Anti-Corruption 2022

Last Updated December 07, 2021

Switzerland

Law and Practice

Authors



Kellerhals Carrard has more than 200 professionals, with offices in Basle, Bern, Lausanne, Lugano, Sion, Zurich and Geneva, as well as representation offices in Shanghai and Tokyo. The law firm is one of the largest in Switzerland, with a rich tradition going back to 1885. Its continually expanding white-collar crime, investigation and compliance team has 15 professionals, who conduct internal and regulatory investigations, particularly in the healthcare, pharma and life sciences sector, the public sector, anti-bribery and anti-money laundering compliance, as well as supervision in the financial services industry. In 2018, the Kellerhals Carrard team led the highly publicised investigation into Postbus. The white-collar crime department has extensive experience in providing advice and court representation for a wide variety of business crime matters and the firm’s specialists have led major international legal assistance matters, related commercial litigation and asset-tracing and recovery matters. Kellerhals Carrard’s compliance specialists have broad experience in advising companies of various industries on proper measures to address any compliance deficiencies, including for anti-bribery and anti-corruption.

Switzerland is signed up to the following international conventions relating to anti-bribery and anti-corruption:

  • the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 17 December 1997;
  • the Council of Europe Criminal Law Convention on Corruption of 27 January 1999 as well as its Additional Protocol of 15 May 2003; and
  • the United Nations Convention against Corruption of 31 October 2003.

The main national legislation in the area of anti-bribery and anti-corruption in Switzerland is the Swiss Criminal Code (SCC). The provisions relating to anti-bribery and anti-corruption are governed by Articles 322ter to 322decies of the SCC, which are divided into four sections: bribery of Swiss public officials (Articles 322ter to 322sexies), bribery of foreign public officials (Article 322septies), bribery of private individuals (Articles 322octies and 322novies) and general provisions (Article 322decies).

All types of bribery include active and passive bribery. Bribery of Swiss public officials goes beyond active and passive bribery, which are governed by Articles 322ter and 322quater of the SCC, to the granting to and the accepting by Swiss public officials of an undue advantage (Articles 322quinquies and 322sexies of the SCC). Article 322decies of the SCC sets out the advantages that are not undue, as well as the equality between private individuals who fulfil official duties and public officials.

The provisions relating to anti-bribery and anti-corruption are interpreted and enforced by the Swiss courts. In addition, legal doctrine contributes to their interpretation.

The Swiss State Secretariat for Economic Affairs (SECO) published in 2017 in its third edition a brochure entitled "Preventing corruption – Information for Swiss businesses operating abroad". The brochure is designed to help Swiss companies operating abroad to cope with the pertinent regulations in Swiss criminal law, highlight the effects of corruption on their business and provide advice on how to prevent and combat corruption.

Prior to 1 July 2016, the criminal offences of active and passive bribery of private individuals were governed by Article 4a in conjunction with Article 23 para 1 of the Swiss Unfair Competition Act (SUCA). Since 1 July 2016, the offences of active and passive bribery in the private sector have been governed by Articles 322octies and 322novies of the SCC.

Bribery

In Swiss criminal law, no distinction is made between bribery and corruption. As outlined in 1.2 National Legislation, the relevant provisions in the Swiss Criminal Code are divided into the following four sections:

  • bribery of Swiss public officials;
  • bribery of foreign public officials;
  • bribery of private individuals; and
  • general provisions.

The provisions governing the bribery of Swiss public officials do not include only the active and passive bribery of Swiss public officials but also the granting to and the accepting by Swiss public officials of an undue advantage.

In accordance with the classification of the Swiss Criminal Code, the following discussion will distinguish between these four categories.

Preliminary Remarks

In abstract terms, the objective elements of active and passive bribery (Articles 322ter, 322quater, 322septies, 322octies and 322novies of the SCC), according to Swiss criminal law, consist of the following:

  • a bribing person;
  • a bribed person ‒ either a Swiss public official, a foreign public official or a private individual;
  • a bribe ‒ an undue advantage;
  • a prohibited act ‒ the offering, promising or giving of an undue advantage (active bribery) or the demanding, the securing of the promise of or the accepting of an undue advantage (passive bribery); and
  • a purpose ‒ the bribing person offers, promises or gives to the bribed person a bribe to cause the latter to carry out or to fail to carry out an act in connection with his or her official activity that is contrary to his or her duty or dependent on his or her discretion (principle of equivalence).

