The legal battles over ‘princess of Uzbekistan’ and her frozen millions

Gulnara Karimova at the 63rd international film festival in Cannes in 2010. Ap2011

Civil cases in Switzerland could adjudicate who is entitled to Gulnara Karimova’s $840 million fortune.

For years, an $840 million fortune amassed by Gulnara Karimova, known as “the princess of Uzbekistan”, has languished in Swiss bank vaults — frozen by government order. 

A long-running legal war fought in civil courts across Switzerland may soon decide who should have it: the Swiss and Uzbek governments; the creditors of a sprawling holding company called Zeromax; or Karimova herself, who, now 51, is imprisoned in Tashkent.

On September 28, after a decade of investigation, Swiss prosecutors brought criminal charges against Karimova. The trial promises to bring to light crucial evidence on where her riches came from — and where they ought to go.

Already, the indictment has triggered fresh legal action from the Zeromax creditors’ camp.

When Zug-based Zeromax collapsed in 2010, leaving debts of $4.6 billion, it was Switzerland’s second largest ever bankruptcy. Before that, it was the biggest investor and employer in Uzbekistan — and widely believed to be a Karimova front.

The company’s creditors — a group ranging from Brazilian football stars to craftsmen in the Black Forest of Germany — say her money should compensate them.

In a case filed in St Gallen on October 10, they allege a multiyear Swiss government intrigue to pervert justice and undermine their claim. Bern sought to siphon off the Karimova fortune and send it back to Tashkent, in exchange for diplomatic favours from the current Uzbek government, they say.

“Our clients complain of a conspiracy ongoing since 2017 between high ranking government members both in Switzerland and Uzbekistan,” said Thomas Rihm, the Zürich-based lawyer behind the case.

“We have full trust in the court in St Gallen, after being repeatedly mistreated by the Swiss government and [former] federal prosecutors,” Rihm said.

The Swiss Federal Department of Finance, against which the claim is filed, said: “The accusations have no basis whatsoever.”

The Swiss government maintains there is no connection between Zeromax and Karimova. Based on a 2018 court ruling, it says Zeromax was neither controlled by her nor beneficial to her. It is therefore entitled to give her money to the government of Uzbekistan, from whom it was plundered.

Karimova herself, meanwhile, maintains her innocence both relating to Zeromax, and the broader accusations of graft against her.

“She contests all the charges and will fight for her acquittal” says her Geneva-based lawyer, Grégoire Mangeat. The money still frozen in Swiss banks belongs is hers by legitimate means, he contends.

No date has yet been set for the Swiss criminal trial — but all sides hope it may finally cut through the legal tangle.

With the protection of her father — Uzbekistan’s autocratic ruler Islam Karimov — Gulnara had once cut a brash and glittering figure on the international stage, jet-setting around the world from her home in Geneva. 

She flaunted her huge wealth and indulged in a series of extravagant vanity projects, including an abortive pop career under the stage name Googoosha, screenwriting a movie set in the sixth century about silk, launching her own fashion label Guli — whose shows were routinely picketed by protesters against child labour in the Uzbek cotton industry — and the creation of a fragrance, Mysterieuse. 

Her role as an ambassador at the UN granted her diplomatic immunity. 

Towards the end of Karimov’s rule — he died in 2016 — factions in Tashkent moved against Karimova and her empire crumbled. She was put under house arrest on charges of embezzlement and then imprisoned for violating its terms. In 2020 a court sentenced her to 13 years in prison for corruption. Her legal team rejects the fairness of that trial.

Allegations over the criminal sources of Karimova’s wealth are not new.

A 2019 indictment from the US Department of Justice says that in the field of telecommunications alone, Karimova took bribes of more than $850 million from international companies seeking contracts in Tashkent. The case has not yet come to trial.

In leaked diplomatic cables from 2010, US diplomats described her as the “single most hated person in Uzbekistan” and a “robber baron” who had “bullied her way into gaining a slice of virtually every lucrative business” in the country. 

They were also explicit on the subject of Zeromax. “The company is controlled by Gulnara Karimova,” another cable states.

When, in 2018, a Swiss court ruled that Karimova had nothing to do with Zeromax — effectively blocking its creditors from making a claim on her frozen assets — it came as a surprise to many.

In their charges against her, Swiss prosecutors now accuse Karimova of heading an international crime syndicate they dub “the office”. It was centred in Switzerland and comprised dozens of individuals and more than 100 separate companies — all with apparently legitimate business interests — secretly working in concert to hide stolen money and enrich its members.

The key question that remains unanswered is what role Zeromax played. For its creditors, it was not just part of “the office” but its headquarters.

Rihm asks why the Swiss government, and previous prosecutors, have been at such pains to dispute that.

In the St Gallen case he has filed, he states there were multiple reports from Switzerland’s intelligence services and police which contained detailed information about Karimova’s involvement in Zeromax.

These were dismissed or not given adequate consideration in court in 2018 thanks to decisions taken by prosecutors. Those prosecutors, he says, were leaned on by Bern.

The Financial Times obtained one of the Swiss police reports Rihm referred to. The report details the connections between Karimova and Zeromax, as alleged by the creditors.

In one example, it describes how in 2016, Swiss police obtained a warrant to search safety deposit boxes rented by Karimova in Geneva. Inside they found a trove of luxury jewellery — including a single diamond ring from Boucheron worth $2.5mn — all of which had been paid for by Zeromax. The owner of one Geneva jewellery shop told the police in a statement that Karimova had personally bought the jewellery and had the money wired from a bank account controlled by Zeromax.

Rihm believes the Swiss government desired to shut Zeromax’s creditors out because it saw it wanted to curry favour with Tashkent. The Uzbek government was growing increasingly angry at the time that it could not get at the money belonging to Karimova stashed in the alps, despite having imprisoned her.
The quid pro quo of Switzerland speedily returning the money to Tashkent, Rihm says, was that Tashkent would rejoin the Swiss-led voting bloc at the IMF, known as the “Helvetistan” group. 

The FT was unable to verify these claims.

Tashkent’s support is nevertheless an important element in maintaining Switzerland’s influence at the IMF. The Helvetistan voting bloc gives Bern a seat on the IMF board.

Switzerland signed an agreement with Uzbekistan to begin restituting Karimova’s money in 2020. Given the continuing fight over the fortune, however, it remains to be seen when — if at all — the pledge will be honoured.

Copyright The Financial Times Limited 2023