Justice Department Settlement Successfully Releases More than $115 Million in Alleged Corruption Proceeds to People in Kazakhstan
Today, the Department of Justice filed a motion to dismiss a forfeiture action against approximately $115 million alleged to be proceeds of foreign official corruption and involved in money laundering in accordance with a 2007 settlement that directed the funds to be used for the benefit of poor youth and families in Kazakhstan, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
The filing marked the formal completion of the settlement terms through which the governments of the United States, Switzerland and Kazakhstan agreed to release the alleged corruption proceeds in installments to a Kazakh foundation established under the guidance and supervision of the World Bank Group and administered by international development organizations IREX and Save the Children, which managed the foundation’s programs.
In 2007, the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and the U.S. Attorney’s Office of the Southern District of New York filed a forfeiture action against approximately $84 million plus interest that had been restrained in Switzerland in 1999 in connection with the prosecution of James H. Giffen and his company, Mercator, by the U.S. Attorney’s Office and the Criminal Division’s Fraud Section. The funds were allegedly the proceeds of illegal bribe payments to senior Kazakh officials in exchange for oil transactions and property involved in money laundering. In an apparent attempt to evade criminal investigation, the funds had been transferred into an account in the name of the government of Kazakhstan where they were later restrained and grew to $115,228,671. Contemporaneous with the forfeiture action, the United States and Kazakhstan filed the settlement agreement, which incorporates a series of international agreements authorizing the release of the funds to the BOTA Foundation, a new Kazakh foundation required to be independent of the government of Kazakhstan, managed by a respected international non-governmental organization and established with the assistance of the World Bank. In addition, the government of Kazakhstan entered into technical assistance agreements with the World Bank regarding its participation in the Extractive Industries Transparency Initiative and a Public Finance Management Review.
“Transparent, responsible repatriation of corruption proceeds can make a real difference for communities harmed by the abuse of public office,” said Assistant Attorney General Caldwell. “In just five years of operations, the BOTA Foundation helped more than 208,000 people in need in Kazakhstan, turning more than $115 million in alleged bribe money into assistance to parents, families with disabled children and youth seeking higher education. Through our Kleptocracy Asset Recovery Initiative, the Department of Justice is committed to fighting back against impunity and seeking creative ways to reduce the harms caused by corruption.”
Under the 2007 agreements, the parties released more than $115 million to the BOTA Foundation for programs running from 2009 through 2014. The BOTA Foundation utilized the funds in three primary programs, each targeting needs of poor youth in Kazakhstan: a conditional cash transfer program providing financial resources and incentives for health and other needs, a social services program providing grants to local communities and a tuition assistance grant program.
Partnership with the governments of Switzerland and Kazakhstan and close collaboration with the World Bank, program managers IREX and Save the Children, the BOTA Foundation’s Board of Directors, the State Department and USAID were essential to the success of the settlement. Deputy Assistant Attorney General Bruce Swartz of the Criminal Division, Principal Assistant Deputy Chief Daniel Claman of AFMLS and Assistant U.S. Attorney Barbara Ward of the District of New Jersey negotiated and implemented the agreement on behalf of the United States. The Criminal Division’s Office of International Assistance provided assistance in this case. The FBI investigated the matter.
Under the Kleptocracy Asset Recovery Initiative, dedicated prosecutors in AFMLS work in partnership with U.S. Attorneys’ Offices and federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where possible and appropriate, put forfeited corruption proceeds to use for the benefit of the people of the country harmed by the abuse of public office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to firstname.lastname@example.org.