matters further states
that “provision may be made for depriving individuals of their right
to […] be elected, but only subject to the following cumulative
conditions [inter alia] it must be provided for by law; the proportionality
principle must be observed […];” such deprivation may be based on
a criminal conviction for a serious offence, potentially including corruption
or money laundering.
42. The Venice Commission issued a report on the “Relationship
between Political and Criminal Ministerial Responsibility”
Note, where it noted that: “…government
ministers should not be exempt from legal punishment, unless covered
by clearly defined and limited rules on immunity. A minister who
commits a criminal offence should be subject to criminal sanctions.
It may be that the problem in some countries is not the government ministers
are held criminally responsible too often, but the opposite – that
it is too difficult to hold them responsible in such a way”. This
report recognised the legitimacy of two models of holding high-ranking
public officials accountable – one involving the ordinary criminal
system and the other involving special impeachment procedures –
both of which could be applied together and not necessarily they
should have a preference one over the other. The principal requirement
in this regard is to avoid abusing the criminal procedures, in particular the
crimes of
ultra vires acts
for the purpose of political persecution of opponents. The report
however does not preclude fighting corruption by both criminal means
and by inducing public officials to assume political responsibility,
including through legal constitutional impeachment procedures or
by lifting immunities.
4.5 Group
of States against Corruption (GRECO)
43. GRECO’s fourth Evaluation Round
on the Prevention of corruption in respect of
,
inter alia, members of parliament and its fifth round
on Preventing corruption and promoting integrity in central governments
(top executive functions) are particularly relevant and have led
to detailed guidance on the implementation of the relevant legal
standards.
Note In both evaluation rounds, GRECO’s
country-specific reports often provided guidance on issues including
procedural transparency, remuneration and benefits, codes of conduct,
conflicts of interest, declarations of assets, prohibited or restricted
activities, and oversight and enforcement mechanisms.
44. In its October 2017 report on “Corruption Prevention: Members
of Parliament, Judges and Prosecutors – Conclusions and Trends”,
GRECO noted that “The overwhelming conclusion with respect to the
4th Round is that while solid foundations have been laid in most
jurisdictions to tackle corruption, including examples of good (even
excellent) practices, there is an overall lack of regard to effective
implementation. One in every five recommendations refers to supervision
and enforcement of the legislative framework in place. This is a
clear sign that the actual implementation of the existing rules
and regulations is an area of concern for each group under GRECO’s
review.” This report found that “the great bulk of recommendations
for MPs refer to three main areas: supervision and enforcement,
incompatibilities and rules of conduct.” GRECO underlined that “the
vast majority of member States received a recommendation with respect
to adopting, elaborating or implementing a Code of Conduct for MPs
… [and] many had yet to develop clear guidance to help MPs apply
the codes in practice”. It considered that “the codes of conduct
and complimentary guidelines provide an important framework for
MPs to grapple effectively with some of the complexities of their
roles and functions”. Even if such “[a] code of conduct does not
guarantee high ethical conduct, … it does set the standards of behaviour and
helps clarify the limits of parliamentary discretion… [and it needs]
to be effectively implemented in practice”. GRECO then concluded
that “the aim must be to ensure that a code of conduct is a living
document… [a] part of a broader integrity framework with an institutional
framework for implementation, awareness-raising and advice, as well
as strong enforcement”.
Note GRECO
did not, however, in this document address the issue of resignation,
as a matter of ethical duty, or a legal obligation to suspend politicians
suspected of corruption.
45. GRECO has published a study containing its findings and recommendations
relating to the development of codes of conduct for public officials
(including, in some cases, elected and/or appointed officials)
Note. It explains that
“codes of conduct are not meant to replace existing legislation”;
rather thy are compilations of standards for public officials that
GRECO recommends as “model codes for the development of consistent standards
of ethical behaviour throughout public administration”. The document
says that “With regard to Codes of Conduct applicable to persons
entrusted with top executive functions (in particular, ministers,
civil servants involved in decision-making and political advisers),
they should describe the conduct expected of them during the government
decision-making process, and deal with topical issues such as: conflicts
of interest; gifts and contacts with third parties/lobbyists aimed
at influencing government policies or bills; post-employment restrictions
with a view to avoiding that the prospect of future employment in
the private sector taints the taking of decisions, etc. It is also
important to ensure the effectiveness of these standards through adequate
monitoring and enforcement. In one case, with regard to members
of parliament, GRECO noted that, “while publicity of eventual breaches
is a valuable measure, it can prove to be insufficient, in terms
of not only its dissuasiveness vis-à-vis potential infringers, but
also the perception given to the public as to the effectiveness
of the enforcement regime of the integrity policy in- house, particularly,
in relation to more serious cases of parliamentary misconduct (including
regarding financial disclosure obligations)”. Against this background,
it recommended that “an effective enforcement and accountability
regime of the Code … can only be accomplished through the formalisation
of the Code of Conduct in the Rules of Procedures of the Chamber of
Deputies”.
