16 September 2020 –

Switzerland and Uzbekistan have signed a Memorandum of Understanding on the Framework for the Restitution of Illegally Acquired Assets Forfeited in Switzerland for the Benefit of the Population of the Republic of Uzbekistan.

The agreement sets a framework for the return of some USD 131 million (and possibly more) confiscated in criminal proceedings in connection with Gulnara Karimova, daughter of the former Uzbek president. 

Switzerland has published the full text of the agreement.

Below is a statement from Uzbek civil society activists, first published on the website of the Uzbek Forum for Human Rights, responding to the agreement:

“For the attention of:

The Swiss Federal Department of Foreign Affairs (FDFA)
The Ministry of Foreign Affairs of the Republic of Uzbekistan
The Federal Assembly of Switzerland
The Swiss Federal Council
The Swiss Task Force on Asset Recovery, FDFA
The Swiss Agency for Development and Cooperation, FDFA
The Ministry of Justice of the Republic of Uzbekistan
The United States Department of Justice

Statement by Uzbek Civil Society Activists

The governments of Switzerland and Uzbekistan have signed a “Memorandum of Understanding on the Framework for the Restitution of Illegally Acquired Assets Forfeited in Switzerland for the Benefit of the Population of the Republic of Uzbekistan”. According to this agreement, $131 million USD, confiscated as a result of money laundering charges against Gulnara Karimova, the daughter of former Uzbek President Islam Karimov, is set to be restituted. The funds derive from the multimillion-dollar bribes that three foreign mobile operators, MTS, Telia and VimpleCom, paid to Karimova in order to secure telecommunication licenses to operate in Uzbekistan, allowing them to side-step an open and transparent tendering process. Another $650 million USD from similar corrupt deals still remains frozen in Switzerland and is yet to be confiscated.

This Memorandum of Understanding (MoU) laudably advances the cause of justice by including conditions that go beyond the baseline requirements of Swiss law. However, unless its proposed potential conditions are very strictly applied, the document will not succeed in preventing the restituted funds being re-appropriated by corrupt government networks.

The MoU stipulates that a separate second agreement on the modalities of the process of asset return is to be signed by the two states. This second agreement is to ensure the following conditions are met by the Uzbek side:

• Transparency and accountability should be guaranteed in the restitution and disbursement process;
• Use of the assets should benefit the population of Uzbekistan, following the objectives of improving living conditions, strengthening rule of law or fighting impunity;
• Preclusion of persons involved in the commission of the offences;
• Investment of the funds in projects which support sustainable development (in accordance with the UN’s 2030 Agenda and Uzbekistan’s development strategy);
• Establishment of a monitoring mechanism;
• Potential involvement of non-state actors including civil society or community-based organizations.

While these commitments are welcomed and mark an important step towards achieving Uzbek civil society aims, the agreement requires evidence of further domestic reform given the political and institutional environment in Uzbekistan. In July 2019, Uzbek activists called upon the Swiss authorities to ensure that asset return be preceded by a set of anti-corruption reforms that would reduce the risks of re-occurrence of misappropriation of returning assets. Unfortunately, these preconditions have not yet been implemented by the Uzbek Government. It is therefore imperative that the Uzbek and Swiss Governments meaningfully adopt and implement these recommendations in advance of the formal return of assets.

The decision by the Swiss Government clearly contrasts with the worrying precedent and bad practice demonstrated by the French asset return of Karimova’s assets in May 2019 without any preconditions. That decision was tantamount to returning the stolen money to those who are complicit in the theft.

Switzerland’s position also contrasts with the bad practice demonstrated by Sweden in confiscating and appropriating $30 million in illicit funds into its own treasury, previously received by Gulnara Karimova as bribes. It must be acknowledged that, unlike the European Union and its member-states, which do not have any policy on the restitution of stolen assets to third (non-EU) countries, Swiss legislation has such a policy, which, although relatively advanced, could be further strengthened.

