On February 1, 2011, the Swiss Restitution of Illicit Assets Act (RIAA), commonly referred to as “Lex Duvalier,” came into effect. This law provides for the freezing, forfeiture, and restitution of assets of politically exposed persons or their close associates. It applies in cases where a request for mutual assistance in criminal law matters cannot produce an outcome owing to the failure of state structures in the requesting state (the politically exposed person’s country of origin).
The former leader of Haiti, Jean-Claude Duvalier, whose USD 6.2 million has been frozen in a Swiss bank account since 1986, will now have to return the money to its rightful owners—namely, the Haitian people. In a recent interview, Swiss attorney Enrico Monfrini, who represents the Haitian government in the legal battle, noted that, “Duvalier’s 6.2 million in Swiss banks is not a large amount compared with the hundreds of millions the former leader allegedly stole, but morally, repatriation of the money would be a huge victory.”
Under the RIAA, in order for a judge to order restitution of frozen accounts, a request for mutual assistance must be initiated by the country of origin. Or, it must be established that the country is unable to satisfy this requirement because of corruption or inadequate state institutions.
In either case, the frozen accounts in question must belong to a politically exposed person, such as a head of government, high-ranking politician, or senior member of any other branch of government. Persons closely associated with politically exposed individuals are also open for prosecution under the law.
During his term in office from 1971 until the popular uprising in 1986, Duvalier enjoyed an ostentatious lifestyle that included indulgences such as a government-sponsored wedding valued at USD 3 million. Beyond living a life of luxury, Duvalier is accused of corruption, misuse of power, and human rights abuses—charges that were brought against him following his recent arrest when he returned to Haiti on January 17th. Unfortunately, Duvalier was released from police custody after a four-hour interrogation, leaving it to be determined at a later date.
Pursuant to the RIAA, the unlawful origin of assets is presumed when an accountholder 1) enjoys a drastic increase in personal wealth in connection to holding political office, and 2) resides in a country or region with a high level of acknowledged corruption. Both criteria apply in the case of Duvalier.
The law requires that returned assets be spent on public programs and further provides for a bi-lateral agreement between Switzerland and the country of origin. Both countries must outline the nature of the programs and detail how the assets will be returned. Moreover, the countries are obliged to describe how the use of the funds will be regulated in order to avoid risk of future embezzlement. If no agreement is reached, the assets will revert to the country of origin via international or national institutions. Accordingly, the objective of the restitution is to improve the living conditions of the people in the country of origin and to strengthen the rule of law.
Presumably, in the case of Haiti, the returned assets of Duvalier would be channeled into desperately needed reconstruction projects in the wake of the 2010 earthquake. However, no disclosure between Haiti and Switzerland exists as of yet.
According to a press release from the Swiss embassy in Washington D.C., Switzerland’s international commitment is to “promote internationally coordinated action to combat [embezzlement] of funds [by politically-exposed individuals]. The international financial centers involved must form a common front to prevent the inflow of such funds, to quickly freeze assets of criminal origin and return them to the rightful owners.”
The “Lex Duvalier” is an impressive step towards achieving this goal, yet it is not without its public detractors. In some instances, groups within the country of origin have protested the requirement of a mutual agreement for spending regained funds, arguing that such arrangements allow for excessive outside influence. In addition, these critics have argued that the agreement’s requirement of mutual monitoring of returned funds is “paternalistic and unfair.”
Other critics, like Mark Pieth, a Swiss criminal law professor who worked on the bill, said that the law does not go nearly as far as it should, since it only applies in the case of “failing states” “where [the] state is really at rock bottom.” Such is the case of former Egyptian president, Hosni Mubarak, whose accounts were only recently frozen after decades of embezzlement. Pieth advocates for a more proactive law that would allow freezing of accounts at earlier stages, without waiting for state failure to occur.
Throughout Latin America’s history, heads of state, government officials, and family members of the political elite have been suspected—if not convicted—of illegally appropriating state funds and depositing them in overseas financial institutions, such as those in Switzerland, that offer confidentiality. The Lex Duvalier is a corrupt politician’s worst nightmare; those absconded with embezzled funds will no longer be able to hide their misbegotten fortunes and will ultimately face justice. A few examples are Alberto Fujimori and Vladimiro Montesinos from Peru, and Raul Salinas from Mexico, whose accounts have already been returned to their rightful owners.
At last, countries that fall prey to embezzlement under corrupt leaders have a robust means of gaining reimbursement. Just as the long arm of the law eventually found its way to Fujimori, Salinas and Duvalier, the Lex Duvalier will help justice prevail against previously hard to prosecute forms of corruption.
References for this article can be found here.
This analysis was prepared by COHA Research Associate Gonzalo Turdera