The Delay in Refunding Uzbekistan’s $230 Million: A Deep Dive
For over twelve years, Switzerland has frozen hundreds of millions of Swiss francs linked to Gulnara Karimova, the daughter of Uzbekistan’s former president. This case is the largest in asset recovery, involving the blocking, confiscation, and refunding of illicitly acquired funds. The Swiss Federal Council hopes that the solution chosen in this case, a Swiss-Uzbek trust fund under the auspices of the UN, could serve as a model for future repatriations.
Challenges in Achieving the Goals
An interim assessment of the Karimova affair reveals that the objective of improving living conditions for the population in the home country and strengthening the rule of law has only been partially achieved. Legal disputes in Switzerland and other obstacles continue to hinder progress.
Excess Funds in the Trust Fund
Out of the approximately 800 million Swiss francs seized in Geneva and Zurich bank accounts in the summer of 2012, Switzerland has pledged 131 million dollars to the Multi-Partner Trust Fund. Of this amount, around 95 million dollars have been transferred. $43.5 million was allocated to a health project to reduce child mortality, while $23.5 million went to an education project. Thus, around $28 million from the first tranche remains unused.
Discussions are ongoing within the Fund’s Management Committee regarding the use of these funds. The Fund currently does not require further deposits, according to the Swiss Federal Department of Foreign Affairs (EDA).
However, the transfer of an additional $230 million, which the Federal Prosecutor’s Office (BA) confiscated more than two years ago, has not yet been made to the trust fund. Another sharing agreement between Switzerland and Uzbekistan is required before this can happen. These contracts must be negotiated by the Federal Office of Justice (BJ) based on the Federal Act on the Division of Seized Assets (TEVG) with Uzbekistan.
Reasons for Delay and Legal Hurdles
The BJ has not disclosed the reasons for the delay in the second sharing agreement with Uzbekistan. The lawyers of the Swiss government successfully resisted the disclosure of the first agreement. Uzbekistan is unlikely to be interested in delays, and reservations may have been expressed by the Federal Department of Finance and/or the Department of Foreign Affairs, which have a say in amounts exceeding 10 million Swiss francs.
One of the reasons for the delay could be demands from the creditors of the bankrupt Uzbek foreign trade vehicle Zeromax or the US judiciary on the frozen Karimova funds in Switzerland.
Bumps in the Legal Process
The Federal Criminal Court in July 2022 overturned a decision regarding a further 350 million Swiss francs that the Federal Prosecutor’s Office seeks to confiscate, sending the case back for reassessment. This process has been suspended pending the outcome of the trial against Gulnara Karimova.
However, a verdict is still pending in Switzerland in the case of the central figure in the affair. While the Federal Prosecutor’s Office filed charges in September 2023, the Federal Criminal Court has not set a date for the trial of the 52-year-old daughter of the late Uzbek President Islam Karimov. Ensuring the defendant, who denies all charges, can participate in the main hearing presents a challenge.
Possibility of the Federal Court Traveling to Uzbekistan
The Federal Department of Justice states that there is a possibility of temporarily extraditing a wanted person for trial participation, but this requires prior approval from the requesting state. The Federal Criminal Court has been in contact with Uzbek authorities for several months, primarily to gather evidence.
Gulnara Karimova’s Swiss defense attorney, GrĂ©goire Mangeat, expressed concerns about the deteriorating conditions for the defense team. Uzbekistan imposed a ban on his entry, which expires at the end of this year. The defense team’s lawyers have yet to receive a visitation date in Uzbekistan, citing incompatible conditions with attorney-client privilege and defense rights.