It should also be noted that the principles for the return of assets to Uzbekistan, which both parties have agreed on, were not provided for by Swiss law in this case and resulted from a policy decision adopted by the Swiss Federal Ministry of Foreign Affairs out of political good will. The inclusion of these terms in the MoU is therefore an important step forward, also in relation to existing Swiss policies. We would like to take the opportunity to elaborate on this:

Switzerland has adopted two laws governing the confiscation and restitution of stolen assets to affected countries:

1. Federal Act on the Sharing of Confiscated Assets (SCAA), 312.4 operates within the framework of criminal law under which cases are considered by the relevant courts. According to this law, the Swiss government is not required to put forward any preconditions before the country of the assets’ origin for their restitution.
2. Foreign Illicit Assets Act (FIAA), 196.1 operates under the Swiss Civil Code. This law was adopted in 2016 and is more progressive in this particular instance (asset return) than Swiss criminal law. FIAA provides for the setting by Switzerland of some conditionality (or “modalities”) for the return of assets to a country of their origin. These assets should be used to improve the living conditions of the population or to strengthen the rule of law in the affected country.

However, the case of Gulnara Karimova is being held under criminal law procedures which do not legally oblige the Swiss Government to set “modalities” for asset return in the Uzbek case. While we welcome the Swiss decision to adopt this kind of conditionality, we would like to warn against repeating the problematic experience of Kazakh II., i.e. the repatriation to Kazakhstan of $48.8 million confiscated in Switzerland in 2011. As it was reported, the World Bank was instructed by Switzerland to facilitate that asset return to Kazakhstan. The Bank chose an organization controlled by Dariga Nazarbayeva as its general partner to manage the assets for one of its social projects. The assets thus fell under the control of an organization closely associated with the ruling regime and its policy of repression against civil society. We are eager to prevent a similar scenario from happening again with Uzbek assets.

We would therefore strongly urge the Swiss Government to give consideration to and accommodate these concerns in any agreement it may reach with the Government of Uzbekistan.

Recommendations

While this MoU and the modalities of asset return it stipulates is welcome progress, there are still concerns and questions that remain unaddressed.

Firstly, it is unclear how the transparency and accountability requirement will be interpreted and enforced. This requires the development of clear procedures and format, including the participation of Uzbek and international civil society groups in the process of asset return.

Secondly, the inclusion of the word “potential” with regard to participation of non-governmental organizations leaves a loophole for the Uzbek government to ignore the role of civil society in this matter. We also note the absence in the MoU of the word ‘independent’ in relation to civil society. We would implore its inclusion to avoid the risk of involving organizations controlled by the Government of Uzbekistan (so-called ‘GONGOs’) to represent civil society that would severely risk compromising the work achieved to date. Similar circumstances undermined the Kazakh II asset return case. It is also worth noting that there are still no conditions for the activity of an independent non-governmental sector in Uzbekistan where draconian restrictions on the registration of NGOs still apply.

Thirdly, we believe that the requirement of accountability simply cannot be fulfilled until rule of law is established in the country. The legal profession is still under the direct control of the Uzbek Ministry of Justice. There are no open and transparent systems of public procurement, nor a conflict of interest clause. Due process rights are prohibited and selectively enforced. A number of other anti-corruption mechanisms have not yet been adopted by the government, without which abuse in spending the returned assets is very likely. We would urge the Uzbek and Swiss Governments to ensure that the requirement for accountability is met, not in words, but in legislation.

For our part, we will continue to constructively and proactively engage on the asset return, disbursement and monitoring process. We will continue to independently monitor developments, undertake in-depth investigations and provide real-time reports, analysis and recommendations to ensure that Uzbek society and other key stakeholders are informed of the risks in managing the returned assets to Uzbekistan in the absence of serious and effective reforms.

• Umida Niyazova, Founder / Director of Uzbek Forum for Human Rights, resident of Germany; email hidden; JavaScript is required (contact person)
• Farida Scharifullina, civil activist, Uzbekistan
• Azimbay Ataniyazov, civil rights activist, Uzbekistan
• Dilmurad Yusupov, researcher and civil society activist, Uzbekistan
• Timur Karpov, photojournalist, Uzbekistan
• Murat Ubbiniyazov, civil rights activist, Uzbekistan
• Tatyana Rubtsova, civil rights activist, Uzbekistan
• Shahida Tulyaganova, journalist, UK resident
• Kudrat Babadjanov, Uzbek political emigrant, resident of Sweden
• Alisher Taksanov, journalist, Uzbek political emigrant, resident of Switzerland
• Dilobar Erkinzoda, Uzbek political emigrant, resident of Sweden
• Ulugbek Khaydarov, journalist, former political prisoner, resident of Canada
• Bahadir Fayzi, publicist, resident of the United States