Switzerland is returning assets stolen by politically exposed persons to their country of origin, based on constructive dialogue with destination governments. Returned assets are used to benefit local development or strengthen the rule of law, for example for a social security programme in Nigeria. Success factors include early dialogue and a close partnership between the transferring and receiving countries.
A development-friendly approach to returning stolen assets
Abstract
Challenge
Switzerland's foreign policy aims to promote the rule of law, justice, transparency and welfare. The global problem of corruption is an obstacle to achieving these goals, and annual losses to developing countries from illicitly acquired assets are estimated to total between USD 20-40 billion. Switzerland is therefore taking measures to combat corruption at both domestic and international level. This includes the identification, freezing, confiscation and return of stolen assets. This raises challenging questions: how can international co-operation, which is essential for the confiscation of assets, be facilitated? How can confiscated assets be returned to support sustainable development, while preventing them from being stolen again or misused?
Approach
Switzerland has developed a practice and a legal framework for the recovery and return of assets stolen by politically exposed persons. Key elements of Switzerland’s approach include:
Partnership: The country of origin and Switzerland commence a partnership at the earliest opportunity and maintain it throughout the asset recovery process. In the last phase, they identify the best way for the assets to be returned and how to implement control measures. They conclude a binding agreement on the modalities of the restitution of assets.
Benefiting the population: Returned assets should be used to improve living conditions or strengthen the rule of law in the country of origin.
Monitoring: Control systems ensure that funds are used as intended and foster transparency and accountability.
Non-governmental stakeholder’s involvement: Non-governmental stakeholders should be included in the process to the extent possible.
International engagement: Switzerland promotes expert dialogue on asset recovery and asset return, and has helped formulate, along with partners, the Guidelines for the Efficient Recovery of Stolen Assets.
Results
Switzerland has successfully applied this approach in a number of cases.
In 2017, Switzerland, Nigeria and the World Bank signed an agreement to return illicitly acquired assets worth USD 321 million to Nigeria. A key aspect of the approach included finding a solution that matched the expectations of Nigeria, Switzerland and Nigerian civil society. This was achieved by using the assets for a World Bank supported programme for social security for the poorest. The agreement also set out control measures to prevent and respond to any misuse of funds.
In 2020, Switzerland signed further asset return agreements with Turkmenistan and Peru, following similar approaches.
Switzerland’s proactive approach has been met with international interest.
Lessons learnt
The different legal, political and development contexts surrounding the return of stolen assets require a case-by-case approach. There are, however, basic standards such as the Global Forum on Asset Recovery (GFAR) Principles which are a key reference for ensuring a transparent, accountable and development-oriented restitution of assets to the partner country. In particular:
Early dialogue: Communication between the countries involved should start as early as possible, continue throughout the process, and address mutual interests and expectations.
Shared responsibility and partnership: Both sides are interested in ensuring that the returned assets are not misused again. Return agreements strengthen the credibility of both countries in the fight against corruption while contributing to development objectives.
Involvement of international organisations and non-governmental stakeholders: Asset return is primarily a process between two states. However, most of Switzerland’s restitutions included participation of international organisations in implementing and monitoring the restitution projects. Non-governmental stakeholders can also play an important role in this regard.
Further information
Federal Department of Foreign Affairs, Illicitly acquired assets of politically exposed persons, https://www.eda.admin.ch/eda/en/fdfa/foreign-policy/financial-centre-economy/illicit-assets-pep.html.
Federal Department of Foreign Affairs, Recovery of potentate assets (Infographic), https://infogram.com/asset-recovery-en-1h7v4pwwm9o0j6k.
Federal Department of Foreign Affairs, No dirty money (brochure), https://www.eda.admin.ch/dam/eda/en/documents/aussenpolitik/voelkerrecht/edas-broschuere-no-dirty-money_EN.pdf.
Federal Department of Foreign Affairs, Restitution of USD 321 million by Switzerland to Nigeria, https://www.dfae.admin.ch/eda/en/fdfa/fdfa/aktuell/news.html/content/eda/en/meta/news/2017/12/4/69088.
Federal Department of Foreign Affairs, Switzerland returns USD 1.3 million to Turkmenistan, https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-77797.html.
Federal Department of Foreign Affairs, Trilateral agreement: Switzerland and Luxembourg to return illicitly acquired assets to Peru, https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-81674.html.
Basel Institute on Governance, Guidelines for the Efficient Recovery of Stolen Assets, https://learn.baselgovernance.org/course/view.php?id=20.
Global Forum on Asset Recovery, GFAR Principles for Disposition and Transfer of Confiscated Stolen Assets in Corruption Cases, https://star.worldbank.org/sites/star/files/the-gfar-principles.pdf.
OECD resources
OECD (2019), OECD Development Co-operation Peer Reviews: Switzerland 2019, Development Co-operation Peer Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264312340-en.
OECD, The Anti-Corruption and Integrity Hub, https://www.oecd.org/corruption/integrity-forum/hub.
To learn more about Switzerland’s development co-operation see:
OECD (2021), "Switzerland", in Development Co-operation Profiles, OECD Publishing, Paris, https://doi.org/10.1787/00eb9f0b-en.
