Fri Nov 15, 2019 London
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THE FOG

The economy, politics and current affairs Money, power and its guiding forces

France’s Ill-Gotten Gains

Jack P. Hine on what’s wrong about France’s attitude towards foreigners who’ve invested in French property

 

In recent years, French judicial investigators and courts have taken to the increasingly fashionable practice of seizing allegedly “ill-gotten” assets from foreigners who have invested in French property. The owners of the assets may even find themselves prosecuted in French courts for corruption alleged to have occurred in their home countries or elsewhere outside France.

 

Should foreign owners of property in France be worried? In short, the answer is yes, if you hold assets in France and you happen to be potentially exposed to false and politically motivated allegations against you in your home country.

 

Many foreigners seeking a secure place to invest and to keep their wealth safe have traditionally favoured France. With a stable legal system and strongly protected property rights, diverse geography and climate, and world-renowned cultural and intellectual assets, France has been a preferred locale for asset protection, particularly among expatriates and exiles, despite the high taxes the country is also known for.

 

Those famous taxes must be understood as being in line with values of egalitarianism and social activism, overlapping with principles of justice to create a general propensity in favour of wealth redistribution. Yet it is the confluence of these values and principles that today also underpins risks for people who own property in France and who may face false and politically motivated allegations against them anywhere in the world.

 

In France today, wealth, and particularly foreign wealth, draws attention, both the attention of social activists and the attention of the authorities. With French law empowering judicial investigators in France to seize allegedly ill-gotten assets, and to prosecute the owners on mere suspicions over the foreign provenance of those assets, red flags are going up for those who may unwittingly find themselves in the crosshairs of a judicial investigation.

 

For the risks are in fact enormous. There are insufficient protections in place to prevent assets from being arbitrarily frozen or seized, and prosecutions launched, when the people targeted are in fact victims of a settling of political scores in their home countries. The presumption of innocence is easily weakened by smear campaigns abroad. Exiles and politically targeted expatriates can easily find themselves the victims of “trial-by-headline” even before a decision is made to prosecute them in France: their reputations blackened by obscure blog posts, commissioned pseudo-journalism and social media campaigns that have a nefarious way gaining a digital critical mass, influencing the reporting of the mainstream media coverage of the world’s political hotspots.

 

This is precisely where the French justice system may readily yet unwittingly be instrumentalised by foreign interests. Foreign adversaries of a French-based expatriate or exile can throw mud at their targets and enlist supporters in France to trigger and fuel a judicial investigation based on mere presumptions or thin legal pretexts. French anti-corruption NGOs can legally file complaints and contribute to investigations. Then, the typical tools of judicial investigators – interrogations, raids, arrests and detentions – are employed to collect enough pieces of an international puzzle to seize assets located in France, and send a case to trial.

 

Even if that puzzle is incomplete, which frequently it will be. The foreign evidence-gathering capacity of French judicial investigators will often be limited to the information provided to them by their counterparts abroad. The evidence collected may be tainted because it comes from a foreign country actively persecuting an exile – or from a completely failed state whose law enforcement apparatus is easily captured or incentivized by private interests. Meanwhile, the defendants in these cases may be seriously disadvantaged in exculpating themselves, due to their inability from afar to marshal exculpatory evidence which invariably must come from their home country, where potential witnesses, documents and legal interpretations are under the control of hostile political forces.  Even if a defendant in France has committed no crime whatsoever in the home country, it may be impossible in practical terms to prove this to the satisfaction of a French court.

 

Formal charges may be for corruption, with the French authorities promising restitution of funds to the home country, or, if funds seized are not to be sent back, formal charges could well be for money laundering, justified by allegations of an offense committed abroad. Either way, the flows of assets and funds seized by a crusading French judge will invariably be politicised, with a redistribution of wealth decided as the French court deems fit.

