Summary – A Case of Irresponsible Return: The Swiss-Kazakhstan $48.8 million

From Switzerland to Kazakhstan with Secrecy: Investigators Uncover Case of Irresponsible Asset Return

English Version: A Case of Irresponsible Return – Summary Report

The Corruption and Human Rights Initiative (CHRI) in part­ner­ship with the International State Crime Initiative (ISCI) and the Eurasia Democracy Initiative, have con­duct­ed an inves­ti­ga­tion into the return of US$48.8 mil­lion in assets to Kazakhstan. These funds were con­fis­cat­ed by the Government of Switzerland fol­low­ing a crim­i­nal inves­ti­ga­tion. The find­ings of this inves­ti­ga­tion are pub­lished in a sum­ma­ry report released today.

CHRI researchers dis­cov­ered that the mon­ey was returned through a series of agree­ments that washed the funds of their illic­it ori­gins. This allowed the Government of Kazakhstan to present the funds as a devel­op­ment grant pro­vid­ed by the Swiss Agency for Development and Cooperation, under the watch of the World Bank. The funds were then man­aged by Kazakh gov­ern­ment agen­cies, where the risk of abuse was deemed high by World Bank ana­lysts, owing to the state’s well doc­u­ment­ed track record of grand cor­rup­tion. The Swiss Government reject­ed a BOTA Foundation style arrange­ment that was pre­vi­ous­ly used to return US$115.82 mil­lion, argu­ing it was too cum­ber­some. Direct return, with­out inde­pen­dent over­sight and gov­er­nance, has proven even more cumbersome.

It was also dis­cov­ered by CHRI researchers that US$21.76 mil­lion of the resti­tut­ed assets went into a Youth Corps Program. A ten­der for the cov­et­ed Youth Corp’s Project Coordinator role was con­duct­ed under the watch of the World Bank. A bid sub­mit­ted by the respect­ed inter­na­tion­al devel­op­ment foun­da­tion, IREX (who co-admin­is­tered BOTA), was reject­ed. The con­tract was award­ed to a GONGO con­sor­tium led by the Congress of Youth.

The Congress of Youth’s Chairperson is senior Nur Otan politi­cian Dariga Nazarbayeva. She is the eldest daugh­ter of Kazakhstan’s President, Nursultan Nazarbayev. Further inves­ti­ga­tion found affil­i­ates and sub-bod­ies linked to the President’s Nur Otan par­ty were key ben­e­fi­cia­ries of the Youth Corp Programme funds. These affil­i­at­ed groups pro­mote the val­ues of patri­o­tism and civic duty to the Motherland, which lie at the heart of Nur Otan’s auto­crat­ic grip on pow­er in Kazakhstan.

One of the report author’s Professor Kristian Lasslett observes: ‘Because the resti­tut­ed funds were returned through a series of grants that con­cealed their illic­it ori­gins, they were wrong­ly framed as devel­op­ment grants by the Government of Kazakhstan. They were in fact resti­tut­ed assets that should have been used to redress the harm­ful impact cor­rup­tion has on the pop­u­la­tion of Kazakhstan’.

Report co-author Thomas Mayne adds: ‘Unfortunately it appears part of the funds have been dis­trib­uted to organ­i­sa­tions and indi­vid­u­als close­ly linked to the rul­ing par­ty and President, who extoll the latter’s nation­al ide­ol­o­gy. This is a regime which per­mits no seri­ous dis­sent or polit­i­cal oppo­si­tion. Such an appli­ca­tion of resti­tut­ed funds seems entire­ly against the spirt and poten­tial­ly claus­es of the UN Convention Against Corruption’.

The report authors argue this case of irre­spon­si­ble return has impor­tant lessons as the Swiss Government takes the lead in the return of US$700 mil­lion to Uzbekistan, a coun­try that is more cor­rupt than Kazakhstan.

Professor Lasslett notes: ‘Kazakhstan II is a salu­tary les­son for the Swiss Government and World Bank. But as this case goes to show, when return­ing funds to high­ly cor­rupt coun­tries, strong safe­guards need to be put in place to ensure integri­ty of the return process, and that funds ben­e­fit vic­tims who have suf­fered immense­ly as a result of grand corruption’.

English Version: A Case of Irresponsible Return – Summary Report

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