Restitution of Illicit Assets Act passed by Swiss Parliament

I hadn’t realised that this law had already passed if it weren’t for a tweet from Pakistan (Hat Tip: Syed Ali Raza Abidi)

On October 1, 2010, the both houses of the Swiss Parliament passed a new law that will somewhat facilitate the restitution of “potentate funds”, or assets of politically exposed persons (PEPs) who are most likely illicit. The law closes a gap in Swiss law that lead to difficulties when the government in question fails to cooperate in the restitution of the funds. As the Federal Council wrote in its Dispatch (Message accompanying a law submitted to Parliament):

Nevertheless, the growing phenomenon of so-called “failing states” has shown up the limits of the system, in particular in the Mobutu and Duvalier cases. The draft law therefore comes into existence as a result of difficulties encountered by the Swiss authorities in returning assets frozen in Switzerland to such states following the failure of the process of international mutual assistance to produce a satisfactory result.

The vote was Ständerat (State Council) voted 41 yes to 0 no, while the Nationalrat (National Council) voted 161 yes to 32 no.

It remains to be seen whether future cases will be handled with less issues than previous ones since much depends on the corporation of the countries in question. As the Federal Department of Foreign Affairs writes on its website:

Restitution of potentate funds

Potentate funds that manage to enter Switzerland despite comprehensive precautionary measures have to be identified and repatriated to their country of origin. This so-called restitution is an important instrument in the Switzerland’s policy of combating illegal monies. Therefore Switzerland has returned about CHF 1.7 billion to their countries of origin, which is more than any other financial center of a comparable size. Individual cases attract considerable publicity on account of the high profile of the people and the amounts of money involved. Examples include:

the Montesinos case, Peru, 2002
the Marcos case, the Philippines, 2003
the Abacha case, Nigeria, 2005
the Angolese assets case, Angola, 2005
the Kazakh assets case, Kazakhstan, 2007
the Salinas case, Mexico, 2008

Some cases are particularly complex to solve. Among them, one can mention the Mobutu case (Democratic Republic of Congo/DRC) and the Duvalier case (Haiti). In the Mobutu case, Switzerland strove during 12 years to return the frozen assets to the DRC. This challenge finally failed among others because of the lack of cooperation of this State. In these circumstances, the Federal Criminal Court of Switzerland (FCC) ruled on 14.07.2009 against pursuing a complaint regarding these assets. The freezing of Mobutu’s assets in conformity with the decision taken on 30.04.2009 by the Federal Council (Swiss Government) has therefore been lifted.

Below is the English text. Beware though that English is not an official language of Switzerland and the English translation is for informational purposes only. Only the French, Italian and German versions are relevant in law.

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Kazakhstan to join Swiss group at IMF and World Bank

Flag of Kazakhstan

Flag of Kazakhstan

Kazakhstan to join Swiss group at the IMF and World Bank

Kazakhstan had declared and interest in joining the Swiss group at the International Monetary Fund (IMF) and World Bank (WB) which consists – besides Switzerland – of Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

During a conference call on Tuesday, 20.07.2010, the Swiss Federal Council has expressed his support of Kazakhstan joining the group.

The membership will formally be completed in the autumn, when the IMF and WB Executive Directors are elected. In the IMF, the Swiss group will then have voting rights of 2.05% of the total.

Sources: Federal Department of Foreign Affairs, IMF

Swiss National Bank expects mid-year loss

SNB Zürich

SNB Zürich

Swiss National Bank expects mid-year loss

The expected loss is around CHF 4 billion and is mostly due to the appreciation of the Swiss Franc against the Euro.

Of the increase of CHF 132 billion in foreign currency investments the bulk was in Euro leading to a loss of over CHF 14 billion. The income from other currency positions and the rising gold price limited the SNB’s half-yearly loss to around CHF 4 billion.

The Stabfund results are not included but are expected to make a significant positive contribution.

The definite half-yearly results will be available from August 13, 2010.

Source: SNB

War Is A Racket – General Smedley Darlington Buttler

Smedley Darlington Buttler

Smedley Darlington Buttler

About General Butler from Wikipedia:

Smedley Darlington Butler (July 30, 1881 – June 21, 1940), nicknamed “The Fighting Quaker” and “Old Gimlet Eye”, was a Major General in the U.S. Marine Corps, and at the time of his death the most decorated Marine in U.S. history. During his 34-year career as a Marine, he participated in military actions in the Philippines, China, in Central America during the Banana Wars, the Caribbean and during World War I, he served in France. By the end of his career he had received 16 medals, five of which were for heroism. He is one of 19 people to be twice awarded the Medal of Honor, one of three to be awarded both the Marine Corps Brevet Medal and the Medal of Honor, and the only person to be awarded the Brevet Medal and two Medals of Honor, all for separate actions.

In addition to his military achievements, he served as the Director of Public Safety in Philadelphia for two years and was an outspoken critic of U.S. military adventurism. In his 1935 book War is a Racket, he described the workings of the military-industrial complex and, after retiring from service, became a popular speaker at meetings organized by veterans, pacifists and church groups in the 1930s.

Excerpts from his book “War is a Racket”

“War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small ‘inside’ group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.”

