Switzerland to Return to Uzbekistan $131m From Karimova Accounts

Published: 15 September 2020

Gulnara KarimovaGulnara Karimova (Photo: Timir01, Wikimedia, License)

By Eli Moskowitz

The Swiss and Uzbek governments established terms for the return of US$131 million in assets confiscated from the daughter of the former Uzbek President Islam Karimov. Gulnara Karimova had stashed some of her ill-gotten money in Switzerland, relying on the prominent financial secrecy jurisdiction to hide a portion of her offshore fortune.

The memorandum signed by the two countries directs how Uzbekistan ought to utilize Gulnara Karimova’s confiscated criminal proceeds, and sets a framework for the future repatriation of additional assets that were frozen, according to a press release published by Switzerland’s Federal Council on Friday.  

The agreement, which still needs to be formalized before it becomes legally binding, stipulates that Uzbekistan will need to “develop good practices on asset return.” These conditions are further described as a “restitution in a transparent and accountable manner that satisfies the scrutiny of civil society and the international community.” 

The portion set to be repatriated, which the Swiss government said it “definitively confiscated” in 2019, is only a fraction of the 800 million Swiss francs ($882.8 million) of Karimova’s assets that were frozen by the country’s attorney general in 2012. 

Karimova was profiled in a series of in-depth investigations by OCCRP, which revealed how she amassed over $1 billion by wielding her political influence to squeeze significant payments from several international telecom-related companies.

As detailed in one investigation, Swiss authorities became suspicious of Karimova after multiple individuals attempted to withdraw several hundred million from her account at Lombard Odier, one of the largest private banks in Switzerland, which found that they were not authorized to do so and subsequently notified the country’s anti-money laundering authorities. 

Ms. Karamova, the eldest daughter of Uzbekistan's strongman Karimov – who served as the country’s first head of state until he died in 2016 – was once widely seen as his chosen successor before the two had a falling out.  

She was first placed under house arrest in 2014, but was then transferred to a prison in 2019 after she was found to have violated the terms of home detainment. 

In March of this year, Uzbekistan’s Supreme Court ruled that they would extend her sentence for another eight years on charges that include extortion, racketeering, money laundering and embezzlement of public funds – criminal activities that are said to have cost the county more than 2.3 billion. 

Following the ruling, Altynai Myrzabekova, Transparency International’s Regional Coordinator for Eastern Europe and Central Asia told OCCRP that while the decision was a positive development, there “is still a long way to go to ensure that all her assets abroad are returned and used in a way that benefits the people of Uzbekistan.” 

In addition to the Swiss criminal investigation, the United States, Sweden and the Netherlands have also been investigating her corrupt business dealings.

While Swiss authorities stated that the agreement they reached would include “transparency and accountability in the restitution process,” which include projects that support sustainable development, the establishment of a monitoring mechanism, and the “potential involvement of non-state actors,” some have criticized this framework as an empty initiative.  

Katherine D. Wilkins, a PhD candidate at the Hertie School of Governance in Berlin who is also an expert at the international non-governmental organization Global Initiative, argued on Twitter that the recent framework agreement is insufficient, saying that “the practice of asset return for corruption cases is woefully inadequate.”  

She explained that this agreement provided “no coherent agreed framework”, and described the proposed asset repatriation as “an ad hoc return,” made in partnership with an Uzbek government has not demonstrated “a move from paper to practice.”  

The agreement, she concluded, is “a suboptimal response for such a significant asset recovery case.”