Subjectively, all types of bribery require that the offender act with intent; ie, the offender must carry out the act in the knowledge of what he or she is doing and in accordance with his or her will. Conditional intent (dolus eventualis) is sufficient. Thus, if the offender regards the realisation of the act as being possible and accepts this, he or she acts with conditional intent.

An undue advantage within the meaning of the provisions relating to anti-bribery and anti-corruption in Switzerland may be tangible or intangible. A tangible advantage is any measurable improvement, be it a cash payment, a payment in kind or a legal improvement. Intangible advantages are, for example, social or professional advantages. The advantage is undue if the offender is not authorised to accept it.

Active and passive bribery require that the undue advantage be offered, promised or given to cause the bribed person to carry out or to fail to carry out an act in connection with his or her official activity that is contrary to his or her duty or dependent on his or her discretion. Therefore, (i) the bribed person’s act has to be carried out or has to fail to be carried out in connection with his or her official activity, (ii) the act has to be contrary to the bribed person’s duty or dependent on his or her discretion and (iii) the undue advantage has to be offered, promised or given in order for the bribed person to carry out or to fail to carry out the act which is contrary to his or her duty (principle of equivalence).

A connection with the official activity of the bribed person exists where he or she is acting in his or her official capacity or violates official duties through the act in question. A breach of duty must be held to be established if the bribed person violates a provision under public law respectively under labour law and his or her employment contract describing his or her dutiful conduct. Alternatively, the respective condition is also met if the bribed person’s act is dependent on his or her discretion. Equivalence of the undue advantage and the bribed person’s determinable consideration is fulfilled if there is a sufficient connection between the bribed person’s behaviour and the undue advantage granted by the bribing person.

With respect to all types of bribery, the undue advantage does not need to be offered, promised or given to the bribed person, but can also be offered, promised or given to a third party. In addition, for the offender to be punishable, it is sufficient that the undue advantage is offered, promised or given to the bribed person without any requirement that the results expected by the involved persons actually occur.

Under Swiss criminal law, the failure to prevent bribery is not an offence. However, a company may also be punished for a bribery offence committed in the company, irrespective of the criminal liability of any natural persons, if the company did not undertake all requisite and reasonable organisational precautions required to prevent bribery (Article 102 para 2 of the SCC). In addition, principals can be held liable for having failed to prevent bribery committed by employees under their supervision.

Bribery of Swiss Public Officials

Under the heading "Bribery of Swiss public officials", four offences are to be distinguished: active bribery of Swiss public officials (Article 322ter of the SCC), passive bribery by Swiss public officials (Article 322quater of the SCC), the granting of an undue advantage to Swiss public officials (Article 322quinquies of the SCC) and the accepting of an undue advantage by Swiss public officials (Article 322sexies of the SCC). With respect to the constituent elements common to all types of bribery, reference is made to the preliminary remarks. The following discussion is limited to the elements specific to the bribery of Swiss public officials.

The notion of Swiss public officials encompasses members of a judicial or other authority, public officials, officially appointed experts, translators or interpreters, arbitrators, or members of the armed forces.

Public officials are the officials and employees of a public administrative authority or of an authority for the administration of justice, as well as persons who hold office temporarily or are employed temporarily by a public administrative authority or by an authority for the administration of justice or who carry out official functions temporarily (Article 110 para 3 of the SCC). In Swiss corruption law, the position of a public official is assessed on the basis of the functional notion of a public official. Employees of State-controlled companies are therefore included in this notion.

In contrast to active bribery, passive bribery does not include members of the armed forces. The same is valid for the accepting by Swiss public officials of an undue advantage. By mirroring the offering, promising or giving, the Swiss public official demands, secures the promise of or accepts the undue advantage.

