IBA Conference Buenos Aires AntiCorruption Committee Recovery of

IBA Conference Buenos Aires Anti-Corruption Committee Recovery of looted assets 15 October 2008 Switzerland Yves Klein Monfrini Crettol & Associés, Geneva www. mcswisslaw. com

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Remedies available to foreign government MLA Proceedings Criminal Proceedings Two stages: 1. Tracing and freezing of assets 2. Recovery Civil Proceedings

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Use of MLA proceedings to trace and freeze assets: Pros: • No costs or attorney fees involved • May be necessary to support domestic criminal proceedings Cons: • Slow • No possibility of real interaction • "Dumb" investigation without real grasp of the facts • Complementary MLA requests necessary • Authorization necessary for use of evidence in other proceedings

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Use of civil proceedings to trace and freeze assets Cons: • Discovery proceedings almost inexistent under Swiss law • No production orders against third parties in most Swiss cantons • Banking secrecy opposable in most Swiss cantons • No concept of tracing of assets or constructive trust • Prima facie evidence of the existence of assets must be presented • Ultimate beneficial ownership test is insufficient. The claim must exist against owner of the assets, unless case of abuse of law • Action on the merits must be started within weeks from the freezing order • High court and legal costs

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Use of criminal proceedings to trace and freeze assets Pros: • Simple, speedy and costless way to initiate proceedings • Full participation in the investigation as party suing for damages (partie civile) : right to consult and copy the whole file; right to interrogate witnesses; right to request investigative or freezing orders; right to appeal decisions or to file observations; informal meetings with investigators, prosecutors or examining magistrates • No banking secrecy • Generic designation of assets in freezing orders (e. g. beneficial ownership or signature power) • Blanket freezing orders in case of criminal organization • Possibility to seize assets or documents abroad through MLA request • Possibility to use evidence in other proceedings abroad or in Switzerland • “Smarter" investigation than MLA proceedings, as the investigators need to have a grasp of the facts • Statute of limitations of 15 years Cons: • No complete control of the proceedings in case of settlement

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Jurisdiction of Swiss criminal courts (3 to 8 SPC): • Breach of trust (138 SPC) • Fraud (146 SPC) • Extortion (156 SPC) • Unfaithful management (158 SPC) • Concealment (160 SPC) • Participation in a criminal organization (260 ter SPC) • Money laundering (305 bis SPC) • Lack of due diligence in financial matters (305 ter SPC) • Bribing of a foreign official (322 septies SPC) • Breach of the Federal Act Against Money Laundering

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Freezing orders Plaintiff Government Letter of denunciation, press releases Criminal complaint Swiss Prosecutor (or Examining Magistrate) Freezing order Evidence Swiss Bank (or other financial intermediary) Freezing orders Other Swiss or foreign banks or financial intermediaries

RECOVERY OF LOOTED ASSETS IN SWITZERLAND International flow of evidence Plaintiff Government (police investigation) Criminal complaint in country A Swiss criminal investigation MLA request to country B Civil proceedings in country C

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Relationship between criminal and MLA proceedings: Decision of the Federal Court of 7 December 2001 (1 A. 157/2001 ) As any victim of a crime, Nigeria was entitled to have access to the file of the Geneva criminal investigation and to use those documents in furtherance of its claims, notably in support of civil proceedings, requests for mutual assistance and criminal complaints, provided that Nigeria formally undertook not to use those documents, directly or indirectly, in criminal, civil or administrative proceedings in Nigeria until the end of the mutual assistance proceedings.

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Recovery proceedings: • Enforcement of own forfeiture decision through MLA proceedings • Enforcement of foreign forfeiture decisions through MLA proceedings • Enforcement of foreign civil judgments • Civil proceedings • Swiss criminal forfeiture proceedings

RECOVERY OF LOOTED ASSETS IN SWITZERLAND 260 ter SPC Criminal organization: 1. Whoever participates in an organisation that keeps its structure and personal composition secret and pursues the purpose of committing violent crimes or enriching itself by criminal means, whoever supports such organisation in its criminal activity, shall be sentenced for up to five years or imprisonment or a fine. (…) 3. The offender shall be also punishable if he committed the crime abroad, provided the organisation carries out, or intends to carry out, its criminal activity fully or partially in Switzerland. (…)

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Swiss Federal Court decision ATF 128 IV 145 of 7 February 2005 “(…) funds held by a criminal organization are presumed to be of criminal origin unless the holders prove the contrary. (…) The structure set up by Sani Abacha and his accomplices constitutes a criminal organization as defined by Article 59 ch. 3 SPC [now 72 SPC], since its object was to embezzle funds from the Central Bank of Nigeria for private purposes, and to profit from corrupt transactions. “

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Article 31, paragraph 8 UNCAC: “States Parties may consider the possibility of requiring that an offender demonstrate the lawful origin of such alleged proceeds of crime or other property liable to confiscation, to the extent that such a requirement is consistent with the fundamental principles of their domestic law and with the nature of judicial and other proceedings”

RECOVERY OF LOOTED ASSETS IN SWITZERLAND Article 55, paragraph 1 UNCAC: “Each State Party, in order to provide mutual legal assistance pursuant to Article 55 of this Convention with respect to property acquired through or involved in the commission of an offence established in accordance with this Convention, shall, in accordance with its domestic law: (…) (c) Consider taking such measures as may be necessary to allow confiscation of such property without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight or absence or in other appropriate cases”.