Swiss Agree to Return $131 Million to Uzbekistan Via UN Trust Fund

on August 16Uzbek and Swiss officials have signed an agreement for the return to Uzbekistan of $131 million seized by Switzerland in a money laundering investigation of Gulnara Karimova, the daughter of late Uzbek President Islam Karimov.

The agreement is based a framework announced in 2020 when the Uzbek and Swiss authorities decided “the principles and stages of restitution” of Karimova’s confiscated assets to the government of Uzbekistan, with basic principles of transparency and accountability of return and the ultimate goal the benefit of the Uzbek people.

I detailed Karimova’s sordid story in 2020 therefore:

In 2010Leaked US diplomatic cables characterized Karimova as a “robber baron.” She was, one cable said, “the most hated person in the country.” However, it was not until 2012 that the scale of Karimova’s corruption surpassed her father’s tolerance. Her machinations spilled into the international consciousness when accusations surfaced in swedish public television that a fictitious company linked to Karimova had solicited and received bribes from a Swedish telecommunications company with the aim of entering the Uzbek market, of which Karimova was queen.

In the years that followed, she finally disappeared from public view (after having been an aspiring pop star, Uzbekistan’s permanent representative to the United Nations in Geneva, and its ambassador to Spain) and placed under house arrest by his father’s administration. That extended beyond the Karimov era, as the change in leadership following Karimov’s death in 2016 also presented an opportunity for the Uzbek government to lobby for asset return worth millions he had taken out of the country.

The recent agreement, which Swiss President Ignazio Cassis signed together with the Minister of Justice of Uzbekistan, Ruslanbek Davletov, stipulates the creation of a UN multi-partner trust fund for the $131 million, “but also for any assets definitively seized in the future in the ongoing criminal proceedings in relation to Gulnara Karimova.”

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As noted above, in 2014 Karimva’s excesses went too far and her own father ordered her house arrest. Karimova died in 2016, and the new Uzbek administration, under Shavkat Mirziyoyev (who had served 13 years as prime minister under Karimov), brought criminal charges against her. In 2017, she was sentenced to 10 years in prison, which was commuted to five years of house arrest. Two years later, in 2019, she was arrested again for allegedly violating the terms of her house arrest. in 2020she was tried again in Uzbekistan (behind closed doors, again), was found guilty of extortion, money laundering and other charges, and was sentenced to an additional 13 years and four months.

In 2012, Swiss authorities froze around 800 million Swiss francs ($842 million) amid several investigations into Karimova’s business dealings. The $131 million was definitively seized in 2019, at which point the Uzbek government began seriously seeking the return of those funds to Tashkent.

As of 2020, more than $715 million in assets remained frozen by the Swiss government and subject to ongoing criminal proceedings. Some of those funds could eventually be transferred to the new trust if they too were definitively seized.

In June 2022However, a Swiss court ruled that the country’s attorney general had failed to prove that around 293 million Swiss francs ($303 million) was the product of the corruption of a foreign official. According to Karimova’s lawyers, the court determined that Karimova could not be considered a public official. On Twitter, the Uzbek Forum for Human Rights said the ruling was problematic because in autocratic countries like Uzbekistan, formal government functions are often intertwined with family interests. Karimova may not have held an official government position (although she did at times), but everyone knew whose daughter she was and she arguably used that influence for personal gain.

Karimova’s assets are not only frozen in the Swiss Alps, but in other places, including the United States, Sweden and the Netherlands.

In March 2019, the US Department of Justice said in a ad that the Russian telecommunications company MTS had agreed to pay $850 million in connection with the bribery of Uzbek officials. The DOJ also announced the opening of charges against Karimova and Bekhzod Akhmedov, former CEO of an Uzbek subsidiary of MTS, “for his participation in a bribery and money laundering scheme involving more than $865 million in bribes from MTS, VimpelCom Limited (now VEON) and Telia Company AB (Telia) to former official Uzbekistan to secure their assistance in entering and maintaining their business operations in the telecommunications market of Uzbekistan”.

In May 2020, France opted to send $10 million that had been seized from Karimova to Uzbekistan without conditions. Accountability advocates called it a “Lost opportunity.”

The Swiss case involving the $131 million represents a more nuanced approach, with an eye toward the kind of transparency and accountability that anti-corruption campaigners have emphasized is necessary. Corruption remains a serious problem in Uzbekistan and while campaigners agreed that Karimova’s millions should return to the country, many worried that the cash flow would be siphoned off again.

According to the Swiss authorities, under the recent agreement the new trust is financed “will be harnessed to advance the SDGs [Sustainable Development Goals] in Uzbekistan.”

Funding will be provided for projects that are in line with the United Nations Sustainable Development Cooperation Framework (UNSDCF) for Uzbekistan.

The projects will be implemented by the UN agencies participating in the fund, working with various implementing partners. They will be monitored in accordance with the monitoring and evaluation framework established for the fund and the rules and regulations of the United Nations system. Civil society organizations will act in a consultative capacity.

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