Switzerland is not a safe haven for stolen funds

Micheline Calmy-Rey, 13:15, Tuesday 15 March 2011

Switzerland was the first country to freeze the assets of Ben Ali, Mubarak and Gaddafi, writes Micheline Calmy-Rey.

Few people could have imagined that the people's uprising in Tunisia would have such far-reaching consequences. On January 14, the former President was forced to flee the country. Five days later, on the 19th, the Swiss government froze any assets of the former President, his family and entourage that might be located in Switzerland.

The Swiss government made a similar decision on the evening of February 11, a mere 30 minutes after the resignation of President Mubarak in Egypt. And when the Libyan rulers used force against their own population, the Swiss Government decided on the 24th to freeze any assets of Muammar Gaddafi and his entourage that might be held in Switzerland with immediate effect. Why did Switzerland take these measures and block the assets of former dictators? Why has Switzerland been the first country in all three cases to take this action, moves that have subsequently been emulated by many other countries?

The answer is very simple: because our policy on this matter is absolutely clear. For almost twenty years the Swiss government has been consistently working to ensure that illicitly acquired assets are not invested in the Swiss financial centre. These efforts have long been recognised in specialist circles, and international experts regularly acknowledge that few countries have been as proactive in this area as Switzerland. A specialist of the World Bank recently remarked: “The idea of Switzerland as a safe haven for stolen funds belongs to the past, and, if at all, is best left to crime thrillers.” Although Switzerland is only ranked seventh amongst the world's financial centres, it occupies first place when it comes to the issue of returning stolen funds: in recent years no other country has even come close to repaying as much money derived from illegal activities to the countries of origin as Switzerland. In total 1.7 billion US dollars has been returned.

Is the reason Switzerland has returned more money simply that it accepted more dirty money than other financial centres? Today competition amongst financial centers’ is global. The reputation and credibility of a financial centre play an increasing part in this competition.

It would therefore be naive to believe that Swiss banks can allow themselves the luxury of standards that are less stringent than those of its immediate competitors. Rather, the reasons for our success can be found in the change of attitude that has taken place in Swiss politics. In recent years, the Government and Parliament have tightened existing laws and created new ones: loopholes have been identified and where necessary legislation improved. In many areas Swiss legislation today goes beyond that of many other countries and serves as a model. The latest example is the Act (Taiwan OTC: 3492.TWO - news) on the restitution of illicit assets of politically exposed persons, commonly referred to as the Lex Duvalier. Although it is often in fragile countries that corruption is rampant, these are precisely the ones that are powerless to protect themselves against the intrigues of their rulers. The Swiss law on restitution is the first of its kind in the world: it enables assets that have been illicitly appropriated or embezzled by dictators to be returned to countries that are no longer in a position to use judicial processes to request its return from abroad.

Nonetheless, I remain convinced that in the first instance our task is to tackle corruption in those places where it occurs. This is one of the reasons why the Swiss government has blocked the accounts of Ben Ali and Mubarak: to help the countries affected to take the legal steps necessary to recover the assets allegedly stolen as quickly as possible.

Since the accounts were frozen, both Egypt and Tunisia have asked Switzerland for legal assistance. So, the reaction of the Swiss government has already proven its worth and that is something we can be proud of.

Micheline Calmy-Rey Switzerland's Federal President and Head of the Federal (SES: E1:F20.SI - news) Department for Foreign Affairs FDFA. Courtsey finance stories from telegraph.co.uk

Tunisian asset freeze in Ottawa's sights

By Laura Payton, CBC News
Mar3, 2011 12:00 PM ET

Canada will soon be able to freeze the assets of the former Tunisian regime.

Justice Minister Rob Nicholson and Foreign Affairs Minister Lawrence Cannon announced Thursday the government has introduced legislation to make sure it has the power to freeze the assets of foreign heads of state.

The government says it was able to stop Libyan dictator Moammar Gadhafi and his close associates from accessing their assets in Canada because of a UN resolution passed last week. But Tunisia was a different case.

