Within a half hour of Mubarak’s resignation on Friday, Switzerland had acted.
“I can confirm that Switzerland has frozen possible assets of the former Egyptian president with immediate effect,” a Swiss government spokesman told Reuters, without saying more.
Later in the day, a Geneva-based news site said an “estimated CHF3.6 billion [$3.7 billion] in assets that may have been deposited by Hosni Mubarak and those close to him were frozen within 30 minutes of the announcement of his resignation.”
The speed of Switzerland’s move was striking. And it was the best news to those in Egypt who’ll be hunting for Mubarak’s treasures. And yet, we thought, how much more important if Switzerland’s announcement had come a month earlier. Or even a year earlier, or a decade.
To its credit, Switzerland isn’t looking for excuses these days to hold back. On a single day last month, the country’s federal council froze suspected assets of Tunisia’s deposed president and the incumbent of Ivory Coast who lost an election but refused to go. The Swiss president, Micheline Calmy-Rey, said then that the asset freezes were intended to “encourage” the countries to seek help in possible criminal cases against the men.
Swiss policy has given corruption fighters plenty to cheer about. Still, it takes a revolution, coup, or similarly cataclysmic event before the Swiss and others will act against self-enriching rulers. So the question is, will the time ever come for preemptive action? For the freezing of assets while the incumbent still sits on the throne, otherwise undisturbed?
The question is crucial. Once corrupt rulers lose access to their plundered wealth, they lose a major source of their illegitimate power. Money not only talks, it keeps rulers in office long after they’ve gone stale. Loot fuels patronage. It buys loyalty and, of course, anti-personnel hardware. Take away the offshore billions and suddenly the emperor has no clothes.
Preemptive asset freezes would trigger regime changes and potential shifts in regional balances of power. That’s too much blowback for Switzerland or other individual countries to risk, unless they’re acting according to international norms and expectations.
Right now, no one can say for sure whether grand corruption violates international law. Some academics, diplomats, and politicians argue that yes, according to the Rome Statute, grand corruption is a “crime against humanity” and therefore within the jurisdiction of the International Criminal Court in the Hague. That, however, isn’t the public consensus within the international community. And until it is, countries aren’t likely to act preemptively to freeze the ill-gotten gains of leaders who are still in charge.
There is another aspect to this story that the media and commentators overlook. Plundering dictators present a global problem. However, funds of criminal origin are very often identified at banks in other countries where “know-your-customer” rules are not as strict as in Switzerland simply because some of the transfers involved a bank in Switzerland which, as required by Swiss law, held detailed documentation not only about the account holder but also about the beneficial owners of the assets and those holding power of attorney over the account. Thus the Swiss investigation into the case of the late Nigerian dictator Sani Abacha revealed that a substantial proportion of his plundered funds had first been laundered by banks in the US and UK. A subsequent investigation by the UK banking regulator in fact revealed that between 1996 and 2000, 23 British banks laundered some USD 1.3 billion of Abacha’s illicit assets. In September 2000 Nigeria’s ambassador to Switzerland, Mr. Ogbe Obande, told Swiss radio: “I’m happy to say without equivocation that so far Switzerland has given the best cooperation to Nigeria in its quest to recover the looted property stashed in banks across Europe and the Americas.” Switzerland remains the only country in the world to have returned Abacha funds to Nigeria and I have yet to see a report on Abacha funds at US banks
But at what point does a ruling head of state get re-classifed as a plundering dictator whose funds have to be found and frozen? When the Cold War ended, a whole generation of US-supported dictators (e.g. Mobutu, Marcos, Duvalier) who had long served the strategic interests of the West by helping to contain the Soviet threat suddenly became a political liability and were dumped. When Duvalier left Haiti in February 1986 for exile in the south of France he was physically flown there in a US military aircraft along with more than 100 crates of personal effects, most of which are believed to have been stuffed with cash. Marcos spent his final years in the US and Mobutu had a splendid residence on the Cote d'Azur, yet we never heard much about their assets in the US and France. Did we not recently see pictures of Sarkozy hugging Ben Ali of Tunisia? Wasn't Mubarak long considered by the US to be a reliable friend in the Middle East?
Finally, no plundering dictator opens an account in his own name. In fact they go to great lengths to disguise their beneficial ownwership of assets. So when a Swiss bank does break through the camouflage and detects the real beneficial owner behind criminal money it should be praised and not criticised.
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