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Amendments to the Illicit Gains Law

Amendments to the Illicit Gains Law
On 20 August 2015, amendments to the Illicit Gains Law were made by way of a presidential decree (the “Amendments).[1] Most importantly, the Amendments introduce the possibility of “reconciliation” through returning illicitly gained funds and paying a fine, which varies depending on the stage of the criminal proceedings. The Amendments also introduce the possibility of issuing travel bans, and establish a framework that allows for the financial administration of seized funds.
Background
The recent Amendments introduce significant changes to the 1975 Illicit Gains Law.[2] The Law itself applies to illicit gains and embezzlement committed by public officials listed in the Law, which includes the President, Prime Minister, cabinet ministers, members of parliament, directors of state authorities and public sector companies, as well as most high-ranking civil servants. The Law generally stipulates that illicitly gained revenue must be confiscated, and imposes a prison sentence on those convicted. The case against a suspect/accused is not dismissed even after he/she is deceased. Article 18 of the Law stipulates that proceedings may continue against the immediate family for the amount of the funds in question. The Illicit Gains Law is one of many laws dealing with different forms of corruption by officials and civil servants. Other relevant legislations include the 2014 Conflict of Interest Law, the 2002 Anti-Money Laundering Law, the 1981 Governmental Accounting Law as well as several provisions of the 1937 Penal Code. In December 2014, the government introduced a draft bill to amend the Law, which focused specifically on two elements. Firstly, the draft changes were supposed to enable the state to administer seized funds in a better way so as not to lose their market value. Secondly, the December amendments proposed ways that would allow an accused or a convict to reconcile with the authorities and drop the charges/sentence provided he/she repays a portion or all of the relevant funds to the authorities, in addition to penalties the sums of which depend on the stage of the investigations or trial. About 8 months after the draft was issued, the recent Amendments have maintained most of the significant points proposed in December 2014, but have reduced the amount of penalties for reconciliation.
The Recent Amendments
Administering Seized Funds The Amendments introduce a welcome change by adding a provision that places an official manager whose job would be to administer and manage seized funds so as to maintain their market value. The provision stipulates that the proceeds will be given to the accused or to those included in the seizure order, after deducting a 10% administration fee to the Illicit Gains Administration of the Ministry of Justice. This departs from the pre-Amendments version of the Illicit Gains Law which did not allow for the investment of suspicious funds until the completion of investigations. Whether it be for the administration of illicitly gained funds or for assessing the amount necessary for reconciliation (explained below), the Amendments provide a more sophisticated process for the calculation of the funds in contention. This includes an expert committee that will be tasked with calculating the amount of funds after hearing both the investigative authorities as well as the suspect/accused, taking into consideration the market value of the funds as well as regulations for calculating such amount that will be issued in the future by the Minister of Justice. Travel Bans The Amendments introduce a new provision (Article 13 bis) to the Law, which gives the competent authority the mandate to request the public prosecutor’s office to issue a travel ban against a suspect or to put the suspect’s name on a watch list if he/she is abroad. The Amendments specify how a suspect can contest this order, a process which must be initiated at the criminal court within 15 days of establishing his/her knowledge. If suspect’s objection is denied, he/she may make another appeal to the same court after three months. Reconciliation The most notable and heavily debated change introduced by the Amendments, however, remains the ability to drop penal charges or conviction through reconciliation. The Amendments add three new provisions to the Illicit Gains Law, each explaining how a public official may reconcile at a particular stage of the criminal proceedings. If investigations are still ongoing and no official charge has been made, the suspect may submit a request to the Illicit Gains Administration at the Ministry of Justice and return the funds alleged to have been illicitly gained, at which point criminal proceedings will expire and any seized funds will be returned. Reconciliation request that are made after trial has commenced must be presented to court, and may only be permitted if the applicant returns the illicitly gained funds and pays a fine equivalent to their sum. If reconciliation requests are made after a conviction is reached, the applicant must return the relevant illicitly gained funds and pay a fine equivalent to double the amount of such funds. If a conviction is upheld and a convicted person is already carrying out his sentence, a reconciliation request will be made to the Prosecutor General’s Office. A court may then order the applicant’s release, if it confirms that reconciliation has been reached with the relevant authorities. In this case, when a convicted person is already carrying out a sentence, the Amendments stipulate that the illicitly gained funds must be returned, together with a penalty equivalent to the amount of such funds. The Amendments also take into account that the same act may give rise to similar charges, such as embezzlement, illicit gains, misappropriation and bribery. If reconciliation is reached in relation to any one of these charges, the Amendments stipulate that the Law will consider reconciliation to have been reached with respect to the related charges.
Conclusion
Recent Amendments to the Illicit Gains Law have sparked considerable controversy. The Amendments introduced new concepts, such as assigning a financial administrator to seized funds. The Amendments also allowed the possibility of reconciliation. The debate on whether the law should allow officials accused or convicted of making illicit gains to drop their cases in exchange for paying back illicitly made gains in addition to penalties has been going on for several years. Commentators have generally pitted the value of retrieving stolen assets or illicit gains against the need for accountability especially for public servants. Within this debate, it must be noted that reconciliation prior to trial under the recent Amendments means that the suspect/accused will not suffer any monetary penalty at all if he/she returns the allegedly illicitly made gains while investigations are carried out. This does not leave much room for deterrence.   [1] Presidential Decree/Law No. 97/2015 amending the Illicit Gains Law; Official Gazette, Issue No. 34 (cont.), 20 August 2015. [2]  Presidential Decree/Law No. 62/1975 issuing the Illicit Gains Law; Official Gazette, Issue No. 31, 31 July 1975.
