A Swiss appeals court last week rejected the appeal of former President Jean-Claude Duvalier, also known as ‘Baby Doc’, who was seeking to prevent the confiscation of US$5.5 million of his assets which have been frozen by the Swiss Government since 2002. Barring a possible appeal to Switzerland’s Federal Supreme Court, the assets may be repatriated to Haiti, the poorest country in the Western Hemisphere, which suffered a devastating earthquake in 2010 killing 200,000 people.
At last week’s hearing, according to a statement published on the Swiss Federal Administrative Court’s website, the forfeiture of Duvalier’s assets was declared valid to preserve Swiss interests because the money held in Swiss banks was obtained “illicitly”1.
Duvalier, otherwise known as ‘Baby Doc’, became President aged 19 following the death of his father François Duvalier, otherwise known as ‘Papa Doc’. In its entirety the Duvalier dynasty lasted nearly three decades. It has been alleged that during that time the Duvalier regime stole Government money running into the hundreds of millions of dollars. Whilst therefore the US$5.5 million would represent a very small percentage of recoveries, the amount, however small, perhaps represents a symbol that there is no impunity. Others might say it is a pyrrhic victory.
On Duvalier’s return to Haiti in 2011 he declared he had “come to help” following the devastating earthquake; however, many believed this was an attempt to take advantage of a then-existing political vacuum and regain power. Duvalier was greeted on his arrival in Haiti with state prosecution charges regarding embezzlement of public funds during his reign, which he denied. Proceedings for corruption and human rights abuses are on-going.
The Swiss appeal court’s decision marks not only a potentially positive development for Haiti but an indication of Switzerland’s willingness to be proactive in helping States recover alleged corrupt assets.
In 2011 Switzerland passed legislation to enable countries to obtain the restitution of funds banked offshore by despotic former rulers without producing a domestic court conviction. The legislation, nicknamed the ‘Duvalier Law’, took effect after growing international pressure following revelations that financial institutions had accepted money from former dictators including the former Presidents Duvalier, Marcos and Nigeria’s Sani Abacha.
At the time of implementing the legislation, Valentin Zellweger, a director at the Swiss foreign ministry’s department of international law, said that “[Haiti’s] judiciary is too weak to follow up with the proceedings. Switzerland’s new law is designed to fill that gap”. The legislation permits an alleged corrupt public official’s Swiss holdings to be frozen and confiscated “unless the legal origin of the assets has been demonstrated” effectively shifting the burden of proof from the requesting victim State to the alleged wrongdoer.
For Lex Duvalier to apply, the victim State must have asked the Swiss authorities for a preliminary freezing of the assets. Second, the demanding state must be incapable of cooperating fully in the asset recovery process, due to the collapse or non-availability of the judicial system. The Swiss have sought to consolidate Lex Duvalier and other associated legislation into a new proposed law entitled: “Federal Act on the Freezing and Restitution of Unlawfully Acquired Assets of Politically Exposed Persons”. Again, the new law contains a condition that the victim State must effectively have a non-functioning judicial system and so its applicability is likely to be limited in many grand corruption cases. There has been a great deal of discussion as to whether any of the Arab Spring countries presently satisfy such a condition; arguably not.
In last week’s Judgment, the Swiss appeals court concluded that: “Jean-Claude Duvalier and his entourage did not demonstrate that the increase in their assets had resulted from activities unrelated to their role as public officials...the level of corruption of the Haitian state was notoriously high during the period in which they held public office”.
The decision brings Haiti one step closer to recovering these alleged proceeds of corruption. However, in relation to repatriation of the assets, the Swiss officials have already apparently indicated that “they want the money to be used for projects to tackle poverty in the island nation”.2 That raises another debate as to whether the requested State should and can impose conditions on the return of funds. However, that debate is in some ways a welcome one once the assets are safely secured.
In the meantime, the Duvalier action and the Arab Spring cases highlight a problem in relation to all asset recovery initiatives. Seeking to recover assets from kleptocrats after decades in power is a difficult task – evidence has been lost or destroyed, stolen monies have been spent, cleverly laundered and/or co-mingled with apparent legitimate funds, the predicate crime can be hard to establish to a criminal standard and/or prosecute or at all, and the old regime may still have huge influence over the new. Whilst by no means should these factors deter attempts to recover stolen or corrupt assets to serve the interests of justice, stronger international measures clearly need to be implemented to detect, prevent and confiscate illicit flows in the first place, and a great deal of responsibility lies with financial centres worldwide and their Governments. The importance of political will can no longer just rest with the victim State but responsibility also lies with those countries where corrupt assets are frequently laundered.