A/HRC/43/66
countries of origin and any third parties and local or foreign investors, including national or
regional or multinational or multilateral financial institutions.
56.
The fund of funds would enjoy total freedom regarding the composition and
management of their portfolios. However, two types of priorities should be taken into
consideration:
(a)
Investing, although not exclusively, in the real sector and the financial sector
of the countries of origin;
(b)
Lending greater attention to the activities that help to safeguard the
environment, boost social equity and improve the quality of governance.
57.
Revenues from such funds should be used to advance the implementation of the
Sustainable Development Goals, in accordance with national priorities, determined through
wide consultation and participation processes. The management of the funds and the
utilization of the profits should be fully transparent. Systems should be set up to provide
access to reliable, timely and easy to comprehend information thereon.
58.
Working as a group would generally reduce each developing country’s individual
risk, and together they could avoid high trading costs, because the fund of funds would
spread fee liability across all investors. Therefore, when properly managed, investment
funds may provide a safe, consistent rate of return through which the countries of origin
would progressively retrieve the amount of monies previously lost in the illicit financial
flows. Investing in an equity fund, or investment fund, would entail buying shares of a
portfolio overseen by a professional portfolio manager appointed by the country of origin.
The portfolio manager would be responsible for picking the stocks in the portfolio and for
the buy, sell and hold decisions.
59.
The advantage of an investment fund is that money may be invested in a wide
portfolio of shares and securities so as to spread risk and ensure “safe” returns. Destination
countries holding funds must be willing to release them, however, which is dependent upon
the political approach taken and bilateral negotiations. The funds could be managed by a
mutual agency with several partners involved, which could provide more assurance to the
country of origin.
Proposal C: creation of a fund governed by national central banks
60.
One expert was more favourable to the setting up of a fund governed by or
associated with national central banks, a view appertaining to the sovereignty of the country
of origin. Investment funds channelled through international financial markets to generate
private investment in developing economies must be considered very critically, given that it
can be extremely expensive, uses public funds to subsidize private funds and could
potentially lead to a simple shift from public to private corruption.
Proposal D: creation of a sovereign wealth fund in the country of
destination
61.
A sovereign wealth fund is also a means for utilizing the illicit funds which have not
been repatriated. The country of destination could establish a sovereign wealth fund using
the frozen illicit funds, which would be a State-owned investment fund investing in real and
financial assets such as stocks, bonds, private equity funds or hedge funds. The return from
the investments could be used for the benefit of the countries of origin.
62.
Such a fund structure would enable Governments of countries of origin to apply for
finance for specific programmes at low interest rates.
Proposal E: channelling the funds through regional banks
63.
Another proposal is to channel the funds through regional banks, which have the
financing of projects in member countries as an objective. This would be in line with the
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