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Foreign Accounts

How the Swiss Freeze Crooks-in-Chief

Switzerland's decision on Feb. 11 to freeze the assets of former Egyptian President Hosni Mubarak is the latest action taken by the famously neutral country against a fallen strongman. The Swiss claim to have returned $1.8 billion in assets from dictators to their countries of origin in the last 15 years. Clawing back the spoils of corrupt regimes is no simple matter.

The Swiss Constitution allows the country's ruling Federal Council to freeze assets temporarily in anticipation of criminal charges being filed abroad to recapture the funds on deposit in Switzerland.

Under a 1981 law, Switzerland may cooperate in cases against "politically exposed persons." The demand for forfeiture must come from the country of origin. Failing that, the assets are returned to the original depositor or his heirs.

Last fall Switzerland passed the Restitution of Illicit Assets Act (RIAA). It allows the Federal Council to seize frozen assets in cases where the judicial system in the country of origin is inadequate.

Dictators Who Tangled with the Swiss

1. Mobutu Sese Seko
Democratic Republic of the Congo
Assets frozen: $6.7 million

In 1997 the Swiss froze the assets of longtime dictator Mobutu at the request of the newly formed Democratic Republic of the Congo. After four extensions over 12 years and repeated attempts to help the DRC bring a case, Switzerland released Mobutu's assets in July 2009, effectively returning the money to his heirs.

2. Sani Abacha
Assets frozen: $700 million

In 1999, a year after the Nigerian military leader and de facto ruler died, the Swiss froze Abacha's accounts at Nigeria's request. In accordance with a 2005 agreement with the country, they have returned the money to Nigeria in installments for health and education projects.

3. Jean-Claude "Baby Doc" Duvalier
Assets frozen: $5.7 million

When the Haitian President fled in 1986, the Swiss froze his assets at Haiti's request. Over the next 25 years Haiti failed to bring a formal case against the former dictator. The Swiss enacted RIAA and seized Duvalier's funds. Baby Doc's representatives will have a chance to prove the legitimacy of his wealth during forfeiture proceedings.

Data: Swiss Foreign Affairs Dept., World Bank

Boudway is a reporter for Bloomberg Businessweek in New York.

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