A UN trust fund is to coordinate the reimbursement to Uzbekistan of the Karimova bribes that were confiscated in this country. But there are still stumbling blocks.
The court decides that the sum of 69 million dollars cannot be proven to be money laundering.
Since 2012, around 800 million Swiss francs have been frozen in bank accounts and safe deposit boxes in Geneva and Zurich. According to the findings of the Federal Prosecutor’s Office (BA), these are bribes from international telecom companies for the issue of mobile phone licenses in Uzbekistan. They are said to have gone to Gulnara Karimova, the daughter of the long-term Uzbek ruler Islam Karimov, who died in 2016. In May 2018, the Federal Council decided to return the blocked assets to Uzbekistan in full if there were legally binding confiscation orders in Switzerland.
In May 2018, aware of this decision, the Federal Prosecutor’s Office issued penal orders for qualified money laundering against two of Karimova’s confessed accomplices and ordered the confiscation of CHF 685 million. In the case of CHF 340 million, confiscation is now legally binding. The rest is still subject to appeals, including last December’s federal criminal court order to return $69 million to a Karimova-controlled shell company in Gibraltar. The court had come to the conclusion that with these funds, proof of the predicate offense of money laundering could not be provided.
Funds are intended to support sustainable development
Parallel to the argument about the confiscation of the suspected corruption funds, the Departments of Justice (FDJP) and External Affairs (FDFA) dealt with the question of the reimbursement of the confiscated funds. On the one hand it applied, based on the so-called Sharing Act (TEVG) negotiate a treaty with Uzbekistan. On the other hand, an agreement should ensure that the returned funds in Uzbekistan do not seep away again into corrupt channels, but serve the Uzbek population and are used for sustainable development projects.
Following an agreement in principle from September 2020, Switzerland and Uzbekistan have now agreed on a concrete construct for the modalities of the refund. According to the EDA, the money should flow through a new trust fund of the UN, the so-called United Nations Multi-Partner Trust Fund. The fund is to be made up of representatives from Switzerland, Uzbekistan and the UN. This is intended to support the goals of the UN Agenda 2030 for sustainable development. Organizations of the UN system are planned together with partners for the implementation. Monitoring in accordance with UN guidelines is planned. Civil society organizations are to be given an advisory role.
Further details still have to be negotiated between Switzerland and Uzbekistan. After that, the fund is to start operations, initially with a first tranche of $131 million. The Federal Audit Office recently referred to the problem of the refund of potentates’ funds. Among other things, she underlined the importance of involving civil society. The non-governmental organization Uzbek Forum for Human Rights welcomed the planned mechanism in an initial statement. Full details would have to be disclosed to avoid misallocation of funds. Civil society should play a key role in monitoring.
For several reasons, there is still no end in sight to the almost ten-year investigation into the Karimova affair. The proceedings against the former president’s daughter, who is the main suspect, are making little progress. The 49-year-old former diplomat fell out of favor with her family in 2014 and is currently serving a long prison sentence in Uzbekistan. The federal prosecutor had to change the head of proceedings in April 2019 due to bias.
Americans want the blocked money too
As for the assets seized by the BA, the US Treasury Department’s Office of Foreign Assets Control (Ofac) has also ordered a freeze on the same funds at Geneva-based private bank Lombard Odier. Neither the FDFA nor the BA wanted to comment on what this means for the Swiss procedure. The matter is currently being processed by the US partner authorities, the federal prosecutor said. According to an expert, the Ofac ban has no legal force in Switzerland. However, it is followed by local banks where dollar accounts and securities are concerned. If the affected banks are now instructed to transfer the affected funds, they will come into conflict.
Finally, the creditors of the bankrupt Zuger Zeromax GmbH are also trying to get the Karimowa funds. Her claims – it is about the role of the president’s daughter in what was once the most important company in Uzbek foreign trade – have so far been blocked. However, the case could be reopened due to a criminal complaint against the former head of proceedings.