The financial control criticizes the strategy for the restitution of illegally acquired assets of foreign rulers. The Federal Council wants to revise its strategy.
Protest rally against the then Tunisian President Ben Ali in January 2011 in Tunis. Switzerland confiscated $60 million in investigations into the Ben Ali clan.
In the past two decades, Switzerland has returned around two billion dollars in assets illegally acquired from foreign potentates in a dozen cases – more than any other financial center. Another billion is to be added in the next few years. In 2016, a new law (Federal Law on the Blocking and Restitution of Illegally Acquired Assets of Foreign Politically Exposed PersonsSRVG) came into force, with which, according to the then Foreign Minister Didier Burkhalter, Switzerland further strengthened its pioneering role internationally.
The Swiss Federal Audit Office (SFAO) does not question Switzerland’s noble intentions, but in a new audit report it points to various shortcomings in the implementation of the strategy for the restitution of potentate funds. “Switzerland has often rashly promised too many results,” criticize the examiners and describe the management of expectations as a central problem.
For example, the expectations associated with the SRVG were not fulfilled. The law, once referred to within the administration as “Lex Ben Ali”, which was intended to draw lessons from the cases of the Arab Spring, has only had a very limited effect. Neither the assets of the toppled Tunisian dictator, which were blocked as a precaution, nor the blocked Mubarak funds could be confiscated and refunded based on the SRVG.
Lack of coherence and unclear criteria
According to the SFAO, the reasons lie in the subsidiary character of the law and in the limitation to exceptional cases of an abrupt regime change. In addition, the decree contains terms that are difficult to implement, such as the failure of a state’s judicial system. International legal assistance and criminal proceedings in Switzerland remain the most important basis for the blocking of potentate funds. However, they rely on other legal bases and do not provide any conditions for reimbursement. Agreements on the use of the returned funds are the exception.
The SFAO finds it difficult to understand why some refunds are made with and some without conditions. “There are no clear criteria as to why a refund is made this way and not that way,” criticize the auditors, adding: “This undermines the coherence of Switzerland’s approach.”
Other points of criticism relate to the lack of an overview of the cases and the use of the returned funds, the unclear criteria for external monitoring and the low involvement of civil society in the countries concerned. From the point of view of financial control, the fact that the federal government’s resources are scattered among various interdepartmental working groups that are active in the fight against corruption and money laundering is an obstacle to a general overview.
Federal Council initiates revision of previous strategy
Financial Control recommends that the Federal Council review its strategy without restricting itself to the SRVG. A more coherent strategy is needed. In a statement, the Federal Council points out that the previous strategy for asset recovery from 2014 was not limited to the SRVG. However, he accepts the recommendation and announces that a project for a new strategy will be launched this year.
The fulfillment of the postulate submitted in June 2019 by the Foreign Affairs Committee of the Council of States should also be taken into account. The Federal Council was thus tasked with examining new legal provisions that would enable the judicial and legal assistance authorities to commission the Federal Department of Foreign Affairs (FDFA) to oversee the reimbursement.
The Federal Council also declares its willingness to implement five further recommendations of the SFAO. Among other things, they relate to criteria for the modalities of reimbursement, an annual overview of the blocked potentate funds and coordinated communication by the authorities concerned about the efforts to fight corruption and money laundering. However, the Federal Council rejects the monitoring of cases in cooperation with the criminal prosecution authorities under the definition of content and time goals. This is not possible for constitutional reasons and for reasons of the separation of powers.
The financial control did not deal with the question of whether the range of instruments for the restitution of potentates’ money should be supplemented by the introduction of confiscation under criminal law. This would allow a reversal of the burden of proof. Those affected would have to prove that the confiscated assets are not of criminal origin. A corresponding initiative failed in the National Council in 2012 and is now being taken up again in a parliamentary initiative.