Berlin, July 8, 2021
For the Attention of:
The Swiss Federal Council
The Swiss Federal Department of Foreign Affairs
The Swiss Federal Office of Justice
The Office of the Attorney General of Switzerland
The President of the National Council
The President of the Council of States
Call for Transparency and Inclusion in the Return of Gulnara Karimova’s Ill-Gotten Assets to Uzbekistan by the Swiss Government
Statement by Uzbek Civil Society Activists
The Swiss government was one of the most active participants of the Global Forum for Asset Recovery (GFAR) in 2017 which adopted ten principles that should be followed by countries that restitute and receive stolen assets. Key principles include transparency and accountability in the return of assets (Principle 4); the obligation of the recipient country to use the returned assets for the benefit of its people harmed by the underlying corrupt conduct (5); using the confiscated proceeds to fulfill UNCAC principles of combating corruption, repair the damage done by corruption, and achieve development goals (6); and the involvement of civil society organizations in the asset return process (10).
The Memorandum of Understanding signed jointly between the Governments of Switzerland and Uzbekistan on 11 September 2020, which sets out the principles governing the return of assets illicitly acquired by Gulnara Karimova, broadly embodies these international principles. It includes paragraphs confirming the return process will be transparent, accountable, inclusive of civil society and contribute to the establishment of the rule of law in Uzbekistan. The inclusion of these points in the memorandum set a powerful precedent in international asset return practice and was therefore welcomed by the community of civil society organizations fighting corruption and human rights violations
Nine months have passed since this memorandum was signed. Neither the Swiss nor Uzbek authorities have shared with the public any further details on the negotiations or the proposed content of the sharing and restitution agreements. In our view, this prolonged silence contradicts the aforementioned commitment of Switzerland to transparency, accountability and inclusion. The Swiss Federal Office of Justice refuses to disclose the sharing agreement, which has already been signed. This refusal is against the Federal Act on Freedom of Information in the Administration, according to which the sharing agreement should be disclosed by the Swiss authorities. A petition in this regard has been filed by the Uzbek Forum for Human Rights. We therefore call upon the Swiss authorities to periodically report on the progress of negotiations with the Government of Uzbekistan on this matter.
We, representatives of Uzbek civil society, would like to take this opportunity to again request the transfer of assets to Uzbekistan be conducted in compliance with the GFAR principles. There remains a high risk of repeated misappropriation of these assets due to continued endemic corruption and lack of financial transparency in all areas of public and economic spheres. Despite calls from civil society, Uzbekistan has failed to adopt effective and sufficient measures and reforms to prevent corruption, especially at the highest levels of the ruling regime. On the contrary, systematic research and journalistic investigations have revealed that the country’s senior leadership are directly and indirectly involved in grand corruption. As a result, while laws have been introduced to challenge corruption, there has been a lack of political will to ensure these laws are applied rigorously and impartially, especially at the highest levels where the most serious and far reaching forms of corruption occur. Additionally, in practice, law enforcement, the anti-corruption agency, and judiciary are subordinate to the executive, and do not have any practical ability to seriously police national laws on corruption, transparency, and good governance.
These are just a few examples that illustrate the issue:
- A journalistic investigation by Ozodlik, the Uzbek service of Radio Free Europe/Radio Liberty (RFE/RL) revealed in February 2021 that a presidential residence, Shovvozsoy, had been secretly built in a mountainous region of Tashkent region. Construction of this luxurious facility, which includes four helicopter landing pads and a water reservoir, began immediately after Shavkat Mirziyoyev took office as president. The total cost of constructing this residence is estimated at around one billion US dollars. However, no publicly available information related to the construction of this facility has been provided by the government despite its commitments to follow standards of transparency in spending public finance, which may indicate the improper use of these funds and conflict of interests.
