A recent Swiss agreement with Nigeria and the World Bank to return hundreds of millions in so-called “Abacha funds” is being hailed as a model for how other countries deal with dictators’ assets. But civil society organisations in both Switzerland and Nigeria have reservations.
Switzerland has been working for several years to clean up its image as a haven for “dirty money”, having returned more than CHF2 billion ($2.1 billion) in stolen assets since 1986. The latest example is $321 million that has already been transferred from Switzerland to a Nigerian government account, part of assets stolen by former Nigerian dictator Sani Abacha (1993-98) and his family. With World Bank oversight, the funds will be used to finance Nigeria’s National Social Safety Net Project involving cash transfers to Nigerians living below the poverty line.
“I think it is a good model for other countries,” says Juliet Ibekaku, special assistant to the Nigerian president on justice reform, “because it presents an opportunity to take care of the poorest members of society, who suffer most when assets are stolen or funds that are meant for development are siphoned outside the country.”
Pio Wennubst agrees. The assistant director of the Swiss Agency for Development and Cooperation who led the Swiss government negotiating team in the Abacha fund dealexternal link calls it a “significant” amount of money that has the potential to send a strong message to the international community.
“It shows that it is possible to have financial institutions and public institutions join forces to actually serve the under-served in the population,” Wennubst says.
Civil society involvement
The Africa Network for Environment and Economic Justiceexternal link (ANEEJ) is leading a group of Nigerian NGOs who will help oversee how the funds are used. ANEEJ Executive Director Rev. David Ugolor says the Abacha case was the first time that civil society groups were invited to participate in drafting an agreement for dictator asset restitution.
Could other countries follow Nigeria’s example? Ugolor is aware that not all of them have such strong civil society institutions but thinks that in such situations, “an alternative framework can be considered”.
But the Swiss NGO Public Eyeexternal link is not convinced the Nigerian restitution makes for an ideal model. While the organisation’s finance and tax expert Olivier Longchamp admits the Abacha asset deal is “a good agreement”, he points out that it’s taken two decades and an “extremely long and complicated” process to arrive at this result.
“I do not think it proves that Switzerland is the world champion of returning stolen assets,” he says.
Long process and disappearing money
And there’s still doubt over how $700 million in previous “Abacha funds”, returned to Nigeria from Switzerland in 2005, were used.
“A substantial part of that money disappeared,” says Longchamp. “That is not necessarily to say that it was stolen, but it was lost in the accounting system of the Nigerian federal state.”
In that case, the World Bank was only called in to conduct an analysis after the funds had been spent and could therefore not point conclusively to where they had gone.
Longchamp says this was a “wake-up call” to Swiss authorities, who realised that good governance guarantees must be in place before returning such enormous sums.
He points out that $140 million returned by Liechtenstein to Nigeria also disappeared, “another good reason for the Swiss to insist on an agreement with better guarantees on the use of the funds”.
Wennubst of the Swiss Development Agency admits that “things could have been done better” in 2005, and that this latest agreement is a product of lessons learned from Nigeria and elsewhere. He says that what came out of those lessons is an agreement “historic” for its level of monitoring, involvement of civil society and use of new technology for cash transfers and traceability that would not have been possible just a few years ago.
Nigeria’s Juliet Ibekeku thinks the key takeaways are that the beneficiaries of the funds must be made “clear and specific” and no projects must be undertaken that cannot be ring-fenced.
She also told swissinfo.ch that the Nigerian government is now working with the World Bank to identify beneficiaries and set up a register. This enables the civil society organisations involved in monitoring to make sure that those identified as beneficiaries are actually the ones receiving the funds.
World Bank’s role
Then there’s the question of to what extent the World Bank should be involved in asset restitution, a sticking point for Rev. Ugolor of ANEEJ and the other civil society organisations involved in drafting the agreement between Nigeria and Switzerland. They “vehemently condemned” a Geneva court decision ordering that restitution be overseen by the World Bank.
“We think the court decision was absolutely unacceptable for a sovereign country like Nigeria with democratic institutions,” says Ugolor.
The World Bank has been present in Nigeria for many years and has the Stolen Asset Recoveryexternal link (STAR) initiative aimed at boosting its capacities in asset recovery, Public Eye’s Longchamp notes. But he says criticism of the World Bank in Nigeria is not without context, since the institution has been implicated in past corruption scandals.
“There was deep scepticism with regard to the World Bank’s involvement, but I think that as long as there is no similar organisation…it’s better to have the World Bank than no-one.”
Cleaning up Switzerland
The latest Nigerian restitution agreement comes amid changes to Swiss laws and practices surrounding the restitution of dictator assets that culminated in the 2016 Freezing and Restitution of Illicit Assets Held by Foreign Politically Exposed Personsexternal link (FIAA).
Longchamp points out that Switzerland has tightened its money laundering laws several times in recent years, often under international pressure and “especially with regard to tax evasion issues”.
He sees progress but says the problem has not gone away, as a series of corruption scandals from Petrobras to 1MDB and Ukraine has proven. He argues that Switzerland often tries to use the restitution of assets to prove its status as a clean financial centre.
But in the end, he believes, most foreign corruption cases on Swiss soil “are probably not even detected”.
Switzerland and dictator funds: Key points
First freezing of funds
1986, Ferdinand Marcos (Philippines), $684 million: Having refused a few years earlier to freeze assets of the fallen Shah of Iran, Switzerland acted fast in 1986. It froze the assets of Ferdinand Marcos and his shoe-loving wife Imelda, just a few days after the fall of the Philippines dictator. This was done as a preventive measure, even before a request from the new Philippines government. The funds were returned 12 years later in 1998, under an agreement with the new Philippines government, including a guarantee that part of the funds would benefit the victims of the Marcos regime. At the time, it took 60 rulings from the Swiss Federal Supreme Court before the funds could be returned.
1997, Moussa Traoré (Mali), CHF3.9 million: The sum was modest, but its remittance was a historic first. This case took only five years, which the Swiss government attributes to smooth cooperation with the Malian authorities, plus the fact that Traoré was tried and convicted in Mali for violent crimes during his rule.
1986 Haiti ($6 million) and 1997 DRC ($5.5 million): Switzerland froze assets of Haitian dictator Jean-Claude (“Baby Doc”) Duvalier and Mobutu Sese Seko of Zaire/DRC soon after they fell. But the funds could not be returned to the countries of origin because of the weakness of State structures and mutual legal assistance in those countries. These failures ultimately led Switzerland to pass a new law known as the “Lex Duvalier”, to permit confiscations under such circumstances.
2011 Tunisia, Egypt, Libya, Syria
In the aftermath of the Arab Spring, Switzerland blocked nearly CHF1 billion ($1 billion) linked to fallen dictators and Bashar al-Assad. So far, only a relatively tiny amount has been returned to Tunisia. Asked about this in January 2018, Swiss president Alain Berset said, “Switzerland would like to go much faster. But this must be done in line with legal procedures and with the certainty that this money will arrive at the right place.”
Following the demonstrations on Maidan Square in Kiev and the removal of Ukraine’s then president Viktor Yanukovich, Switzerland preventively froze his assets, totalling some $70 million.
Source: Swiss governmentexternal link