Update 12:50 Bern / Zurich, Switzerland (GenevaLunch) – The argument over who gets the Duvalier millions, some CHF5.8 million of them, will finally be heard in court, with the Swiss government 2 May initiating forfeiture proceedings at the Swiss Administrative High Court. The proceedings are the first under a Swiss law that went into effect in February 2011. The Haiti proceedings are also currently the only case requested by the federal government, spokesperson Roland Meier told GenevaLunch, but, he notes “the law was created to cover other cases” as needed.
The new law allows what are known as failed countries to ask for help without pressing criminal charges first, a lengthy, costly and often, as in the case of Haiti, near-impossible task.
If the government’s case for restitution is successful, “the Swiss Confederation will return the Duvalier assets to Haiti in accordance with the provisions of the new Federal Act on the Restitution of Unlawful Assets (RUAA).
The funds were frozen in 1986 shortly after Jean-Claude Duvalier fled Haiti, ending his family’s decades-long dictatorship. They have been continually frozen in Switzerland since then.
Amount that could go to Haiti probably more than CHF5.8 million
The forfeited assets should amount to somewhat more than CHF 5.8 million, according to the Federal Department of Finance (FDF), which announced the opening of proceedings.
The amount appears to have risen and fallen over the years, but Meier, spokesperson for the FDF, told GenevaLunch that it is not yet clear if this is because the funds were in dollars and the dollar has moved against the franc, or if the amount involved is only part of the original funds in question.
Duvalier said in February 2011 that the money belonged to his family’s foundation, and he mentioned a sum of CHF6.8 million. At that time the Swiss government spoke of $5.8m, not Swiss francs (background story, GenevaLunch). Asset Recovery, which has published an online history of the attempts to give the Duvalier funds to Haiti, mentions $4.8 million in 2009. Reuters notes today that the amount of which Duvalier has been accused of embezzling is between $300,000 and $800,000.
Duvalier returned to Haiti 21 January 2011 for the first time since he left in 1986, saying he wanted to help his people, following the massive earthquake there. He had been living in exile in France, initially with a luxurious lifestyle, but he lost much of his money in a costly divorce to his wife Michele.
25 years to close the Swiss law loophole
The RUAA was created to close a loophole in Swiss law that had made it impossible for Switzerland to return the money to Haiti, which never had a stable government long enough in the post-Duvalier days to be able to instigate a claim itself and supply the information required by Switzerland.
Swiss authorities, who made it clear over the years they did not believe the money should be allowed back in Duvalier family hands, kept the funds blocked, but early in 2010 there was a close call where it appeared that Switzerland would not be able to legally continuing blocking the funds.
The federal government 2 February, the day after the new law went into effect, asked the Federal Finanace Department to start proceedings.
Background story, Duvalier funds, GenevaLunch, February 2010
Swiss government begins proceedings to return funds under new law
Geneva, Switzerland (GenevaLunch) – Jean-Claude Duvalier, in his first televised interview since being detained by police in Haiti in mid-January, told UniVision television Wednesday 2 February that the CHF6.8 million blocked by the Swiss government belongs to a foundation created by his family to help Haiti.
He himself never had accounts frozen in Switzerland, he said, and he would like to see the money used to help Haiti recover from the destruction wrought by the January 2010 earthquake.
About the same time on Wednesday the Swiss Federal Council said in a statement that it has asked the Federal Department of Finance (FDF) to begin the “forfeiture” process with the Swiss administrative high court. The FDF must do so within a year. As part of the process “representatives of the Duvalier family will have the opportunity to demonstrate the legal origin of the frozen funds in the framework of the forfeiture procedure now under way.”
Background, GenevaLunch
Swiss lawmakers and the government pushed through new law to be able to return Haiti's money
“It’s a step in the right direction” says assets recovery lawyer, calling Swiss law “pioneering”
Update 20:00 Bern, Switzerland (GenevaLunch) - Some CHF6 ($5.8) million in assets that were placed in Switzerland by Haiti’s ruling Duvalier family before they fell from power in 1986 have now been blocked under a new Swiss law, the Federal Act on the Restitution of Assets of Politically Exposed Persons obtained by Unlawful Means (RIAA).
The law was designed to enable funds such as the Duvalier money to be returned to a country that is unable to obtain them through normal international agreements, notably mutual assistance treaties. A government may be too weak in the wake of a dictator, or may not feel it can afford a lengthy court battle.
Switzerland was legally obliged to unfreeze the assets of the Mobutu clan from the Democratic Republic of Congo in July 2009 after 12 years of court efforts to avoid this.
It came close to being forced for similar reasons to return money to Duvalier in early 2010 despite the government’s determination to avoid this, and a decision by the Federal Criminal Court that the assets were illegally obtained by the Duvaliers.
“Asset recovery is not working as well as it should” worldwide, notes London-based Steven Philippsohn, senior partner of PCB Litigation, who specializes in corporate fraud and asset recovery. He is chairman of the UK Commercial Fraud Lawyers Association. “The major problem is getting criminal proceedings brought in the first place. A country that is trying to get its act together after a dictator will have other priorities.”
He calls the new Swiss law “pioneering” because it allows what are known as “failed countries” to ask for help without pressing criminal charges first, but he cautions that countries with mutual assistance treaties will not be able to take advantage of this.
