How to return one billion dollars stolen from the people of Uzbekistan

The saga of Gulnara Karimova’s ill-got­ten and ill-fat­ed assets – frozen in a num­ber of most­ly European juris­dic­tions – may soon come to an end.

This sto­ry began in 2012, when two asso­ciates of Gulnara Karimova, the daugh­ter of Uzbek pres­i­dent Islam Karimov, tried, appar­ent­ly on her order, to con­duct a trans­ac­tion involv­ing an account at Lombard Odier bank in Geneva, Switzerland. Shokhrukh Sabirov and Alisher Ergashev were lat­er arrest­ed by the Swiss police on sus­pi­cion of mon­ey laundering.

This prompt­ed crim­i­nal inves­ti­ga­tions and for­fei­ture cas­es tar­get­ing assets belong­ing to Karimova, who end­ed her extra­or­di­nary career as a pow­er­ful oli­garch and socialite with house arrest in February 2014. She lat­er found her­self in prison after being con­vict­ed for extor­tion and embez­zle­ment in 2015. The assets in ques­tion are being pur­sued by a num­ber of juris­dic­tions, includ­ing, apart from Switzerland, Sweden, the United States and The Netherlands. In 2015, the US Department of Justice filed a civ­il case to for­feit $850 mil­lion of cash deposit­ed in Swiss, Irish, Belgian and Luxembourg bank accounts reg­is­tered in the name of Gulnara’s asso­ciates, along­side charg­ing tele­coms inter­na­tion­al Vimpelcom $795 mil­lion as a penal­ty for alleged bribery in Gulnara Karimova-relat­ed case. The total amount of Karimova’s assets seems to be even larg­er. In Switzerland alone, $700 mil­lion has been frozen and is being tar­get­ed by the Federal Prosecutor’s Office (BA) of Switzerland.

Indeed, the Swiss author­i­ties are about to con­fis­cate these assets. On 22 May, the BA issued two penal orders lead­ing to the con­fis­ca­tion of Karimova’s assets. Karimova’s lawyers have appealed the deci­sion. If this con­fis­ca­tion process is com­plet­ed, the Federal Department of Foreign Affairs will start nego­ti­a­tions with the Uzbek gov­ern­ment over the repa­tri­a­tion of these assets. In prin­ci­ple, the deci­sion to return them has already been made by the Swiss government. 

On the one hand, this looks like the cor­rect deci­sion. A num­ber of oth­er par­ties are also after this mon­ey, such as some cred­i­tors of Zeromax GmbH, a com­pa­ny reg­is­tered in the Swiss off­shore zone Zug and whose ben­e­fi­cial own­er is believed to have been Gulnara Karimova. Before going bank­rupt in October 2010, Zeromax GmbH had aggres­sive­ly invest­ed in one sec­tor of Uzbekistan’s econ­o­my after anoth­er – appar­ent­ly with the sup­port from the country’s top lead­er­ship, but to the dis­con­tent of oth­er big play­ers among Uzbekistan’s polit­i­cal and busi­ness elite. The sud­den and mys­te­ri­ous bank­rupt­cy of this com­pa­ny left cred­i­tors with­out com­pen­sa­tion for their investments.

Responsible” repa­tri­a­tion here means that asset return should pro­vide a rem­e­dy to the vic­tims of cor­rup­tion, i.e. the whole pop­u­la­tion of Uzbekistan

On the oth­er hand, a num­ber of Uzbek civ­il soci­ety activists are con­cerned that the Swiss may return the assets with­out sound pre­con­di­tions and, in the past few years, have advo­cat­ed for respon­si­ble repa­tri­a­tion. “Responsible” repa­tri­a­tion here means that asset return should pro­vide a rem­e­dy to the vic­tims of cor­rup­tion, i.e. the whole pop­u­la­tion of Uzbekistan. They argued that the assets should not be hand­ed over to the gov­ern­ment of Uzbekistan, as some top offi­cials have avoid­ed account­abil­i­ty for com­plic­i­ty in the Gulnara Karimova-dri­ven cor­rup­tion case.

Gulnara Karimova. Photo CC BY-SA 3.0: Timir01 / Wikipedia. Some rights reserved. 

In light of the pend­ing con­fis­ca­tion of Gulnara Karimova’s assets by the Swiss author­i­ties, the same group of Uzbek activists has put for­ward a set of prin­ci­ples that should guide the repa­tri­a­tion of assets to Uzbekistan.

The main prin­ci­ple should be to con­sid­er repa­tri­a­tion in the con­text of the fight against cor­rup­tion at the nation­al and glob­al lev­els. If the asset return does not con­tribute to this fight, then the asset-return­ing state (in this case, Switzerland) should be held respon­si­ble for per­pet­u­at­ing cor­rup­tion in the asset-receiv­ing state (Uzbekistan).

A noto­ri­ous exam­ple of irre­spon­si­ble asset return has been Switzerland’s 2012 trans­fer of $48 mil­lion to Kazakhstan – a move that has been crit­i­cised for sup­port­ing that country’s repres­sive and klep­to­crat­ic regime. This is not the kind of deal Uzbek activists want to see in the case of their country’s stolen assets.

Compared to pre­vi­ous stages of their cam­paign, there is some nov­el­ty in the Uzbek activists’ pro­posed prin­ci­ples, which reflect the new real­i­ties in Uzbekistan, espe­cial­ly President Shavkat Mirziyoev’s com­mit­ment to reform the gov­ern­ment and its policies.

Thus, the activists call for the assets to be used as an incen­tive for core anti-cor­rup­tion reforms, the progress of which is still very weak to date. The activists believe that such use of returned assets would act as a gen­uine rem­e­dy for vic­tims of cor­rup­tion and serve their best inter­est in the long run. If imple­ment­ed con­sis­tent­ly, the reforms would guar­an­tee that the rights and wel­fare of the gen­er­al pop­u­la­tion would be less neg­a­tive­ly affect­ed by gov­ern­ment corruption.

The activists argue that before the assets are returned, the Government of Uzbekistan should pro­vide con­crete proofs that the insti­tu­tion­al dri­ving fac­tors which led to large scale bribery in the tele­com sec­tor are being addressed. They iden­ti­fy five such areas where reforms should be imple­ment­ed, before the Swiss gov­ern­ment trans­fer the assets, name­ly (1) trans­paren­cy of ten­der­ing process and cor­po­rate reg­istry; (2) integri­ty of civ­il ser­vice abid­ing by law and not by per­son­al loy­al­ty; (3) fair tri­al and due process; (4) trans­paren­cy of pub­lic finance; and (5) an inde­pen­dent anti-cor­rup­tion agency. If imple­ment­ed these reforms would have pos­i­tive impact far beyond the tele­com indus­try, as every sec­tors of the state and econ­o­my are affect­ed by the same problem. 

These reforms would be a sig­nif­i­cant step towards estab­lish­ing the stan­dards of good gov­er­nance. They would give suf­fi­cient guar­an­tees that huge scale bribery in Uzbekistan’s tele­com sec­tor would not be repeat­ed, and that the returned assets would not be stolen all over again.

How to return one bil­lion dol­lars stolen from the peo­ple of Uzbekistan

Related Posts