Switzerland's Federal Banking Commission has confirmed that regulators discovered a bank account connected to the late Nigerian dictator, Sani Abacha, as far back as two years ago.
On Monday the German weekly "Der Spiegel" published the case of the German bank M.M.Warburg which channelled millions of German marks through their subsidiary in Switzerland in 1998.
According to "Der Spiegel", Warburg money was paid to Abacha by the German construction firm, Ferrostaal, to secure an order for building an aluminium plant in southern Nigeria. The bribes, which amounted to millions of German Marks according to "Der Spiegel", were paid from Warburg in Hamburg to their subsidiary in Luxembourg via their branch in Zurich.
The Swiss Banking Commission, a watchdog organisation to supervise the nation's banking sector, learned about the transaction in 1998, when it was alerted by Warburg's Swiss auditors and intervened. As a result, the supervisory board replaced leading employees of the Swiss Warburg subsidiary.
The Banking Commission published the case in its 1998 annual report, albeit without naming Abacha, Nigeria, or Warburg. The story in "Der Spiegel" is only new in so much as its gives those details.
In fact the Banking Commission proudly points to the case now as a showpiece of how the Swiss anti-money-laundering measures work: It was warned about the transaction, it acted upon that warning, and the culprits had to bear the consequences.
The Banking Commission also alerted the authorities in Germany and Luxembourg to the transaction. However, they failed to act upon it or lacked the necessary legal framework. Switzerland introduced a practice in 1986 whereby banks have to scrutinise accounts where "potentates", i.e. dictators or autocrats or otherwise undemocratic heads of states, are involved. This practice, which also extends to families and "clans", was written into law in 1998.
The question remains whether the Federal Banking Commission could have done more. It now says that it treated the Warburg-Abacha transaction as a singular case. Only when Abacha was ousted and the new government in Nigeria demanded that all the accounts of the former dictator be blocked, did the Commission launch a major investigation into possible Abacha accounts. US$640 million have been blocked since and 15 banks including Credit Suisse are being investigated.
Treating the Warburg-Abacha case as singular means that the Banking Commission kept its details not only from the public, but also from other banks. The commission communicates with the banks by means of circulars. Had they put out a circular in 1998 informing the banks of the Warburg-Abacha connection, other accounts might have been detected earlier, or the case against the banks involved would now be that much stronger.
The Banking Commission says that it had no indication that Abacha owned a series of Swiss bank accounts. "We cannot act on allegations", says Edgar Wolhauser of the Commission's legal department. But the extent of corruption in Nigeria, and the huge sums involved drawn from the oil business, were public knowledge at the time. Allegations about Abacha's own involvement in massive corruption deals had been made public in the press.
Swiss law does not stop the commission from acting preventively. "In exceptional cases we can do that", Wolhauser agrees. One such exception was made after the fall of Mobutu's regime in Zaire in 1997. The Banking Commission called upon all Swiss banks to list accounts and properties possibly belonging to the former dictator.
Evidence suggests that the Banking Commission might have been wise if it had treated Nigeria's Abacha and his accounts similarly.
By Markus Haefliger