Tag Archives: Switzerland

Returning Stolen Assets to Kazakhstan: Did the World Bank Flub It?

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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.

 

Guest Post: The Nigerian Foreign Minister’s Vilification of Switzerland and the Diplomacy of Asset Recovery

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Today’s guest post is from Dr. Matthew Ayibakuro,director of research and policy at the Africa Network for Environment & Economic Justice (ANEEJ).

On Tuesday, 11 September 2018, Nigeria’s Foreign Minister, Geoffrey Onyeama in a speech delivered at the opening of the 2nd International Conference on Combatting Illicit Financial Flows organized by the Presidential Advisory Committee Against Corruption (PACAC), called out Switzerland for being an accessory to the looting of the country by the former Head of State, Sani Abacha.

He further decried the difficulties faced by Nigeria in repatriating the infamous Abacha loot from Swiss authorities, referring to the process as “daylight robbery”.  For stakeholders working on issues of asset recovery from Nigeria and in foreign jurisdictions, these comments give room for some concern.  The potential impact of statements like this in the short and long-term can impede the progress made by the asset recovery regime in Nigeria over the last couple of decades.  There are obvious reasons for this. Continue reading →

Will the Swiss Government Heed Civil Society’s Advice When Returning Stolen Assets to Uzbekistan?

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Readers of this blog know the Swiss government faces a dilemma in returning several hundred million Swiss francs of stolen assets to Uzbekistan (here and here).  Although the current government has taken small steps towards reform, it remains dominated by the same clique of Soviet-era apparatchiks whose corrupt ways were behind the theft of the assets. Returning the money thus runs a high risk that it will go right back to the culprits or their cronies.

At the same time, the Swiss government has an obligation under the UN Convention Against Corruption to return the assets. Moreover, thanks to decades of misrule, living condition for the average Uzbek remain dismal at best.  Money for everything from basic education and health programs to investment in public works is desparately needed.

Uzbek civil society now offers a solution to the Swiss dilemma.  Acknowledging the reformist leanings of the current government, and wanting to encourage them, civil society proposes that the Swiss government return the funds in tranches.  The return would be keyed to progress in realizing the kinds of reforms the government says it is committed to making.   Internationally recognized measures would be used to gauge progress.

A phased, conditioned return has two advantages.  It offers those in the Uzbek government leverage to persuade reluctant colleagues of the need for change.  At the same time, a phased return avoids swamping the government with a massive amount of money its primitive public financial system simply couldn’t manage responsibly.

The proposal appears in a letter to Swiss authorities authored by prominent Uzbek citizen, both those who have had to flee the country to escape political repression and those (anonymously) who remain.  The English version is here; a Russian version here.  A commentary on the proposal in the Swiss press is here, and background on the circumstance the led to the theft is here.

Will the Swiss Government Condone Gross Human Violations in Returning Stolen Assets to Uzbekistan?

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The Swiss take pride in their nation’s uncompromising defense of human rights. Its diplomats offer unwavering support for the rights of the oppressed in international fora; its NGOs provide generous support to human rights defenders around the world, and as home to the United Nations Human Rights Council and other UN human rights agencies, Geneva is the center of the global discourse on human rights. But if recent press reports are to be believed (here [German] and here [English]), the Swiss government may be ready to ignore gross human rights violations perpetrated by the government of Uzbekistan.

The issue is part of the struggle over how to return the several hundred million dollars that Gulnara Karimova, daughter of its recently deceased dictator, stashed in Switzerland with the help of lackeys Gayane Avakyan and Rustam Madumarov. The monies are allegedly bribes international telecommunications companies paid Karimova to operate in Uzbekistan.

The Uzbek government is seeking their return while Uzbek civil society argues that because the government is so corrupt, the Swiss government should follow the precedent established in a Kazakh case and return the monies directly to the Uzbek people.  If the Swiss government does not, and does return the money to the Uzbek government, it will be forced to condone grave human rights abuses Avakyan and Madumarov have suffered at the hands of the Uzbek government. Continue reading →

Uzbek Civil Society to Swiss Government: Hasty Return of Stolen Assets to Uzbek Government Not Warranted

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GAB readers know that the Government of Uzbekistan has been pressing countries to return some $1.0 billion under their control which Gulnara Karimova, daughter of the late dictator Islam Karimov, stole through corrupt schemes.   They also know that Uzbek civil society has urged a “responsible return,” one that recognizes that despite modest changes since Karimov’s death, Uzbekistan is still ruled by the same close-knit group in charge during Karimov’s time and with the same kleptocratic proclivities.  Responding to reports that the Swiss government, which holds several hundred million dollar of Gulnara’s corrupt monies, may soon send these funds back to Uzbekistan with little guarantee they will to go improve the welfare of the Uzbek people, members of Uzbek civil society living in exile wrote the Swiss government today asking it to refrain from any hasty repatriation. Their request is particularly urgent given the evidence they cite that stolen assets Switzerland returned to Kazakhstan through a World Bank program were misused. The request is joined by members of Kazakh civil society members in exile.

OPEN LETTER OF CIVIL SOCIETY ORGANIZATIONS TO THE SWISS GOVERNMENT

We, the undersigned representatives of civil society organizations advocating for transparent and responsible repatriation of assets stolen from the Uzbek people, are urgently calling upon the Swiss government to ensure that any decision regarding the ill-gotten assets of Gulnara Karimova, currently the subject of litigation in several countries, be made with due consideration to the rights and development prospects of the Uzbek people.