The granting to and the accepting by Swiss public officials of an undue advantage (Articles 322quinquies and 322sexies of the SCC) differs from active and passive bribery in so far as the undue advantage is offered, promised or given in order that the Swiss public official carries out his or her official duties. Thus, in contrast to active and passive bribery, the offering, promising or giving of an undue advantage is not linked to a concrete or at least determinable consideration of the Swiss public official (principle of equivalence). Nevertheless, the granting of the undue advantage needs to be suitable for influencing the carrying out of the Swiss public official’s official duties.

In contrast to active and passive bribery pursuant to Articles 322ter and 322quater of the SCC, the granting to and the accepting by Swiss public officials of an undue advantage only refer to the future exercise of the public official's official duties.

It is noteworthy that the granting to and the accepting by Swiss public officials of an undue advantage (Articles 322quinquies and 322sexies of the SCC) only apply to Swiss public officials.

Facilitation payments, defined as smaller payments made to secure or expedite the performance of a routine or necessary action to which the payer has legal or other entitlement, could, in principle, fall within the scope of the offences of granting to and accepting by Swiss public officials of an undue advantage. However, negligible advantages that are common social practice do not constitute undue advantages (Article 322decies para 1(b) of the SCC).

Bribery of Foreign Public Officials

The active and passive bribery of foreign public officials is a punishable offence pursuant to Article 322septies of the SCC.

With respect to the constituent elements common to all types of bribery, reference is made to the preliminary remarks.

Within the meaning of active and passive bribery of foreign public officials, the undue advantage is offered, promised or given to, respectively demanded, secured the promise of or accepted by a member of a judicial or other authority, a public official, an officially appointed expert, translator or interpreter, an arbitrator, or a member of the armed forces who is acting for a foreign state or international organisation.

Bribery of Private Individuals

Since 1 July 2016, not only is the active and passive bribery of Swiss (Articles 322ter and 322quater of the SCC) and foreign public officials (Article 322septies of the SCC) forbidden, but also the active and passive bribery of private individuals (Articles 322octies and 322novies of the SCC). Pursuant to Article 322octies para 1 of the SCC, any person who offers, promises or gives an employee, partner, agent or any other auxiliary of a third party in the private sector an undue advantage for that person or a third party in order that the person carries out or fails to carry out an act in connection with his or her official activities that is contrary to his or her duties or dependent on his or her discretion is criminally liable.

As the constituent elements correlate with bribery of public officials, reference is made to the preliminary remarks.

It is nevertheless noteworthy that the offences of active and passive bribery of private individuals within the meaning of Articles 322octies and 322novies of the SCC are also applicable to the bribery of foreign private individuals. Furthermore, in minor cases, active and passive bribery of private individuals is only prosecuted upon complaint. Minor cases could be held to be established, in particular, in the following circumstances:

  • the sum in tort is not extensive;
  • the security and health of third parties are not affected by the offence;
  • there is no multiple, repeated or commission of the offence by a member of a group;
  • no document fraud has been committed in connection with the bribery.

General Provisions

The general provisions contained in Article 322decies of the SCC are applicable to every form of bribery in Swiss law. According to Article 322decies para 1 of the SCC, the following are not undue advantages: (i) advantages permitted under public employment law or contractually approved by a third party and (ii) negligible advantages that are common social practice.

Advantages that are negligible, but clearly aiming at a purpose of bribery, are not covered by Article 322decies para 1(b) of the SCC. The threshold for negligible advantages that are common social practice lies with the possibility of influencing the person accepting the advantage; ie, in general, about CHF150.

In addition, pursuant to Article 52 of the SCC, the competent authority shall refrain from prosecuting the offender, bringing him or her to court or punishing him or her if the level of culpability and consequences of the offence are negligible.

Article 322decies para 2 of the SCC provides that private individuals who fulfil official duties are subject to the same provisions as public officials.

Money Laundering

Active and passive bribery of Swiss or foreign public officials (Articles 322ter, 322quater and 322septies of the SCC) qualify as felonies and are thus predicate offences to money laundering, according to Article 305bis of the SCC.

