Swiss Ambassador Pierre Helg told guests at a party marking Switzerland's 715th anniversary that "99 percent" of the money was back in Nigeria, Lagos' Day newspaper reports.
The other 1 percent, or $7 million, was being held in an account of an unnamed Nigerian to be given to the Abacha family, "which they say, they could prove that it was honestly earned," he said.
Abacha was a Nigerian politician and military leader who was the country's dictator from 1993 until his death in 1998.
After Abacha died, the new Nigerian government accused Abacha and his family of having looted the Nigerian treasury.
The $700 million from Switzerland is only part of the money that government officials believe Abacha and his family stole. The officials allege the total figure is $4 billion, much of which they say is still held by the late dictator's son, Mohammed Abacha.