U.S. Should Set an Example to Combat Global Embezzlement

U.S. Should Set an Example to Combat Global Embezzlement

It remains unclear why Western governments are so reluctant to return ill-gotten funds to governments that badly need money for social and economic development.


Saudi Arabia and the Gulf monarchies exploring their geopolitical options with China has a dimension that the Washington debate has neglected: the kings, dictators, and their relatives across the world have accumulated hundreds of billions of dollars through the “privatization” of national budgets and/or what is known as “state capture,” where public service becomes the most profitable kind of business. 

In the 1990s, authoritarian rulers like Presidents Mobutu Sese Seko of Zaire or Suharto of Indonesia were accused of stealing not less than $5 billion and $20 billion respectively, sums that were never recovered. In the Mobutu case, Swiss authorities found only several million dollars in accounts that were returned to Mobutu’s family in 2009, while Suharto’s family was ordered to repay just $324 million more than fifteen years after he abdicated from the presidency. 


Following the Arab Spring of 2011, the new government of Egypt arrested the former president, Hosni Mubarak, and his two sons, who allegedly built a business family empire estimated by some sources at a staggering $70 billion

The Egyptian authorities ordered the funds accumulated in Mubarak relatives’ accounts to be frozen, and following this order around 700 million Swiss francs were blocked in Switzerland, with France and Luxembourg following suit. But a decade-long legal battle finally ended so that the Swiss authorities between 2018 and 2022 have returned almost $600 million to fourteen people associated with Mubarak’s clan. Hardly a triumph for justice. 

The U.S. Department of Justice built up an international task force following the Nigerian government’s demand for locating and returning assets belonging to late dictator General Sani Abacha, his son Mohammed, and his associate Abubakar Atiku Bagudu. Due to their interminable efforts, more than $600 million in funds were transferred to the Nigerian treasury from the United States, Great Britain, and Switzerland—but the process took around a quarter of a century with the last portion of the funds, estimated at $20.7 million, being released in November 2022. 

Similar claims, put forward by half a dozen of countries, are still being considered by courts and justice and finance ministries throughout Europe and the United States. Most of the successful claims have been resolved if the nation asking for the recovery of funds has geopolitical importance for the West and has proven its transition from a dictatorship to a more democratic and liberal order.

Uzbekistan, the landlocked, most populous Central Asian country bordering Afghanistan, is a case in point. This post-Soviet republic was ruled for twenty-five years by President Islam Karimov, who enjoyed full control over the country until his death in 2016. In 2015, the Organized Crime and Corruption Reporting Project accused Russian mobile telecom operators Vimpelcom and MTS (both registered in the European Union) and Scandinavian companies TeliaSonera and Telenor of transferring more than $1 billion to Karimov’s daughter Gulnara, who later deposited them into her Swiss accounts. For twenty years, Gulnara was the country’s glamor girl, a diplomat, and a wealthy businesswoman, dabbling into pop singing, extortion, and corruption. 

The case looks notorious for two reasons. On the one hand, it resembles charges brought against Odebrecht S.A., a global construction conglomerate based in Brazil, for paying $788 million in bribes to or for the benefit of government officials in eleven foreign countries. In both cases, the companies involved cooperated with international prosecutors and agreed with penalties for their wrongdoings (Vimpelcom alone paid out $795 million to resolve U.S. and Dutch money-laundering investigations that became the largest-ever charge paid under the Kleptocracy Asset Recovery Initiative). Gulnara Karimova has been jailed since 2014, with pressure on her increasing following the death of her father in 2016. She was sentenced to thirteen years in 2020. 

On the other hand, Uzbekistan’s case looks unique because Karimova became subject to prosecution under the U.S. Magnitsky Act that targets corrupt officials all over the globe—and even if she is released by her government, she will remain indicted by the U.S. authorities until she repays the illicitly acquired funds, estimated at $865 million. 

The Uzbek government of President Shavkat Mirziyoyev, which succeeded Karimov, consequently asked Swiss, Belgian, and Irish authorities to unfreeze the funds and return them to the country’s treasury. However, in this case, the process appears to be glacial, and faces many conditions: e.g., the 2020 release of $131 million was only undertaken in exchange for a promise that the money will be invested in projects which support sustainable development under United Nations supervision (in accordance with the UN 2030 Agenda and Uzbekistan’s development strategy). Meanwhile, around $850 million remains in Switzerland, awaiting the agreement between Tashkent, Bern, and Washington.

Truly, in some cases, the governments of developing countries cannot be fully trusted since no one can guarantee that the restituted money will not be plundered again—but in many cases, some progress is achieved. 

Uzbekistan is one such case: it has liberalized considerably under Mirziyoyev, allowing freer media and conducting economic and social reforms; its modernized financial system is being hailed by the World Bank and international development agencies. It is rapidly developing, and in recent years became a vital ally for the Western world in fighting Islamic extremism in Central Asia. 

As Secretary of State Antony Blinken’s visit to Central Asia has shown, the United States is also monitoring China’s actions in Central Asia, which is doing its best to comply with the Russia sanctions. Antagonizing Tashkent is not in the interests of the United States, United Kingdom, or European Union. It remains unclear why the Western governments are so reluctant to return ill-gotten funds to governments like those of Nigeria, Uzbekistan, or Egypt that badly need money for social and economic development at a time when globalization is stalled and foreign direct investment is decreasing. 

The money flows from the world’s periphery to the global financial centers may be called the “Third Imperialism,” allowing the West to exercise its control over “the rest” without military or political pressure. Let us hope that Karimova’s case will not evolve in a similar way to Mobutu or Mubarak families’ cases. It is not in the United States or the West’s interests.

Vladislav Inozemtsev, Ph.D., is Special Advisor to MEMRI’s Russian Media Studies Project, and is the Founder and Director of Center for Post-Industrial Studies.

Image: Shutterstock.