- Another case is the Sardoba Reservoir in Syrdarya region that was also built secretly, in the absence of public scrutiny under the current president Shavkat Mirziyoyev when he served as Prime Minister under the late President Karimov. There are almost no official documents related to the reservoir available to the public. It was only after the collapse of the dam on May 1, 2020, which flooded 22 villages in three districts of the country as well as in neighboring Kazakhstan, requiring the evacuation of some 60,000 residents and loss of countless homes and property, that many people learned of its very existence. Information leaked to the press after the incident revealed that $404 million were spent on its construction and that no public tenders had been held to allocate lucrative contracts. The latter were distributed among the relatives of officials that managed the project, its planning and implementation. A criminal case that was opened by the Prosecutor General’s office did not hold to account those high-ranking officials that made the decisions, oversaw the project and were responsible for its overall implementation. Instead, middle and lower-ranking officials were tried and convicted. The trial itself was held behind closed doors, under the pretext of confidentiality of the investigation materials although the reservoir does not belong to a category of security or defense significance. It appears that the purpose of the closed trial was to conceal information that would compromise high-ranking officials that were in charge of the project, primarily the Deputy Prime Minister, Achilbay Ramatov, and the Chairman of the State Corporation Uzbekhydroenergo, Abdugani Sanginov, both close associates of President Mirziyoyev.
- The third case is a contract signed in April 2020 between the state joint-stock company Hududgazta’minot and Texnopark, LTD for the production of 3.5 million smart gas meters and the transfer of households to an automated gas metering system. While Texnopark is owned by the Tashkent city authority, the trademarked Osten brand gas meters employed by Texnopark, is owned by the current mayor of Tashkent, Jahongir Artikhodjaev, who also enjoys close relations with the president. Although a public tender was formally held for the contract, gross violations of the law were committed during its implementation according to an investigation by Radio Ozodlik. Tellingly, another company, Gas Meter LLC, which was already specializedin the production of smart meters, was excluded from the tender, while Texnopark had no experience in this area at all. According to the contract signed between the government and Texnopark, the company would not have to guarantee the correct functioning of the meters and would not be held liable if the meters gave incorrect gas consumption figures.
- Finally, UzInvestigations, an investigative research unit managed by Ulster University and Uzbek Forum for Human Rights, has published a series of reports documenting serious evidence of corrupt practices at senior levels in government. This research also points to a significant lack of transparency and governance requirements in the private sector. Some of the key findings from this research includes:
(1) The ongoing use of secret decrees and direct purchases to circumvent open competitive tenders.
(2) The use of opaque offshore companies and proxies to conceal beneficial ownership.
(3) The rigging of tenders, in favor of politically exposed entities.
(4) The award of land, tax exemptions, and state investment in politically exposed companies without an open process.
(5) Significant transparency blackspots, with large numbers of tenders, not being documented on the national tender portal.
(6) Systematic refusal by government to grant access to documentation on grounds in clear violation of the laws on freedom of information and archiving.
(7) The existence of an explicit government view that prioritizes investment over achieving AML/CTF compliance.
These are just four examples taken from the recent past, under the administration of President Mirziyoyev. This demonstrates that although Uzbekistan has adopted some laws which aim to establish transparency and accountability in the allocation of public resources, they are not respected in practice. Conflicts of interest at the highest levels of government and corruption schemes that permeate business transactions persist. The justice system remains silent because, as under the previous president, judges and investigators are de facto under the direct control of the country’s top leadership.
Under these circumstances, the return of assets without any conditions and sufficient measures against grand corruption would be irresponsible and clearly present a real and high risk of repeated misappropriation. We therefore call upon the Swiss government to robustly implement the GFAR principles it helped to develop in order to ensure transparent and responsible return of Karimova’s stolen assets to Uzbekistan.
Umida Niyazova, Director, Uzbek Forum for Human Rights
Dilmira Matyakubova, civil society activist
Farida Sharifulina, civil society activist
Alisher Toksanov, former diplomat, political scientist
Dilobar Erkinzoda, civil society activist
Timur Karpov, journalist
Shahida Tulyaganova, filmmaker
Kudrat Babajanov, journalist
Ulugbek Ashur, journalist