46. This compilation is also relevant because it implicitly deals
with the issue of political and legal responsibility. It reads that
“One of the points that has been most frequently emphasised by GRECO
concerns the necessity to developing within the government an organisational
strategy and practices to improve, both with regard to public officials
and persons entrusted with top executive functions, the management
of conflicts of interest, including through responsive advisory,
monitoring and compliance mechanisms”. Amongst the most specific
recommendations, reference should be made to enforcement mechanisms
“that intentionally false statements made on the reports [should]
be actionable under the criminal code, that information required
to be reported is related to restrictions of office including any
new conflict of interest standard, and if reports are required,
that they provide a basis for counselling in ways to avoid potential
conflicts of interest”. In one case, GRECO observed that the information
provided by the official “should also be used by the Commission
for the Resolution of Conflicts of Interest in a preventive manner
by helping to identify potential conflicts of interest and then
counsel the official on the steps that must be taken to avoid the
conflicts. Such steps could include recusal or resignation from
a conflicting but not prohibited outside position”.
47. GRECO recommended in this sense, “to clearly define and illustrate
what shapes and forms conflicts of interest may take specifically
in the government context in a code of conduct intended for these
functions. In addition, a formal system, or systems for review of
declarations of ministers and disclosures of other persons entrusted
with top executive functions should be established or enhanced,
and the reports filed be used by trained reviewers as a basis for
individual counselling regarding the application of rules dealing
with disqualification, outside activities and positions, and gifts.”
4.6 Committee
of Experts on the Evaluation of Anti-Money laundering Measures and
the Financing of Terrorism (MONEYVAL) and Financial Action Task
Force (FATF)
48. MONEYVAL is a permanent monitoring
body of the Council of Europe entrusted with the task of assessing
compliance with the principal international standards to counter
money laundering and the financing of terrorism and the effectiveness
of their implementation, as well as with the task of making recommendations to
national authorities in respect of necessary improvements to their
systems. Its evaluations are undertaken, inter alia, on the basis
of the FATF 2012 Recommendations. In so far as it is relevant for
the present memorandum, FATF has recommended adoption of special
measures against money laundering, such as provisional non-conviction-based
confiscation, which would “allow such proceeds or instrumentalities
to be confiscated without requiring a criminal conviction, or which
require an offender to demonstrate the lawful origin of the property
alleged to be liable to confiscation, to the extent that such a
requirement is consistent with the principles of their domestic
law” (Recommendation 4).
49. In order to strengthen the fight against corruption and money
laundering, the Assembly, in
Resolution 2218
(2018), has also recommended that member States consider reversing
the burden of proof for the confiscation of illegal assets, in line
with the Irish and Italian examples that the European Court of Human Rights
has found compatible with the presumption of innocence and the protection
of property.
5 Fighting
corruption, money laundering and related offences as a question
of political and ethical responsibility
50. The fight against corruption
is one of the priorities of the Council of Europe. The Assembly,
the Committee of Ministers, and Council of Europe monitoring bodies
such as GRECO and MONEYVAL have underlined the negative effects
of corruption and money laundering on democratic institutions, the
rule of law and human rights. Council of Europe member States must
take action to prevent such nefarious activities, including – especially
– when committed by public servants, including elected politicians.
51. The “Panama papers”, “Paradise papers”, “Laundromats”, and,
most recently, the “Pandora papers” scandals have revealed allegations
of politicians and politically exposed persons using offshores schemes
for tax evasion and asset concealment, raising public outrage about
possible corruption and money laundering. Even if tax optimisation
per se does not necessarily involve
illicit activities, low avoidance through offshore schemes is increasingly
criticised.
Note Moreover, offshore schemes offer
many possibilities for politicians and high-ranking officials to
hide illicit assets, including the proceeds of corruption.