On 20 August 2015, amendments to the Illicit Gains Law were made by way of a presidential decree (the “Amendments).[1] Most importantly, the Amendments introduce the possibility of “reconciliation” through returning illicitly gained funds and paying a fine, which varies depending on the stage of the criminal proceedings. The Amendments also introduce the possibility of issuing travel bans, and establish a framework that allows for the financial administration of seized funds.
Background
The recent Amendments introduce significant changes to the 1975 Illicit Gains Law.[2] The Law itself applies to illicit gains and embezzlement committed by public officials listed in the Law, which includes the President, Prime Minister, cabinet ministers, members of parliament, directors of state authorities and public sector companies, as well as most high-ranking civil servants. The Law generally stipulates that illicitly gained revenue must be confiscated, and imposes a prison sentence on those convicted. The case against a suspect/accused is not dismissed even after he/she is deceased. Article 18 of the Law stipulates that proceedings may continue against the immediate family for the amount of the funds in question. The Illicit Gains Law is one of many laws dealing with different forms of corruption by officials and civil servants. Other relevant legislations include the 2014 Conflict of Interest Law, the 2002 Anti-Money Laundering Law, the 1981 Governmental Accounting Law as well as several provisions of the 1937 Penal Code. In December 2014, the government introduced a draft bill to amend the Law, which focused specifically on two elements. Firstly, the draft changes were supposed to enable the state to administer seized funds in a better way so as not to lose their market value. Secondly, the December amendments proposed ways that would allow an accused or a convict to reconcile with the authorities and drop the charges/sentence provided he/she repays a portion or all of the relevant funds to the authorities, in addition to penalties the sums of which depend on the stage of the investigations or trial. About 8 months after the draft was issued, the recent Amendments have maintained most of the significant points proposed in December 2014, but have reduced the amount of penalties for reconciliation.
The Recent Amendments
Administering Seized Funds The Amendments introduce a welcome change by adding a provision that places an official manager whose job would be to administer and manage seized funds so as to maintain their market value. The provision stipulates that the proceeds will be given to the accused or to those included in the seizure order, after deducting a 10% administration fee to the Illicit Gains Administration of the Ministry of Justice. This departs from the pre-Amendments version of the Illicit Gains Law which did not allow for the investment of suspicious funds until the completion of investigations. Whether it be for the administration of illicitly gained funds or for assessing the amount necessary for reconciliation (explained below), the Amendments provide a more sophisticated process for the calculation of the funds in contention. This includes an expert committee that will be tasked with calculating the amount of funds after hearing both the investigative authorities as well as the suspect/accused, taking into consideration the market value of the funds as well as regulations for calculating such amount that will be issued in the future by the Minister of Justice. Travel Bans The Amendments introduce a new provision (Article 13 bis) to the Law, which gives the competent authority the mandate to request the public prosecutor’s office to issue a travel ban against a suspect or to put the suspect’s name on a watch list if he/she is abroad. The Amendments specify how a suspect can contest this order, a process which must be initiated at the criminal court within 15 days of establishing his/her knowledge. If suspect’s objection is denied, he/she may make another appeal to the same court after three months. Reconciliation The most notable and heavily debated change introduced by the Amendments, however, remains the ability to drop penal charges or conviction through reconciliation. The Amendments add three new provisions to the Illicit Gains Law, each explaining how a public official may reconcile at a particular stage of the criminal proceedings. If investigations are still ongoing and no official charge has been made, the suspect may submit a request to the Illicit Gains Administration at the Ministry of Justice and return the funds alleged to have been illicitly gained, at which point criminal proceedings will expire and any seized funds will be returned. Reconciliation request that are made after trial has commenced must be presented to court, and may only be permitted if the applicant returns the illicitly gained funds and pays a fine equivalent to their sum. If reconciliation requests are made after a conviction is reached, the applicant must return the relevant illicitly gained funds and pay a fine equivalent to double the amount of such funds. If a conviction is upheld and a convicted person is already carrying out his sentence, a reconciliation request will be made to the Prosecutor General’s Office. A court may then order the applicant’s release, if it confirms that reconciliation has been reached with the relevant authorities. In this case, when a convicted person is already carrying out a sentence, the Amendments stipulate that the illicitly gained funds must be returned, together with a penalty equivalent to the amount of such funds. The Amendments also take into account that the same act may give rise to similar charges, such as embezzlement, illicit gains, misappropriation and bribery. If reconciliation is reached in relation to any one of these charges, the Amendments stipulate that the Law will consider reconciliation to have been reached with respect to the related charges.
Conclusion
Recent Amendments to the Illicit Gains Law have sparked considerable controversy. The Amendments introduced new concepts, such as assigning a financial administrator to seized funds. The Amendments also allowed the possibility of reconciliation. The debate on whether the law should allow officials accused or convicted of making illicit gains to drop their cases in exchange for paying back illicitly made gains in addition to penalties has been going on for several years. Commentators have generally pitted the value of retrieving stolen assets or illicit gains against the need for accountability especially for public servants. Within this debate, it must be noted that reconciliation prior to trial under the recent Amendments means that the suspect/accused will not suffer any monetary penalty at all if he/she returns the allegedly illicitly made gains while investigations are carried out. This does not leave much room for deterrence.   [1] Presidential Decree/Law No. 97/2015 amending the Illicit Gains Law; Official Gazette, Issue No. 34 (cont.), 20 August 2015. [2]  Presidential Decree/Law No. 62/1975 issuing the Illicit Gains Law; Official Gazette, Issue No. 31, 31 July 1975.