BOX 8.3
Compensation for Damages Where Assets Are Misappropriated
In the case Attorney General of Zambia v. Meer Care & Desai & Others (2007),a the London High Court found sufficient evidence that $25 million was misappropriated or misused, and that there was no legitimate basis for Zambia’s payments of approximately $21 million pursuant to an alleged arms deal with Bulgaria. The defendants were held liable in tort for these actions. They were also found to have broken the fiduciary duties they owed to the Zambian Republic or had dishonestly assisted in such breaches. As a result, they were held liable for the value of the misappropriated assets.b a. Attorney General of Zambia v. Meer Care & Desai & Others [2007] EWHC 952 (Ch.) (U.K.). b. Lawyers who were involved in transactions were also held liable by the High Court of London. However, claims against them were dismissed after they appealed.
contract. The bribe may have resulted in a price for goods and services that is above market value or may have permitted the use or the sale of government resources at less than market value. In addition, there may be social or environmental damage that has been incurred as a result of the contract award. To be fully compensated in these situations, government authorities or entities may have to establish the difference between the benefits that would have been received if bribery had not taken place and those received after entering into the fraudulent contract.233 It may not be sufficient to show that prices for goods and services were set above market rates. Courts may require a more precise measure of rates that a hypothetical prudent negotiator would have accepted, given the market for goods and services of the same quality. Determining this measure will be particularly challenging in specific circumstances and in the absence of clear market references.234 In these situations, establishing the financial damage will frequently require evidence of a secret agreement between the briber and the corrupt agent and/or of technical or accounting assistance.235 In some jurisdictions, when the corrupt act is uncovered years after it has taken place, courts may presume that the bribe was incorporated into the contractual prices. Other losses must be proved and quantified by the plaintiff.236
233. Kevin E. Davis, “Civil Remedies for Corruption in Government Contracting: Zero Tolerance Versus Proportional Liability,” International Law and Justice Working Paper 2009/4 (New York: New York University School of Law, 2009). 234. In particular, for specific constructions or equipment and for “intellectual” services, including consulting studies. 235. For example, such evidence could be documents showing that the briber and the corrupt agent secretly agreed to increase usual rates by a specific amount or percentage, comparisons with bids from competitors in the same bidding process, or transcripts of conversations or reports on meetings where the corrupt agreement was discussed. 236. O. Meyer, ed., Civil Law Consequences of Corruption (Baden Baden: Nomos Verlag, 2009).
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Asset Recovery Handbook