US commission accuses Switzerland of hiding Russian assets

Switzerland is accused of not doing enough to help the global hunt for Russian assets. Fiji Sun

Swiss anti-corruption expert Mark Pieth has testified before an influential US government commission that accuses Switzerland of concealing Russian assets. He said Swiss lawyers had carte blanche to help the oligarchs hide the trail of their funds.

This content was published on May 5, 2022 – 19:44

The Commission for Security and Cooperation in Europe, otherwise known as the Helsinki Commission, has issued strong criticism of Switzerland’s perceived role in hiding Russian assets.

“Long recognized as a destination for war criminals and kleptocrats to hide their plunder, Switzerland is a key catalyst for Russian dictator Vladimir Putin and his cronies. After plundering Russia, Putin and his oligarchs are using Swiss secrecy laws to hide and protect the proceeds of their crimes,” the body said.External link.

Thursday’s Commission hearing heard testimony from Pieth, Miranda Patrucic, deputy editor of the Organized Crime and Corruption Report Project, and Bill Browder, a financier who accuses Swiss prosecutors of botching a Russian money laundering investigation.External link leading to the death of his lawyer, Sergei Magnitsky.

Pieth told the Commission that lawyers were taking advantage of Swiss loopholes to thwart efforts to track Russian assets.

“Helps Hide Funds”

Here is his testimony in full:

“We know that Switzerland is a small country. At the same time, it houses a considerable financial center and is probably the largest commodity trading center in the world.

At the same time, this country has a long tradition of secrecy. In short, it is one of the greatest offshore paradises in the world.

I’m particularly interested in the role of introducers and facilitators – often lawyers who hide behind solicitor-client privilege. Now, there is nothing wrong if they act like traditional lawyers defending the interests of their clients. On the other hand, it is equally clear that the lawyers who invest money for their clients do not act as lawyers: they are financial operators.

The Panama Papers, Pandora Papers and other leaks have however shown that there is an intermediary sector, those who, without touching the money, are involved in the creation of money laundering structures (front companies, offshore accounts etc. ). They are not covered by the AML [anti-money laundering] legislation. And yet they help conceal the funds of Russian oligarchs, for example, as these leaks have shown.

To give an example, the Russian cellist [Sergei] Roldugin, a school friend of Putin, suddenly got a quarter of Bank Rossiya and a quarter of a Russian tank manufacturer – the people helping him access and hide these assets are a law firm in Zurich (names can be provided).

Such structures prevent banks and authorities from determining the true beneficial owners of assets. They pose a real danger to the success of the sanctions regime against Russia.

So what should we do?

In Switzerland, it was only in March 2021 that Parliament refused to subject these facilitators to AML legislation, under pressure from industry lobbyists. Of course, if we have clear evidence of sanctions busting and money laundering, Swiss authorities could step in – but as Bill Browder’s example shockingly demonstrated, law enforcement can be incompetent and sometimes partisan.

Until Switzerland redoubles its efforts to regulate the catalysts, the United States has a role to play: obviously, when these catalysts undermine the American sanctions, the DOJ [the Department of Justice] could intervene. More directly, you could put the facilitators, whose names are known, on the sanctions list or you could subject these lawyers to a visa ban.

Overall, I think Bill’s suggestion to review US-Swiss law enforcement relations is warranted if the new attorney general doesn’t understand the message the Magnitsky case sends.

Diplomatic reaction

When Russia invaded Ukraine, Switzerland’s initial response was not to impose sanctions as this could violate the Alpine nation’s policy of neutrality. But the Swiss government was forced to do an about-face following domestic and international pressure and is now applying European Union sanctions against Russian individuals and entities.

Swiss authorities have so far frozen 7.5 billion Swiss francs ($7.7 billion) in assets. Yet the Helsinki Commission, which is funded by the US government but acts independently, remains unimpressed. Although it has no formal decision-making authority on the world stage, the Helsinki Commission, made up of 18 US parliamentarians and representatives from the US Departments of State, Defense and Commerce, has some influence on the American foreign policy.

Swiss media reports that the public accusations by the Helsinki Commission have caused consternation within the Swiss government. The Luzerner Zeitung newspaper reported that Swiss Foreign Minister Ignazio Cassis objected to statementsExternal link by a phone call to his American counterpart Antony Blinken.

Swiss government spokesman André Simonazzi strongly rejected the Helsinki Commission’s allegations.

“Switzerland applies all the sanctions decided by the Federal Council and the EU. Switzerland has no reason to be ashamed of the way it applies sanctions in international comparison,” he told public broadcaster RTS.

The Helsinki Commission

The Commission for Security and Cooperation in Europe was founded in 1976 with the stated intention of defending human rights around the world and ensuring that this objective is included in American foreign policy.

The body, which is made up of Republican and Democratic politicians, describes itself asExternal link “an independent U.S. government commission that advances U.S. national security and national interests by promoting human rights, military security, and economic cooperation in 57 countries.”

It grew out of the 1975 Helsinki Accords which set military and territorial terms and a mechanism for settling disputes between the Soviet Union and the West during the Cold War. The unofficial name of the body of the Helsinki Commission derives from this birth.

The Organization for Security and Cooperation (OSCE), of which Switzerland is a member, was also created after the Helsinki Accords. The Helsinki Commission cooperates with the OSCE but is a separate organization.

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Aurora J. William