On Friday, 28 February, the Swiss Public Prosecutor very publicly declared that it had launched a money laundering investigation into deposed Ukrainian President Viktor Yanukovych and his son Oleksandr. The Swiss authorities also froze the bank accounts and assets belonging to the ‘former President’ and 19 other members of his “entourage”, as described in a Swiss Federal Council statement, in order to “avoid any risk of the misappropriation of Ukrainian state assets”.
No details have yet been released on the amount of assets that have been frozen in Switzerland. The Federal Council added in its press release that it is co-operating fully with the Ukrainian authorities and that should the frozen assets subsequently be proved through criminal proceedings to have been illegally obtained, they will be returned to Ukraine.
Liechtenstein followed its neighbour Switzerland’s example and froze the bank accounts of the same officials, while Austria announced an asset freeze on 18 Ukrainian officials as a preliminary security measure, although it is not clear as yet the extent to which Mr Yanukovych or his associates have any assets in those countries.
In relation to the rest of Europe, in Brussels Olivier Bailly of the European Commission announced that the European Union has agreed to sanctions against former Ukrainian officials but that “no final decision by the member states” has yet been made concerning who should be subject to the restrictions. Indeed, MEPs “urged” the EU to implement targeted sanctions (click here for news article). Yet, nearly two weeks after the removal of Yanukovych no sanctions appears to be in place. If stolen assets from Ukraine are at this very moment being laundered through the EU Member States’ financial systems, then the EU’s response is somewhat pedestrian. The EU took 37 days, for example, to freeze Mubarak’s assets following his regime’s collapse.
In the UK no asset freeze has been implemented. The UK is either holding back for an EU led sanctions regime, or a formal mutual legal assistance request from Ukraine. The UK does not appear to have launched a standalone domestic criminal investigation into, for example, money laundering, despite very well publicised allegations linking Ukraine’s corruption to the UK including through the use of UK corporate vehicles. William Hague has offered the UK’s technical assistance, and the US has followed suit. But a policy of awaiting and requiring strong bilateral support before taking immediate action against suspected corrupt assets makes the chances of successful asset recovery more remote. Ukraine in its present state of upheaval and with huge foreign policy concerns vis a vis Russi, is unlikely to be able commit resources at the moment to the requirements of a formal MLA route.
Transparency International Ukraine commended the swift action by Bern, Vienna and Vaduz and urged other governments in Europe and the US to take similar precautions. Organisation head Oleksii Khmara stressed the importance of governments moving fast to freeze assets highlighting the fact that in some jurisdictions it takes less than 10 minutes for someone to set up an anonymous shell company online for the purpose of hiding money. The lessons of Egypt and Libya and now Ukraine coupled with the ease and speed at which money can be laundered again serves to emphasise the fact that some countries, including the UK, should consider implementing new laws that mirror those of say Switzerland and Canada, which enable quicker freezing of corrupt assets. Perhaps they need to introduce laws that go further, in specific cases of grand corruption, in order to make confiscation or forfeiture easier and faster; the success stories unfortunately continue to remain few and far between, and take years if not decades to reach a happy conclusion.
In the end, however, we do have to wonder why foreign countries that house foreign corrupt assets need to wait for a regime change at all before taking any meaningful positive action. Clearly, diplomatic and foreign policy considerations as well as state immunity are in play but it remains unsatisfactory that in so many cases ‘host’ countries only react when foreign corrupt leaders leave their post willingly or unwillingly. By then, you are just playing a game of catch-up where the corrupt have a huge head start.