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Richard L. Cassin
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Elizabeth K. Spahn
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Julie DiMauro
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Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
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Shruti J. Shah
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Russell A. Stamets
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Eric Carlson
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Bill Steinman
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The BOTA Foundation explained (Part Five): The roles of the U.S., Switzerland, and the World Bank in BOTA’s creation

In the case of BOTA, it took four to tango: the governments of Kazakhstan, the United States, Switzerland and the World Bank. For Kazakhstan, as explained in the previous post, BOTA provided a face-saving “out” for President Nazerbayev. Talks between the U.S., Switzerland and Kazakhstan on the disposition of the $84 million, plus accrued interest, in the Swiss Pictet and Cie Bank, started in 2003, shortly after James Giffen was arrested and charged with violating the Foreign Corrupt Practices Act.

According to a U.S. official with insight into the Giffen case, the Justice Department was looking for a way  to use money associated with the case to help victims of corruption, namely the poor. The DOJ was aware that by 2003 the money had been frozen for four years already, and uniquely, the Pictet and Cie Bank account was in the name of the government of Kazakhstan, allowing for direct negotiations on its forfeiture and use without the need for a lengthy forfeiture procedure or post-trial asset recovery effort.

The option of returning the funds to directly to the government of Kazakhstan was not palatable. Establishing a ring-fenced mechanism to return the funds so that Kazakh officials could not touch them or influence how they were spent was appealing.

A former Swiss official involved in establishing BOTA told me his country was also interested in releasing the funds — in a safeguarded way  — to benefit poor Kazakhstanis. Switzerland campaigned particularly hard for the inclusion of an obligation to return illegitimate assets and compensate victims via the UN Convention against Corruption (UNCAC), which came into force in 2005. Switzerland was also involved at the same time with returning $700 million to the government of Nigeria from recovered assets that had been looted by ex-dictator Sani Abacha.

Why did the World Bank (WB) get involved? Several individuals who helped negotiate BOTA’s creation on behalf of the WB told me the key reason was the WB’s most important shareholder, the U.S., joined by Switzerland and Kazakhstan, asked for the Bank’s assistance to find a solution to repatriate the $84 million (plus accumulated interest) to Kazakhstan’s poor. 

The first idea of the Swiss and the U.S. was to give the money directly to the World Bank for redistribution in Kazakhstan, but that didn’t work for the Bank. Why? The source of the funding, and its ties to an active FCPA prosecution, caused serious concerns within the World Bank that Kazakhstan had not given up its claim to the funds. 

After exploring the capabilities of existing foundations in Kazakhstan and finding them lacking, the World Bank proposed as a possible solution setting up an independent foundation. However,  many in the Bank were cautious. No “BOTA-like” foundation had ever set up — would this go according to plan or become an administrative nightmare for the World Bank? 

In the end, according to my World Bank sources, the then president of the Bank, James Wolfensohn, made the final decision. He saw a new opportunity for the World Bank  —  to become increasingly involved in the restitution of assets from corruption cases. From 2005 until 2007, the Bank worked out the modalities leading to the May 2007 agreement between the Kazakh, Swiss and U.S. governments to establish BOTA Foundation.

In the next post, I’ll dig a bit deeper into what was actually in the Memo of Understanding signed by the three governments, including how BOTA would be set up and supervised. 

Part One of this series is here, Part Two is here, Part Three is here, and Part Four is here.

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Aaron Bornstein was the Executive Director of BOTA Foundation, employed by a Washington, D.C. based NGO called IREX, from 2011 until its close in 2014. He is a foundation and international development professional who has worked in 8 different countries on a variety of civil society strengthening, poverty alleviation, and other projects. Aaron is interested in receiving institutional support for the more extensive documentation of the BOTA experience that he is working on. Please send your suggestions, along with your feedback on the BOTA series, to [email protected].

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