In contrast, active and passive bribery of private individuals (Articles 322octies and 322novies of the SCC) are qualified as misdemeanours and are thus not predicate offences to money laundering. The same is true for the granting to and the accepting by Swiss public officials of an undue advantage (Articles 322quinquies and 322sexies of the SCC).

By trading in influence, a person misuses his or her influence over a decision-maker (typically a public official) for a third party in return for any undue advantage.

Swiss law does not detail a specific offence with respect to trading in influence. However, if the intermediary is a public official, he or she could be held liable for passive bribery or the accepting of an undue advantage if he or she accepts an undue advantage to influence another public official. The third party giving the undue advantage could be held liable for active bribery or the granting of an undue advantage. However, the undue advantage must be linked to the official activity of the intermediary. It is important to note that, under Swiss law, the granting to and the accepting by public officials of an undue advantage only apply to Swiss public officials.

If the intermediary is a private individual and the public official whose decision is to be influenced participates in the corruptive scheme and at least implicitly accepts the undue advantage for the intermediary, active and passive bribery could be fulfilled. Depending on the explicit or implicit agreement between the parties, the third party could be held liable for complicity or incitement to active bribery, the intermediary for active bribery (or complicity to active bribery) and the public official for passive bribery.

Under Swiss criminal law, it is a punishable offence if a debtor fails to comply with a statutory obligation to which he or she is subject to keep and preserve business accounts or draw up a balance sheet, with the result that his or her financial position is not ascertainable or not fully ascertainable, if bankruptcy proceedings are commenced against him or her (Article 166 of the SCC). Moreover, any person who wilfully or through negligence fails to comply with the statutory duty to keep proper accounts or to preserve accounts, business correspondence and business telegrams is criminally liable (Article 325 of the SCC).

Forgery of documents is covered by Article 251 of the SCC, which punishes the production and the use of a false or falsified document. If the offender is a public official or a person acting in an official capacity, Article 317 of the SCC (forgery of a document by a public official) is applicable.

Under Swiss law, there are several provisions relating to the criminally relevant behaviour of public officials.

Pursuant to Article 313 of the SCC (overcharging of taxes), any public official who, for unlawful gain, levies taxes, fees or other charges that are not due or that exceed the statutory rates, is criminally liable.

Likewise, any member of an authority or public official who, in the course of a legal transaction and with a view to obtaining an unlawful advantage for himself or herself or another, damages the public interests that he or she has a duty to safeguard is liable to prosecution for misconduct in public office (Article 314 of the SCC).

A public official is criminally liable for the appropriation of moveable property belonging to another but entrusted to him or her, as well as for the unlawful use of financial assets entrusted to him or her for his or her own or another's benefit (Article 138 of the SCC).

Finally, any member of an authority or a public official who abuses his or her official powers to secure an unlawful advantage for himself or herself or another, or to cause prejudice to another, is liable to prosecution for abuse of public office (Article 312 of the SCC).

As previously mentioned in 2.1 Bribery, Articles 322ter to 322novies of the SCC explicitly provide that the undue advantage does not need to be offered, promised or given to the public official, but can also be offered, promised or given to a third party. Apart from that, the general provisions concerning complicity, incitement and assistance are applicable, as the case may be.

Swiss criminal law distinguishes between the limitation of prosecution rights and the limitation period for the execution of a sentence. Whereas the former has the effect of hindering the authorities in prosecuting, the latter prevents a sentence from being executed.

Limitation of prosecution rights depends on the maximum sentence provided for in the respective offence. According to Article 97 para 1(b) of the SCC, the right to prosecute is subject to a time-limit of 15 years if the offence carries a custodial sentence of more than three years. This is the case for active and passive bribery of a Swiss or foreign public official (Articles 322ter, 322quater, 322septies of the SCC). The right to prosecute is subject to a time-limit of ten years for the offences of granting to and accepting by Swiss public officials of an undue advantage pursuant to Articles 322quinquies and 322sexies of the SCC, and for active and passive bribery of private individuals pursuant to Articles 322octies and 322novies of the SCC (Article 97 para 1(c) of the SCC).