 

Then a further dynamic comes into play:  an undercurrent of moral righteousness in France, underpinning the pursuit of what might be dirty money. Observers may see an irony in the French justice system being the moral and legal standard-setter when France asserts domestic jurisdiction in cases tied to countries of France’s colonial past or more recent geopolitical interventions.

 

Yet today’s judicial investigators appear to set themselves far above the complicated histories that entwine the French with countries whose very political instability today is what triggered the flow of exiles and their assets seeking refuge in France. Their short historical memory is a form of hypocrisy that, certainly from many a defendant’s perspective, undermines their own legitimacy:  given the lack of a time limit when today’s judicial investigators choose to look at ill-gotten assets of foreign provenance, one wonders whether anyone in France could also be pursued for ill-gotten assets or money laundering, for the plethora of artefacts and monuments displayed today in French museums or adorning Paris’s grand avenues and public squares, generating significant public and private revenues from tourism. Yet these arguably revenue-generating souvenirs of France’s military, mining and petroleum exploits are apparently off-limits.

 

Indeed, how would France react if judges in foreign countries adopted a similar kind of judicial activism? Not only judges in, say, other European countries or the United States, but also judges in China, the Middle East, Russia or Africa? What if foreign judges take it upon themselves to chase what they may deem to be ill-gotten assets now held by France’s corporate champions, which themselves have a history of murky business dealings outside of French borders? Could France’s trend towards extraterritorial judicial activism trigger imitations or retaliations from abroad? France’s former colonies in particular might have an interest in the issue of ill-gotten gains won by France at their expense.

 

Meanwhile, the upshot is that in any country today characterised by both political instability and rapid private wealth creation – as is the case in emerging markets from Africa to Asia to Latin America – faraway political opponents may find that French courts willingly provide a new theatre for their animosities to be played out.

 

This is potentially of great concern to people – particularly those who have recently (and legitimately) generated significant wealth in countries such as China, Russia or Arab states of the Persian Gulf. In several of these countries, notably China and Russia, just a generation ago all people lived relatively modest lives, without major property holdings. In the Middle East, oil discoveries created great affluence for a fortunate few. Even if this new wealth was amassed in compliance with the governing law of a given country, the most common and deeply entrenched view, from France, is that such new wealth is almost invariably a product of corruption. The French may champion the collapse of authoritarianism or market reforms in some of these countries, but seem less willing to tolerate the resulting creation, or shifts in ownership, of wealth.

 

A complicating factor is the lack of a prescribed time limit for foreign asset holders in France to prove the provenance of their wealth. Defendants accused of holding ill-gotten assets may be forced into the impossible task of unscrambling an omelette, proving the legitimate provenance of their wealth dating back twenty or thirty years or more.

 

This obviously creates a potentially vicious legal tool ready for abuse by those involved in faraway political turmoil or historical enmities. A foreign dictatorship, privately funded interest groups or even well-meaning anticorruption activists can trigger and sustain a French judicial witch hunt against an innocent person chosen to bear the blame for their country’s failings.

 

There are equally significant risks for the legitimate leaderships of foreign countries, whose interests may be impacted by abuses of France’s laws on ill-gotten assets. Third countries, religious organizations or even private interests (foreign or French) can manipulate facts and fabricate evidence that ends up instrumentalising France’s activist judges against a country targeted for geopolitical or even commercial reasons.

 

With French judicial and law enforcement cooperation increasingly extending throughout the European Union, French investigating judges can extend their reach across the region and into other countries where mutual legal cooperation arrangements are in place. Coupled with powers of extradition or transfer of persons, and relatively common abuses of INTERPOL by unstable regimes, crusading French magistrates may feel emboldened and have free reign to extend their reach beyond their country’s borders.

 

Against this backdrop, smart money may find that it is more prudent to go elsewhere, until France has ramped up its protections against ill-founded activism by judicial investigators, and sorted out its priorities in law enforcement.

 

Jack P. Hine is a dealer in vintage memorabilia. He lives between London, Hove and the South of France. He enjoys exposing the worst and celebrating the best.

 

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