It is not clear if this covers Tunisia and Cote d’Ivoire, two countries where political leaders’ potential assets have been blocked by the Swiss in 2011. Such treaties could bode well, if criminal charges are brought for stolen funds. “There’s a very effective system in Switzerland, where once a criminal case is launched the investigator has access to banking records. I don’t despair, as a litigator,” says Philippsohn, one of 60 lawyers involved in Fraudnet, an international group that works for very large corporations and sometimes governments to recover assets. ”
Philippsohn and James Nason of the Swiss Bankers Association, who was interviewed by swissinfo, agree that despots who steal not only cover their trails well but they use speed to stay ahead of efforts to bring criminal charges against them. “It doesn’t take rocket science to see that all the people in control of this money need to do is to move it to another country, add another layer to the money laundering. A lot of countries would happily take this money without asking any questions,” says Philippsohn.
Assets frozen for 25 years, but legal battle could soon end
The Duvalier assets have been frozen for the past 25 years but they have been at the centre of a legal tug of war that may now be coming to an end.
The Swiss government has said it wants to see the money, gained illicitly, returned to the people of Haiti. The next step, under the new law, will be for the Swiss Federal Council, the cabinet, to ask the Federal Finance Department to open “a confiscation action” with the Federal Administrative Tribunal, a Swiss high court.
The FDFA (Federal Foreign Affairs Department) notes in a statement 1 February that “the Confederation will take legal action before the Federal Administrative Court to enable frozen assets to be forfeited. Once confiscated, the assets will be returned to Haiti in order to improve the living conditions of the Haitian people. The RIAA illustrates the policy that Switzerland has pursued for the last 20 years in order to avoid being used as a safe haven for stolen assets by PEPs (politically exposed persons).”
Duvalier’s move, to appeal or not appeal, will determine speed at which money is returned
Much thus depends on whether or not Jean-Claude Duvalier decides to appeal a new high court decision. He has not given any indication of what he will do, and his surprise return to Haiti and subsequent detention by authorities in mid-January, leaves this an open question.
Bern, Switzerland (GenevaLunch) – Switzerland’s new law covering potentate funds, dictator’s assets frozen in Swiss banks, goes into effect 1 February 2011. The first beneficiary of what is called the Restitution of Illicit Assets Act is likely to be Haiti, which is scheduled to receive CHF6 million that have been frozen since Jean-Claude Duvalier, known as Baby Doc, fled the country in 1986.
Baby Doc’s surprising return to Haiti 17 January has provoked questions about why he would risk prosecution, and one of the suggestions put forward is that he hopes to keep the Swiss from returning money his family stashed in Swiss banks. The Duvaliers fought long and hard to force Switzerland to unfreeze their assets, saying these were legally gained. Baby Doc’s notoriously expensive lifestyle and divorce in France have sparked rumours that he is short of money.
Switzerland has struggled to keep the funds out of the Duvalier clan‘s hands for several years, cobbled by its own laws that said funds could be returned only if a country asks for judicial assistance once the dictator is gone. Haiti’s plight, a country too poor and disorganized to ask for help, underlined the shortcomings of the law.
The new law, passed in October 2010 (text), will, under certain circumstances, make it possible to return funds to a country that has not been able to follow the normal international legal path to demand their return.
Duvalier, whose motives for returning to Haiti remain a mystery, now faces charges of fraud and embezzlement.
Links to other sites: BBC, France24/AFP, New York Times
Swiss high court ruling on Haitian ex-dictator Jean-Claude Duvalier’s money will lead to new law
Talloires, France, near Geneva, where the Duvaliers fled after leaving Haiti in 1986 (photo: Talloires Tourisme)
Update (links added) 23:30 Bern, Switzerland (GenevaLunch) – The Swiss government Wednesday morning 3 February took the unusual step of freezing funds in a bank account once held by Haiti’s former dictator, Jean-Claude Duvalier, based on a special cases clause in the Swiss constitution. At the same time the Swiss supreme court published its ruling on the frozen assets, saying that they cannot be returned to the Haitian people as mandated by the Swiss Office of Justice in 2009. The court decision has prompted the Swiss Federal Council to freeze the funds long enough to pass a law that will help it avoid releasing the assets “for the benefit of the Duvalier clan, which the Federal Criminal Court deems to be a criminal organization.”
A new law would allow the Swiss parliament input on how to best return the money to Haiti.
The ruling Federal Council is asking the Foreign Affairs Department to “complete by the end of the month its work on drafting a federal law that would ultimately allow such assets to be confiscated, and to submit the draft law for consultation.” A spokesperson for the Federal Foreign Affairs Office told GenevaLunch that the law is likely to be passed in 2010. It will cover similar situations of confiscated assets, several of which have come up in recent years.
Switzerland is the only country in the past 20 years to have returned stolen “potentates” funds to the countries previously ruled by the dictators: more than CHF1.6 billion has been returned to Peru, the Philippines and Nigeria among others.
The Duvalier family has been fighting to obtain access to $5.7 million sitting in Swiss bank accounts since they were frozen in 1986, when the Haitian government made a first request for assistance to obtain what it said were stolen funds. Jean-Claude Duvalier, popularly known as Baby Doc, ruled Haiti starting in 1971, when at age 19 he became the world’s then-youngest ruler. His father, known as Papa Doc, had ruled it for the previous 13 year.
Bern, Switzerland (GenevaLunch) - The Swiss government says it “deplores” the fact that it was obliged 15 July to inform Swiss banks and the heirs to accounts that belonged to former Zaire (now DR Congo) dictator Mobutu Sese Seko that nearly CHF8 million in Swiss banks must be unfrozen, meaning the money returns to the family. “The Federal Department of Foreign Affairs deplores this result, which marks the end of 12 years of freezing of the assets in which all conceivable solutions were attempted. Since 1997 the Confederation has gone to considerable lengths to bring this matter to a satisfactory conclusion.”
