Summary Report: A Case of Irresponsible Return: The Swiss-Kazakhstan $48.8 million (English and Russian translation)

05 Jul 2018

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

 

English Version: A Case of Irresponsible Return – Summary Report

Russian 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

Russian Version: A Case of Irresponsible Return – Summary Report

 

 

Contact

 

Fatima Kanji

E: f.kanji@qmul.ac.uk

M: +447944373416