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The Failure of Illicit Asset Recovery: A Haitian Case Study

JURIST Guest Columnist Rogendy Toussaint of St. John's University School of Law Class of 2016, is the twelfth author in a twelve-part series from the staffers of the Journal of Civil Rights and Economic Development. Toussaint discusses whether the disparate impact of international aid in Haiti...

As a seemingly routine afternoon faded to dusk on January 12, 2010, a 7.0 magnitude earthquake rocked Haiti's capital city, Port-au-Prince. The devastation was exhaustive: 316,000 people dead, 300,000 injured and nearly 1.5 million people left homeless. As the once majestic National Palace lay in ruin, it became clear that the poorest country in the Western Hemisphere would need all the help it could get in order to get back on its feet.

Heeding Haiti's call the international community donated nearly $13.5 billion dollars to assist with humanitarian efforts, including $4 billion donated by the US government. Yet five years later less than 7 percent of the total money pledged has aided the Haitian people, and 93 percent has been lost to fraud and waste. While unfortunate this outcome is far too customary to the citizens of Haiti. In fact since 1986, hundreds of millions of dollars [PDF] belonging to the Haitian people has sat in European bank accounts, as thousands of Haitians struggle in the squalor of makeshift tent cities. These funds, stolen from Haiti's treasury in 1986, were deposited in several countries—including Switzerland—by Haiti's former dictator Jean-Claude "Baby Doc" Duvalier. For 15 years, he led a government rife with open corruption.

Following Baby Doc's exile an accounting was done which revealed that nearly $504 million of the Haitian people's money had been misappropriated from the nation's treasury and hidden in foreign accounts. Over the next three decades the Haitian government fought to have the money returned, but to no avail. In 1986 both the French and Swiss governments refused to overturn money held within their jurisdictions. Then in 2011, hours before the massive earthquake, the Swiss Federal Supreme Court decided to release the remaining $6 million held in Swiss accounts to the Duvalier family uninhibited. After the earthquake, Switzerland's government was worried about a public relations nightmare following the court's decision and decided to reverse course. The Swiss enacted a groundbreaking new law—the Restitution of Illegal Assets Act (RIAA) [PDF].

Before the RIAA Switzerland had long been a tax haven for deposed despots—mandating strict bank confidentiality, and enabling clients to invest assets without paying any taxes. Past despots with Swiss bank accounts included General Sani Abacha of Nigeria, who kept a reported $505 million in Swiss bank accounts, and the former president of the Philippines, Ferdinand Marcos, who stashed away $624 million. The RIAA looks to remedy this problem by burden shifting. It moves the burden of proof away from the petitioning nations seeking a return of funds and places it squarely onto the shoulders of the former heads of state, requiring the heads of state to prove that his or her alleged assets were earned legitimately.

The provisions of the RIAA are straightforward. First, it must be determined that traditional channels of justice cannot produce binding outcomes. This may occur for a variety of reasons, but it is typically caused by an inability of the petitioning country to successfully prosecute the former head of state in their own justice system. Once this determination is made, the Federal Council of Switzerland may freeze assets held in Switzerland if two additional conditions are met: (1) the funds held in Switzerland are significantly larger than what could have credibly earned by the former head of state while in office, and (2) the petitioning country has a history of corruption. Once these two conditions are met, the burden of proving the legitimacy of the assets falls on the former head of state. If no such proof can be provided, the assets are frozen. If frozen, the RIAA provides for a restitution process. In the case of Baby Doc Duvalier, this point came in 2013.

Nonetheless two years after the Federal Administrative Court of Switzerland determined that restitution was appropriate, the RIAA has failed to return any money to the Haitian people. Why? Swiss authorities fear that the funds will be returned into a cycle of corruption. Accordingly the two sides have never even met to negotiate. All the while 60 percent of the country's entire population lacks access to basic health care services and less than 2 percent of Haitian children finish secondary school.

I propose a possible solution to this seemingly intractable quagmire. Currently there are between 3,000 and 10,000 NGO's in Haiti, providing four-fifths of the nation's social services. In fact NGO's are widely viewed by the Haitian people as being more adept than the national government in solving the pressing issues that affect their day-to-day lives. This is Haiti's reality. Therefore, I propose that the government of Switzerland accept non-governmental entities as suitable custodians of stolen assets in their restitution standards under the RIAA.

The Swiss are not the first to want to assist Haiti, and yet be wary of corruption. Back in 1986, the United States District Court for the Southern District of Florida, fashioned a remarkable non-governmental entity called The Commission for a New Haiti (The Commission). The Commission would consist of a seven-member panel: three development economists or experienced project administrators; two representatives chosen from a reputable human rights organization; and two representatives chosen from the private sector. All panel members would be of Haitian descent, with all commission proceedings being a matter of public record, subject to public scrutiny during a thirty-day comment period. The Commission would have the fiduciary duties of allocating any funds returned to Haiti in accordance with a detailed restitution plan governed by an agreement between Switzerland and Haiti. Such procedure would mitigate both the temptation of corruption and any fears of wasteful spending.

While the RIAA was an important step in the right direction, it has effectively been stalled by mistrust and cynicism. By embracing NGO's like The Commission For A New Haiti, Switzerland could finally put an end to this three decades long cat-and-mouse game and finally fulfill the very goal that the Swiss government had at the time of the RIAA's passage—delivering direct assistance to the citizens of the poorest nation in the Western Hemisphere.

Rogendy Toussaint is a 4LE at St. John's University School of Law. Along with this Senior Staff position on the Journal of Civil Rights and Economic Development, he also serves as the Executive Director of the Moot Court Honor Society. This fall, he is serving as an extern for the US Attorney's Office for the Eastern District of New York.

Suggested citation: Rogendy Toussaint, The Failure of Illicit Asset Recovery: A Haitian Case Study, JURIST - Student Commentary, Mar. 2, 2016, http://jurist.org/dateline/2016/3/rogeny-toussaint-illicit-asset-recovery.php


This article was prepared for publication by Elizabeth Dennis, an Assistant Editor for JURIST Commentary. Please direct any questions or comments to her at commentary@jurist.org

Opinions expressed in JURIST Commentary are the sole responsibility of the author and do not necessarily reflect the views of JURIST's editors, staff, donors or the University of Pittsburgh.
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