Transparency International

This Anti-Corruption Helpdesk brief was produced in response to a query from one of Transparency International’s national chapters. The Anti-Corruption Helpdesk is operated by Transparency International and funded by the European Union

Query

Could you please provide an overview of the use and good practices regarding ‘lifestyle audits’, including country examples in Africa?

Summary

Lifestyle audits – also known as lifestyle checks or lifestyle monitoring - are an accountability tool that can be used to detect and prevent corruption. Such audits are typically conducted when the visible lifestyle or standard of living of an individual appears to exceed their known income level. The detection of such discrepancies can raise red flags warranting closer inspection.

In such instances, an assessment of the individual’s income, assets and investments can be undertaken to determine if such seemingly extravagant expenditures could have come from illicit gains. If the audit shows a mismatch between a person's known income and assets compared to their lifestyle and spending patterns, then there is an increased risk that the person is deriving alternative income from sources that constitute a conflict of interest or illegal activity, including embezzlement and bribery. As verification often includes assessments of an official’s household, the approach is particularly helpful in detecting whether corrupt proceeds could have been concealed under the names of family members or associates.

Lifestyle audits are best used systematically in conjunction with other anti-corruption measures, including the criminalisation of illicit enrichment, establishing obligations for regular declarations of assets, incomes and interests, as well as Unexplained Wealth Orders. Yet despite the potential value of using lifestyle audits to curb corruption, there remain a number of challenges. Undertaking comprehensive lifestyle audits – especially of large numbers of public officials – is often considered impractical and resource intensive for an anti-corruption agency. Some agencies choose to rely on civil society organisations or investigative journalists to conduct such audits, flag discrepancies, and trigger more formal investigations. However, the viability of this approach is contingent on a number of other factors including public access to the content of asset and income declarations, and the interest and ability of civil society to engage in lifestyle audits.

The reliance on public access to declarations in itself gives rise to a number of contentious questions, particularly around public officials’ right to privacy. This is compounded by the fact that the nature and scope of lifestyle audits, and the criteria for verification of declarations in general, are rarely specified by law, or are often fragmented across sub-legal instruments that target specific categories of officials. Finally, lifestyle audits have occasionally been politically and institutionally manipulated, which can undermine their legitimacy and lead to discriminatory profiling.

A number of African countries have established lifestyle audit frameworks in a host of different scenarios and which are being implemented with varying degrees of success. These include Kenya, Malawi, Namibia, Nigeria, South Africa, and Zimbabwe.

Contents

1. Introduction

2. Anti-corruption tools related to lifestyle audits

a. Illicit enrichment

b. Declaration of Assets, Incomes, and Interests

c. Unexplained Wealth Orders

3. Lifestyle audits

a. Rationale for lifestyle audits

b. Limitations

c. Methodologies

d. Institutions responsible for conducting lifestyle audits

e. Sanctions

4. Human rights concerns and risks

5. Country examples in Africa and beyond

Main points

— A lifestyle audit is an accountability tool that measures a person’s lifestyle – property and assets owned, spending habits, and way of living – against their legitimate wealth and income.

— It has been employed in a number of countries, especially in Africa. It is often presented as a panacea for corruption, but inherent limitations, including its resource-intensive nature, have led to varying degrees of success.

— A review of the evidence suggests that lifestyle audits should be chiefly reserved for top officials and linked to efforts to digitalize and publish officials’ financial disclosure forms.

— Verification should be the responsibility of an independent nonpartisan agency able to apply sanctions where irregularities are substantiated.

— Lifestyle audits can be conducted through desk reviews of available information and/or field observation of the individual’s day-to-day life. Lifestyle questionnaires have also proven useful. Civil society and journalists can play an important supporting role in the verification process.

— There are human rights-related concerns about how lifestyle audits may threaten privacy rights as well as the presumption of innocence, which is a fundamental component of the right to a fair trial.

Authors

Guilherme France, tihelpdesk@transparency.org

Reviewers:

Jorum Duri and Matthew Jenkins, Transparency International

Date

12/07/2021

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