27 March 2020

The Centre for Civil and Political Rights’ Anti-Corruption and Human Rights Initiative recently published a report by the Swiss lawyers François Membrez and Matthieu Hösli entitled “How to return stolen assets: The Swiss policy pathway”, which examines the Swiss policy of asset recovery and how it integrates a human rights perspective. In their report, they outline recommendations for further developing the Swiss policy as a model for the EU and its member states.

The authors provide a detailed description of the Swiss asset recovery policy, and the Foreign Illicit Assets Act (FIAA) in particular, which they conclude is a success – being comprehensive, results-oriented and quite effective: To date, more than 1.7 billion Swiss Francs have been returned to the countries they were stolen from.

The introduction of the report highlights that a “well-functioning and effective asset recovery system has favourable impacts on the prevention of widespread corruption and should be used as one of several corruption prevention mechanisms. The more stolen asset return is aligned with standards of integrity, transparency, and accountability, the harder it becomes to divert assets or carry out corrupt acts. In this regard, the asset return process may support the establishment and enforcement of rule of law and prevent further corrupt practices in the country of asset origin. And, of course, fewer acts of corruption mean fewer corruption-related human rights violations.”

With the adoption of Switzerland’s Foreign Illicit Assets Act in July 2016, the country operationalized Chapter V of the UNCAC: The “FIAA recognises the need for negotiations regarding the modality of asset return with the country from which those assets were stolen, to ensure that the returned assets are used in the interests of the victim population and to improve the rule of law in the country of asset origin. This crucial and revolutionary provision thus fulfils UNCAC Chapter V asset recovery provisions while also serving the interests of victims of corruption.”

Although the Swiss asset recovery policy, and FIAA in particular, are more progressive than those of most other countries, the authors of the report note that “changes could be made to further improve the Swiss foreign asset recovery policy in the perspective of human rights and to protect victims of corruption.” As described in paragraphs 21 and 22 of the report: “FIAA applies to assets located in Switzerland belonging to foreign politically exposed persons, i.e. individuals who are or have been entrusted with prominent public functions by a foreign country, and to their close associates […].” Once such assets are located in Switzerland, “[…] the first step will be the process of freezing such assets. Then a criminal procedure has to be opened, either independently based on Switzerland claiming jurisdiction, or based on an international mutual assistance request by another State. Finally, the confiscation and return of the assets must be ordered.”

In their report, Membrez and Hösli suggest four major and two minor improvements to the Swiss asset recovery policy:

1. Allowing for assets confiscated in accordance with Swiss criminal law to be returned to improve the living conditions of the inhabitants of the country of origin or to strengthen the rule of law in the country of origin. This would in turn contribute to the fight against impunity, extending the application of Art. 17 and 19 of the FIAA. Currently, assets confiscated on the basis of Swiss criminal law are awarded to Switzerland, unless the Federal office of Justice negotiates a sharing agreement with the foreign State. Article 17 and 19 of the FIAA only apply to confiscated assets linked to a foreign politically exposed person that are of illicit origin and that are confiscated following an instruction from the Federal Council (on the basis of 14 FIAA). The authors of the report state that such a proposed change would be in line with a reform requested by the Swiss Federal Parliament.
2. Rewriting Art. 27 of the FIAA regarding criminal penalties to include harsher sanctions for violations of the FIAA committed in business operations, adapted to the size of the company involved. In line with the OECD Working Group on Bribery’s Phase 4 Report 2018 on Switzerland, the authors recommend penalizing companies irrespective of the criminal liability of any natural persons, provided they failed to take certain measures, and increasing the maximum statutory fine, potentially even including other penalties, such as losing the license to operate. They indicate that this change could be a part of overhauling the entire sanction regime against legal entities with regard to criminal business law.
3. Granting well-established NGOs in the field to be part of criminal proceedings in Switzerland with the status of party, like in France, to enhance the sanctions regime with regard to economic crimes.
4. Amending the Swiss Criminal Code (SCC), requiring that fines paid to the Swiss Federal State or to a Swiss canton be returned to the country of origin, i.e. the country where the predicate offense was committed, if the criminal procedure is related to one or more of the following offenses: Bribery of foreign public officials (Art. 322septies SCC), Bribery of private individuals (Art. 322octies SCC), Accepting private bribes (Art.322novies SCC), or Money laundering (Art. 305bis SCC). This would make it possible to use the funds from monetary penalties against wealthy individuals and large corporations for the benefit of civil society of states where the criminal offense was at least in part committed (potentially in the same vein as the possibility provided by Art. 18/4 of the FIAA.
5. Improving transparency of restitution agreements based on Art. 18 (or 10) of the FIAA by making them all available on a website. While the release of such agreements could be requested under the Freedom of Information Act (FoIA), their automatic publication would ensure that the public is aware that an agreement has been concluded in the first place. Given the large funds involved, the publication of these settlements would be in the public interest.
6. Expressly enshrining in law, the possible interpretation of Art. 18 of the FIAA allowing Switzerland to request a State affected by a misappropriation scheme to adopt anti-corruption reforms. This would be more transparent and could in turn reinforce the probability for such clauses to be included in future hand-over

Finally, the authors make suggestions for the European Union to adopt a common policy regarding foreign corruption, including an asset recovery policy.

Read the full report here.