Switzerland does not want stolen assets from corrupt individuals or governments in its banks and wants to give them back to those populations who have suffered the consequences of their kleptocratic governments. From banking secrets to stolen assets, Switzerland is seeking to share its fifteen years of experience (both successes and failures) to help developing countries in the fight against poverty.
According to Micheline Calmy-Rey, head of the Swiss Federal Department of Foreign Affairs, it is not about “image” but rather about “justice”. For the last fifteen years, Switzerland has embarked on reforms directed towards its banking sector, which in the past allowed African dictators to amass colossal sums of money to the detriment of their poverty stricken populations. It would be remembered that in only a matter of 5 years, between 1993 and 1998, former Nigerian president, Sani Abacha stole between 2 and 5 billion dollars, about 27 per cent of the West African country’s GDP. Nigeria was later able to retrieve half a million by virtue of a judicial cooperation with Switzerland. And the Swiss government wants to increase such success stories, especially at a time when a country like Haïti, after the deadly earthquake that caused the death of hundreds of thousands of people, is in dire need of the stolen assets amassed by Jean-Claude Duvalier, their former head of state, in Swiss banks and which till date have not been given back to the destitute country.
To prove its determination and political will, Switzerland announced that about 1.7 billion dollars (out of a total of $5 billion, according to the World Bank) have been sent back to their countries of origin. This makes Switzerland, currently holding 7th place in the financial development index, a pioneer. According to the Stolen Asset Recovery (Star) initiative, a product of the World Bank and the United Nations Office on Drugs and Crime (ONODC), for every $100 million dollars given back to a country, about 250 000 homes are connected to water sources.
“Times are hard”, says Ngozi Okonjo-Iweala, Managing Director of the World Bank. At a time when rich countries are tightening their fiscal belts to mitigate the effect of the global financial crisis, including the reduction of Official Development Assistance, the recovery of stolen funds represent a source of finance “that needs to be taken seriously”. It is however the responsibility of developed nations to ratify the various existing conventions, and above all apply them. According to Mo Ibrahim, the Sudanese entrepreneur who has made good governance his principal objective through his foundation that seeks to honour outstanding African leaders, “civil society must put pressure on governments” to make them react. “European governments talk, but do nothing”, he says.
The “slowness” of the recovery process is frustrating, especially in what concerns the political will of western countries. Ngozi Okonjo-Iweala believes that developed countries feel less concerned about the subject matter than the issue of tax evasion in these crisis times. Or perhaps because it is perceived as “a problem that only affects developing countries?” But doesn’t the crumbling of the Greek financial system provide enough evidence to the contrary? Corruption is detrimental to development around the world. And Ngozi Okonjo-Iweala is glad to echo the words of the Greek Prime Minister George Papadréou, who has recognised that systemic corruption is the cause of the current crisis in his country.
However, the recovery of embezzled funds requires a concerted action which has been lacking in the case of Duvalier (Haiti) and Mobutu (DRC). In the latter’s case, Switzerland was forced to close the proceedings after the funds — which had been under investigation — had been frozen for years. In what concerns Duvalier’s stolen assets, the recent involvement of the Haitian authorities could help the country to recover about 5.7 million dollars.
The difficulties encountered during the recovery of stolen funds by the Swiss authorities when dealing with “weak states”, says Micheline Calmy-Rey, should be overcome in the near future by virtue of a pending bill in the country’s Parliament. If it becomes law, it would help bypass the judicial cooperation process, which is essential in legal proceedings towards fund recovery for those (weak) states.
The World Bank’s Larissa Gray enumerates four of them. In the first instance, the victim (country) shall obtain a court verdict that gives a go ahead for the confiscation of embezzled funds through a mutual judicial cooperation between the country of origin and the host country. This procedure helped Nigeria retrieve Sani Abacha’s illegal assets in 2005.
The second method is to confiscate without legal proceedings. Once again in the case of Nigeria, South Africa conducted necessary investigations to help the West African nation to recover a number of stolen assets accumulated by Diepreye Alamieyeseigha, the governor of the oil-rich state of Bayelsa.
In the third instance, a legal action may be launched under civil law. In this case, a private attorney shall be empowered to investigate the whereabouts of the illicit funds. This type of procedure led to the freezing of Zambian President Frederick Chiluba’s assets in the UK in 2005.
The fourth scenario is to allow the country of destination to launch legal proceedings. Switzerland frequently investigates money-laundering cases on its territory. Not only does the Swiss government ensure that affected assets are duly repatriated, but they also seek the services of NGOs and the World Bank to ensure that the funds reach the intended beneficiaries.
Switzerland used one of the Bretton Woods organizations in the Nigerian case, which has become a beacon of cooperation between countries. “There was a strong political will,” says Ngozi Okonjo-Iweala, who was the Nigerian Finance Minister at the time. President Obasanjo and his predecessors did all they could to trace the stolen (Abacha) funds and meet all legal obligations under the cooperative framework with Switzerland. And according to the World Bank official, a good dose of “courage” is needed because some will continue to insinuate that governments embark on the fight against corruption to score political points. But “this is not the case. It is a development issue and a fight against poverty “.
And these actors intend to focus on the most essential issue: “the recovered assets,” says Adrian Fozzard, coordinator of Star, which is currently helping 22 countries to develop legal tools necessary to launch proceedings to recover those stolen assets. For the time being, embezzled funds and illegal assets remain unfathomable mysteries in the world of international finance.