In 2012, Kazakhstan and Switzerland agreed to return $48.8 million that Switzerland had confiscated in a money-laundering case involving Kazakh nationals. This is the second time Switzerland has returned stolen assets to Kazakhstan. In the first, out of a fear the funds might be stolen again, the two had created an independent foundation with stringent oversight mechanisms to administer the money (details here). This time the two decided to rely on the World Bank alone to see that returned funds were not misused.
One of the projects being funded is a $12 million grant program to instill a public service ethic in the nation’s youth, and a consortium of Kazakh NGOs has been selected to manage it. Although the consortium only recently began making grants, questions about the integrity of the grant-making process are already being raised. In February, the Corruption and Human Rights Initiative identified several apparent irregularities. Among them: 1) The consortium’s lead NGO is headed by Dariga Nazerbayev, at the time of the award to the consortium she was the daughter of the country’s president and is now Speaker of the Kazakh Senate; 2) The youth wing of the ruling party was awarded a grant for “awareness-raising activities among vulnerable youth groups” across the country in seeming violation of the ban in the World Bank’s charter on political activities; 3) numerous grants have been awarded for an amount just under that which would trigger World Bank review; and 4) program managers have coached grant applicants on how to circumvent Bank procurement rules.
A full report on the irregularities is here. At the request of the Swiss government, the World Bank is said to be investigating.
GAB | The Global Anticorruption Blog 
Kudos to CHRI and GAB for exposing and highlighting what amounts to nothing less than corruption within both the Swiss government and the World Bank.
Let’s be clear, if the report is accurate, as it appears to be, this was no flub by either the Swiss or World Bank. They both should absolutely be investigated because they both had to know, from years of experience and international reputation, what was certainly going to happen to money thrown into the arms of the powers-that-be in Kazakhstan.
Indeed, my own experience and research related to the first major corruption case back in the early 1980’s (Kazakhstan 1), tells me almost nothing has changed within Kazakhstan’s power structures and that little has changed within the policy or decision-making halls of either the Swiss government or the World Bank.
A few observations and lessons learned:
1. This case is shameful.
2. The youth in Kazakhstan deserve better.
3. Those complicit on all sides should be held accountable.
4. UNODC and the international community need to develop a clear policy and safe-guarded process for returning criminally tainted or stolen assets to any country – particularly one as corrupt as Kazakhstan.
“3) numerous grants have been awarded for an amount just under that which would trigger World Bank review;”
Then hard cutoffs under which people are immunized from accountability is a stupid concept.
I get it an institution shouldn’t be expected to have the time or the resource to investigate every single case, and that you need some kind of heuristic to focus on the big fish. That shouldn’t mean tying one’s own hands in the back and automatically let all the little fish go wild.
Rick – would a better course of action simply be to invest money into infrastructure or infrastructure projects with World Bank/UN oversight? (This seems to be the approach taken by DFID on more than one occasion).