“I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China  in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”

Here is a re-enactment of a speech he gave.

An E-Mail from Wall Street to the Rest of the World

From The Reformed Broker via Huffington Post (Note it sounds very much like Wall St, but the origin of the mail has not been established so far, so it could be a hoax):

“We are Wall Street. It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable. I didn’t hear America complaining when the market was roaring to 14,000 and everyone’s 401k doubled every 3 years. Just like gambling, its not a problem until you lose. I’ve never heard of anyone going to Gamblers Anonymous because they won too much in Vegas.

Well now the market crapped out, & even though it has come back somewhat, the government and the average Joes are still looking for a scapegoat. God knows there has to be one for everything. Well, here we are.

Go ahead and continue to take us down, but you’re only going to hurt yourselves. What’s going to happen when we can’t find jobs on the Street anymore? Guess what: We’re going to take yours. We get up at 5am & work till 10pm or later. We’re used to not getting up to pee when we have a position. We don’t take an hour or more for a lunch break. We don’t demand a union. We don’t retire at 50 with a pension. We eat what we kill, and when the only thing left to eat is on your dinner plates, we’ll eat that.

For years teachers and other unionized labor have had us fooled. We were too busy working to notice. Do you really think that we are incapable of teaching 3rd graders and doing landscaping? We’re going to take your cushy jobs with tenure and 4 months off a year and whine just like you that we are so-o-o-o underpaid for building the youth of America. Say goodbye to your overtime and double time and a half. I’ll be hitting grounders to the high school baseball team for $5k extra a summer, thank you very much.

So now that we’re going to be making $85k a year without upside, Joe Mainstreet is going to have his revenge, right? Wrong! Guess what: we’re going to stop buying the new 80k car, we aren’t going to leave the 35 percent tip at our business dinners anymore. No more free rides on our backs. We’re going to landscape our own back yards, wash our cars with a garden hose in our driveways. Our money was your money. You spent it. When our money dries up, so does yours.

The difference is, you lived off of it, we rejoiced in it. The Obama administration and the Democratic National Committee might get their way and knock us off the top of the pyramid, but it’s really going to hurt like hell for them when our fat a**es land directly on the middle class of America and knock them to the bottom.

We aren’t dinosaurs. We are smarter and more vicious than that, and we are going to survive. The question is, now that Obama & his administration are making Joe Mainstreet our food supply…will he? and will they?”

Swiss National Bank postpones Issueing Date for New Banknotes Series

The project for Swiss new banknotes from the SNB has run into unforeseen issues it seems. From the February 17 press release (emphasis mine):

Intensive efforts are underway at the Swiss National Bank (SNB) on the preparatory work for its new banknote series. The project activities have revealed that additional development work will bring improvements as regards those technological security features which are being used for the first time. However, this will take time, and as a result the project will need to be rescheduled. The SNB still intends to replace existing banknotes with a new series. Given the high security standard of the banknote series currently in circulation, however, there is no urgent need for replacement. To allow time for the additional development processes, the SNB is postponing the issue date of the new banknote series, which had originally been scheduled for autumn 2010. The SNB expects that the first note of the new series can be issued in 2012. As mentioned in previous announcements, the new banknote series, which had originally been scheduled for autumn 2010. The SNB expects that the first note of the new series can be issued in 2012.

Hum, interesting from a project management point of view. The banknotes were scheduled to be introduced in autumn 2010 and only in spring 2010 did they find out that their schedule was too ambitious?

One might think that preparations have already been made and costs incurred by banks in upgrading their ATMs and public transports by upgrading their ticket vending machines to be able to cope with the new banknotes. Now just 6 month before the SNB pulls the plug, for at least two years.

The highlighted sentence above might point to a serious flaw in the security of the new banknotes that requires them to go back to the drawing board or requires an upgrade in printing press technologies, or both. However, that’s only speculation.

FINMA Annual Media Conference 2010

A FINMA press with the title “FINMA Annual Media Conference 2010: Stability affords protection and is an advantage for Switzerland as a location” release let’s us know that:

The Swiss Financial Market Supervisory Authority FINMA underwent a turbulent year in 2009. In its first year as the new combined financial authority, it had to contend with a challenging economic environment for those under its supervision, tough decisions and time-consuming investigations. At today’s media conference, FINMA focused on the importance of the stability of financial institutions for creditors, investors and insured persons. It spoke about the introduction of the Swiss Solvency Test in the insurance industry as a measure to promote stability, and two areas in which it sees an urgent need for action in the Swiss financial centre: the problem of institutions being too big to fail and legal risks in cross-border private client business.

The funny thing is that I don’t remeber them doing much in this turbulent year, except white-washing pretty much everyone from UBS (Subprime) to Credit Suisse (Lehmann & Madoff investments). But that’s my view only, I am sure FINMA has a different take on the importance of their actions or omissions.

What’s even mor interesting, is that the word “integrity, credibility and truthfulness” does not figure in FINMAs vocabulary. Obviously, stability overrides everything else justifying a cover-up of the banker’s bad deeds just to maintain the stability?

Warning from the FINMA: The truth can be dangerous to your stability.

The full press release can be found here.