We urge the Swiss government not to act hastily and to consider that the promise of reform by the Mirziyoev regime have not yet materialized in practice. Based on all available information we strongly believe that return of these assets without sound conditionalities developed in consultation with major stakeholders, including civil society – which has been in a stranglehold in Uzbekistan for more than two decades – would only further perpetuate corrupt practices in Uzbekistan, leaving the systemic causes of the original criminal conduct untouched. The Swiss government can and should use these assets as an incentive to promote and support the course of reforms in Uzbekistan in the long-term interests of the Uzbek people. Continue reading →

Protecting the Rights of Countries Victimized by Corruption: the Swiss Approach

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One topic on the agenda at next week’s OECD Integrity Forum is “Settling Foreign Bribery Cases with Non-Trial Resolutions.”  As explained here, a principal reason for a session on settlements is the concern that developing countries are losing out on them.  When the bribe-taker is a developing country official and the bribe-payer employed by a transnational corporation, the case is most often resolved through a settlement in the country where the corporation is headquartered.  And the developing nation’s interests are often ignored.

A notorious example is the bribery of Nigerian officials by the American company Halliburton.  The company settled the case with U.S. authorities for $559 million; years later it settled with Nigeria for $35 million, just over six percent of what the U.S. extracted.  Yet which country suffered the most from the bribery?  And which one is more pressed for resources?

Countries with civil law legal systems offer a solution that common law nations would well advised to consider: allow the victim government to participate as a party to the criminal proceeding with the right to file a claim for damages and indeed to help in gathering evidence for the prosecution.  Swiss law provides one example employed by several countries which have been victimized by corruption.    Continue reading →

Artful Transactions: Corruption in the Market for Fine Arts and Antiques

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The fascination surrounding art theft and forgery has long been the subject of much exploration. Only more recently, however, has the art market come under increased scrutiny regarding its connection to money laundering and corruption. It’s not just that stolen artworks often end up in the hands of criminals: even the market for non-stolen art is especially vulnerable to money laundering and corruption. With more banks cracking down on illicit activities, art has become an “efficient instrument for hiding cash.” As an article in the New York Times observed, no business seems “more custom-made for money laundering, with million-dollar sales conducted in secrecy and with virtually no oversight.”

Considering the attention paid by anticorruption and anti-money laundering activists to the role of the real estate market and the market for other luxury goods to facilitate money laundering and bribery, it is perhaps a bit surprising that there hasn’t been more attention to the art market—which is perhaps even more deserving of scrutiny. Continue reading →

London Anticorruption Summit–Country Commitment Scorecard, Part 2

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This post is the second half of my attempt to summarize the commitments (or lack thereof) in the country statements of the 41 countries that attended last week’s London Anticorruption Summit, in four areas highlighted by the Summit’s final Communique:

  1. Increasing access to information on the true beneficial owners of companies, and possibly other legal entities, perhaps through central registers;
  2. Increasing transparency in public procurement;
  3. Strengthening the independence and capacity of national audit institutions, and publicizing audit results (and, more generally, increasing fiscal transparency in other ways); and
  4. Encouraging whistleblowers, strengthening their protection from various forms or retaliation, and developing systems to ensure that law enforcement takes prompt action in response to whistleblower complaints.

These are not the only subjects covered by the Communique and discussed in the country statements. (Other topics include improving asset recovery mechanisms, facilitating more international cooperation and information sharing, joining new initiatives to fight corruption in sports, improving transparency in the extractive sector through initiatives like the Extractive Industries Transparency Initiative, additional measures to fight tax evasion, and several others.) I chose these four partly because they seemed to me of particular importance, and partly because the Communique’s discussion of these four areas seemed particularly focused on prompting substantive legal changes, rather than general improvements in existing mechanisms.

Plenty of others have already provided useful comprehensive assessments of what the country commitments did and did not achieve. My hope is that presenting the results of the rather tedious exercise of going through each country statement one by one for the language on these four issues, and presenting the results in summary form, will be helpful to others out there who want to try to get a sense of how the individual country commitments do or don’t match up against the recommendations in the Communique. My last post covered Afghanistan–Malta; today’s post covers the remaining country statements, Mexico–United States: Continue reading →

Furthering Cross-Border Cooperation to Fight Corruption

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Some of the best news on the corruption front is the growing cross-border cooperation among domestic law enforcement agencies.  The French firm Alstom’s December 18 agreement to pay R$ 60 million, US$ 16 million, to Brazil to settle bribery claims nicely illustrates the pay off from such cooperation.  Thanks to information supplied by French and Swiss authorities, Brazilian prosecutors showed that Alstom had bribed officials of Sao Paulo’s state government to win a contract to supply electrical equipment to the state’s power company.  A critical element in the case was evidence that the officials had deposited large sums in Swiss banks around the time the contract was awarded.

Although Brazil, France, and Switzerland are all bound by domestic legislation and treaties to help one another investigate and prosecute corruption cases, law alone is not enough to produce the kind of cooperation that resulted in the Alstom settlement.  As Silvio Marques, one of the Alstom prosecutors, explained the other day in a note to colleagues, the key element is – Continue reading →

Bribery in the Boardroom: Implications for Internal Reporting Programs

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Early last month, the OECD released its first Foreign Bribery Report. According to Angel Gurria, the organization’s Secretary-General, the report “endeavors to measure, and to describe, transnational corruption based on data from the 427 foreign bribery cases that have been concluded since the entry into force of the OECD Anti-Bribery Convention in 1999.” The report as a whole is quite interesting, but I would like to hone in on the OECD’s findings regarding who engages in bribery, and how this should change how we approach arguments on whistleblower internal reporting requirements.

The report found that, contrary to popular belief, in the majority of cases senior management were aware of or endorsed the payment of whatever bribe occurred (in 41% of the cases senior management was implicated, in 12% even the highest level executives were aware of the bribe being paid). As the report notes, this “debunk[s] the “rogue employee” myth,” and this, I would argue, calls into question internal reporting requirements as a means of combating foreign bribery. Continue reading →