52. Some member States allow offshore operations to be carried
out with legitimate purposes, for example for tax optimisation or
facilitation of banking operations, to secure privacy and to reduce
bureaucratic burden. Still, the use of undeclared offshore accounts
by politicians raises credible suspicions of tax evasion, money laundering
or asset concealment. Public ethics and the fight against corruption
therefore require measures such as declarations of interests and
codes of ethics with effective monitoring and enforceable sanctions.
Note Failure to implement such
measures may undermine public trust in democratic institutions.
53. Any credible suspicion of a politician being involved in such
offences requires a prompt response from the criminal justice system,
whatever the individual’s status or the gravity of accusations –
everyone should be equal before the law. Indeed, high-level corruption
and offshore scandals, in particular the risk of bringing the very
system of democracy into disrepute, require particularly effective
and expeditious investigation.
54. Whilst there is no legal or universal definition of political
responsibility, it is clearly distinguishable from criminal liability.
Both the Assembly and the Venice Commission have confirmed this
principle, noting that political responsibility implies “the ultimate
judges being the voters”.
Note However, I think that the political responsibility
should be understood also as an ethical duty resting on a politician,
whatever their rank, to suffer the consequences of breaching public
trust. This accountability could be engaged either by resignation, suspension
during criminal investigation, effective application of codes of
conduct, or even their political parties exerting pressure on suspected
politicians to resign.
55. The examples described above illustrate that there is no general
standard amongst European countries for when politicians suspected
of corruption, money laundering or tax evasion should resign as
a matter of political responsibility. Legal standards concerning
the fight against corruption provide rules on declarations of assets,
conflicts of interests, gifts, and property ownership. There are
special tools to prevent and fight corruption and money laundering
such as shifting the burden of proof in the cases of unlawful enrichment.
Note In addition, there are clear recommendations
to set up of rules on ethical conduct of a public official and MPs requiring
them to report on corruption and to self-restrain from corrupted
behaviour.
56. However, all these principles do not require a resignation
or a suspension from the public office. With few exceptions, politicians
step down either under the pressure of their political parties (like
in Iceland) or following a political custom (like in France), or
amid corruption-related suspicions (like in the examples from the Republic
of Moldova, Lithuania, Sweden) or as a result of significant loss
of reputation (like in Germany and Hungary as a result of the plagiarism
scandals). Also, there are no clear legal rules to guarantee that
a politician who is being investigated or has been charged with
corruption, money laundering, or tax-related offences is suspended
or removed from office.
57. Normally a politician should not be elected or appointed to
a public office if he or she does not have criminal records cleared.
Equally, a serving politician should behave ethically and maintain
public trust. Yet, here is the paradox: a politician suspected of
serious offences, such as corruption, money laundering or tax-evasion,
can continue to occupy a public position despite having breached
what should be a clear ethical duty to respond to public accusations.
Some examples of politicians resigning when confronted with corruption
and similar scandals, such as those above, illustrate sound ethical
conduct and political customs. Unfortunately, history shows that
politicians are rarely willing to resign unless forced to do so
by political circumstances.
6 Conclusions
58. Political life in Council of
Europe member States remains prone to corruption. The recent scandals mentioned
in this document are certainly far from exhaustive. They demonstrate
the need to reform whole systems, and to analyse the adequacy of
national anti-corruption mechanisms and procedures.
59. The Assembly has long been committed to “restoring trust in
the efficiency and effectiveness of democratic institutions [as]
a priority for all European democracies, including European institutions”,
Note encouraging member States
to “remain at the forefront of the fight against corruption”.
Note
60. The Assembly has also recalled that politicians should be
accountable for ordinary criminal acts in the same way as ordinary
citizens. Any distinction between political decision making and
criminal acts or omissions must be based on national law. Legal
mechanisms should be used, such as impeachments, improvement of ethical
standards in codes of conduct, suspensions from public positions
pending criminal accusations, disciplinary sanctions for undeclared
assets and unresolved conflicts of interest, etc.
61. Criminal liability and political responsibility are not the
same and should be engaged both in relation to corruption, money
laundering, and tax-related offences. In the same context, effective
preventive mechanisms must be also put in place. This has again
become evident in the context of the recent offshore scandals.
62. Resignation seems to be an ideal solution but is too rarely
the case in practice. We cannot always rely on politicians’ sense
of public duty to ensure resignations in the face of corruption
or similar scandals. Banning or suspending those concerned from
holding office, through impeachment procedures or judicial decision pending
criminal investigations, are legal avenues for enforcing political
responsibility. Internal pressure from political parties and effective
implementation of codes of conduct for elected politicians could
also be a way to sanction a politician for breaching public trust.