With the brother-in-law and sister of former Tunisian dictator Zine El Abidine Ben Ali in Montreal, opposition MPs have been demanding the government take the same action against that regime.

"This would allow the government of Canada to order the freezing of assets or the restraint of property of foreign, politically exposed persons ... so that assets of foreign nationals can be rapidly frozen under certain circumstances," Nicholson said.

Prime Minister Stephen Harper was asked about the legislation Thursday in Toronto.

"As I said in the House of Commons several times, the government is trying in every way possible to freeze the assets of former dictators," Harper said in French.

"If we're going to freeze someone's assets, we have to have a legal process in place in order to do that. And unfortunately, the previous legislation or the legislation now in place does not actually give us the powers to do that," Harper said.

"This new legislation, and I do hope that we will have the support of the parties to get it through quickly, gives us more powers to take action in those cases and in future cases as well. Because I think it’s quite clear that these cases will continue to come forward."

The proposed legislation imposes three conditions: that the subject of the freeze has held important positions in the state, that the state is in internal turmoil and that it's in the interest of international relations to freeze the assets.

It recognizes that it could be hard to get evidence from another country during a period of conflict.

Under the bill, a freeze would expire automatically after five years unless it's extended.
How much Gadhafi money in Canada?

Speaking on CBC's Power & Politics with Evan Solomon, Nicholson wouldn't say how much money Gadhafi had in Canada. He said that is a policing matter and his job is to give law enforcement agencies what they need to do their jobs.

"It's something that we have to have in Canada, and in my opinion, there are gaps in the law," Nicholson said.

The bill was introduced in the House of Commons Thursday morning and has to pass through the House and the Senate before it becomes law.

Liberal MP Dominic LeBlanc said his party needs to look at the legislation, but in principle doesn't have a problem with it. He said the party is speaking with the government about getting it through the House with half a day of committee hearings.

"We certainly recognize the urgency and the legitimacy of passing this legislation," LeBlanc said.

NDP foreign affairs critic Paul Dewar questioned why it took problems with Gadhafi and Ben Ali for Canada to act.

"We knew there were dictators stuffing money into our banks," Dewar said.

"We don't know (who else has money here), and that's something we need a full accounting on."

Dictators need more than 'Zap, you’re frozen!'

Monday, Mar. 07, 2011 9:55PM EST

The Freezing Assets of Corrupt Regimes Act, a bill tabled in Parliament last week, is a good start at preventing tyrants and their close relatives from enjoying ill-gotten gains. But it depends upon regime change and does not deal with current misappropriations by incumbent dictators and their associates.

If the bill is passed, as seems likely, the Canadian minister of foreign affairs will be able to freeze assets if and only if the government of the foreign country concerned makes a request for a freezing order.

Teodoro Nguema Obiang Mangue, the son of Teodoro Obiang Nguema Mbasogo, who since 1979 has been the President of Equatorial Guinea, a small but oil-rich country, owns a $30-million house in Malibu, Calif., and was recently reported to have ordered a $380-million yacht to be built in Germany. His $60,000 salary as the Minister of Agriculture and Forestry would not enable him to make such purchases. It is reasonable to suspect misappropriation of Equatorial Guinea’s wealth. But if Mr. Obiang Mangue had assets in Canada, the bill could not freeze them unless his presidential father asked Canada to do so – or was overthrown.

At present, Canada could only act in such a case by establishing a whole sanctions regime against the country. As for the International Criminal Court, its prosecutor has power to lay charges for genocide, crimes against humanity and war crimes, but not for massive thefts and frauds.

The new bill does do more than locking barn doors after the tyrannical horses have fled. Still, the Canadian Departments of Justice and Foreign Affairs should continue on the same path, to think about ways to help interrupt misappropriations that are works in progress by people who are still in power. It is always a delicate matter to try to correct injustices in foreign countries in which their governments are implicated – but Canada should be prepared to deal with the most flagrant cases, when the profits of unjust enrichment find their way to this country.