This article presents three examples of how criminal proceedings
and international assistance in criminal proceedings offered a
possibility to attach assets which could then be claimed in civil
The present document is aimed at showing some possibilities open
to the practitioner in civil and commercial law suits who has met
with difficulties to trace assets in the past.
United States of America vs. Albert
Within the framework of the Irangate affair, the Office
of International Affairs of the U.S.Government addressed a request
for international criminal assistance to the Swiss Central Office
for judicial assistance in criminal matters. According to the
requesting government, Oliver North, a military aide to the
National Security Council, had been mandated to negotiate arms
sales to Iran in the amount of US$ 12 million. He was assisted by
two American citizens, former General Richard Secord and Mr. Albert
Hakim, who provided an offshore company, Lake Resources, for the
The sales proceeds of over US$ 47 million were placed on Swiss
bank accounts of offshore companies connected with Lake Resources.
An amount of US$ 14 million was paid to the U.S.Government, and the
surplus of US$ 33 million was placed by a Swiss fiduciary company
managed by a former U.S. citizen on the accounts of various
offshore companies managed by North, Secord and Hakim. While Oliver
North intended to spend the money for aid to the Nicaraguan Contra,
Secord and Hakim were accused of trying to pocket the benefits of
the sales surplus for their own benefit.
The Swiss Central Office caused the accounts of the offshore
companies to be seized pending a final decision of a criminal or
civil court concerning the question of ownership of the assets.
Secord and Hakim were granted immunity from prosecution by the
U. S. Congress in exchange for making declarations before Congress
in the hearings concerning the Irangate. As a consequence,
they could no longer be respondents to criminal charges, and
criminal suits against them in the U.S. were dismissed.
Therefore, when the U.S.Government asked the Swiss authorities
to hand over the attached funds in accordance with the U.S.
– Swiss Treaty for Judicial Assistance in Criminal
Matters, in application of art. 1 ciph. 1 lit. b of the
Treaty1, the transfer was refused by the Swiss Central
Office, the reason being that there was no criminal proceeding
going on in the United States which could justify that the
conditions of the transfer were fulfilled. This decision was
confirmed by the Swiss Supreme Court.2
At the same time, the Swiss Supreme Court granted the
U.S.Government 60 days to file a civil claim in order to establish
its title to the funds attached in Switzerland3. The
U.S.Government then filed a civil claim with the ordinary courts in
Geneva, which was granted based on the following legal
It was admitted that Secord and Hakim were agents of the
The existence of agency entails a fiduciary relationship
between the principal (U.S.Government) and the agent, according to
which the latter must act in the interest of the former, may not
make use of his position to gain a benefit for himself, and must
account for the outcome of his mandate including remitting to the
principal all the benefits of the operation he engaged in on behalf
of the principal.
If the agent does not fulfil his duty to transfer the assets
resulting from the operation to the principal, these assets become
an object of a constructive trust4.
The constructive trust creates a lien on the assets which
benefits the rightful owner of the benefits of the operation
conducted by the agent.
This legal lien allows for the principal keep his title on the
assets even if the agent has distracted them and made arrangements
to become the owner ("droit de suite") or to
transfer them to third parties. This right in rem allowed
the U.S.Government to recover the proceeds of the arms sales to
Iran even giving them a preferential position with regards to
creditors of the agents.5
The funds were transferred to the U.S.Government as the result
of civil proceedings recognizing their title of ownership.
P & B v. F
In Geneva, Switzerland, an accountant diverted funds belonging
to his employers and used part of them to finance her retirement
plans and life insurance. Another portion of the funds was used to
purchase a house across the border in France.
A criminal complaint was filed against the faulty employee. The
criminal proceedings in Geneva allow for the criminal court to
judge the civil claims of the...
Tracing And Freezing Assets In Aid Of Litigation
|Author:||Ms Isabel von Fliedner|
|Profession:||Isabel von Fliedner, Avocate|
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