If a judgment is issued by a Court of First Instance before expiry of the limitation period, the time limit no longer applies (Article 97 para 3 of the SCC).

Depending on the sentence imposed, the right to execute a sentence in connection with a bribery offence is subject to a limitation period of five, 15 or 20 years (Article 99 para 1 of the SCC).

According to Article 3 para 1 of the SCC, any person who commits an offence in Switzerland is subject to the Swiss Criminal Code. Article 8 para 1 of the SCC clarifies the notion of the place of commission by stating that an offence is considered to be committed at the place where the person concerned commits it or unlawfully omits to act and at the place where the offence has taken effect.

It is sufficient for the Swiss authorities to assert jurisdiction if the offence is only partly committed in Switzerland. With respect to bribery, Swiss jurisdiction can arguably be held to be established if the bribe money has been transferred to or from a bank account in Switzerland, irrespective of whether the bribing or the bribed person has been to Switzerland.

Notwithstanding the foregoing, Swiss legislation has extra-territorial reach under certain conditions. A person who commits an offence abroad that Switzerland is obliged to prosecute in terms of an international convention is subject to the Swiss Criminal Code, provided that (i) the act is also liable to prosecution at the place of commission or no criminal law jurisdiction applies at the place of commission and (ii) the person concerned remains in Switzerland and is not extradited to the foreign country (Article 6 para 1 of the SCC).

Furthermore, a person who commits an offence abroad where the requirements of, in particular, Article 6 of the SCC are not fulfilled is subject to the Swiss Criminal Code if:

  • the offence is also liable to prosecution at the place of commission or the place of commission is not subject to criminal law jurisdiction;
  • the person concerned is in Switzerland or is extradited to Switzerland due to the offence; and
  • under Swiss law, extradition is permitted for the offence, but the person concerned is not being extradited (Article 7 para 1 of the SCC).

If the person concerned is not Swiss and if the offence was not committed against a Swiss person, Article 7 para 1 of the SCC is applicable only if the request for extradition was refused for a reason unrelated to the nature of the offence (Article 7 para 2(a) of the SCC).

As explained in 2.1 Bribery, under Swiss criminal law, according to Article 102 para 2 of the SCC, a company is penalised for an offence committed in the company by an individual, irrespective of the criminal liability of any natural persons, provided the company has failed to take all the reasonable organisational measures that are required to prevent such an offence.

A successor entity is only liable to prosecution instead of the entity within which an offence has been committed if there is identity between the two entities, which is the case if the assets of the actually liable entity (i) exist separately from the assets of the successor entity, (ii) are used in an identical or similar manner as before and (iii) form an important part of the total assets of the successor entity.

This condition is not met in the case of a merger of two entities of the same size.

Generally speaking, a person or corporation accused of bribery can raise defences relating to the objective and subjective requirements of the relevant provision (see Section 2 Classification and Constituent Elements). In particular, it can be challenged that:

  • a gift qualifies as an undue advantage;
  • in the case of Article 322septies of the SCC, whoever was offered or demanded the undue advantage has the status of a foreign public official;
  • the undue advantage has been offered "in order to cause" the public official to act contrary to his or her duties (lack of "equivalence link");
  • the public official who was offered or demanded the undue advantage had any influence on the carrying out of the relevant official act;
  • the offender acted with intent or at least conditional intent (dolus eventualis) in relation to all objective requirements of the offence;
  • in the case of corporate liability, the corporation has not taken all reasonable organisational measures required to prevent the offence; or
  • in the case of insufficient organisational measures, the lack of such measures enhanced the commission of the offence.

There are no exceptions to the defences mentioned under 4.1 Defences.

As outlined in Section 2 Classification and Constituent Elements, Article 322decies para 1(b) and 52 of the SCC set out certain de minimis exceptions.

There are no sectors or industries exempted from the offences previously discussed.

Swiss law does not contain specific provisions to reward spontaneous reports of irregularities by natural persons or corporations. However, self-reporting followed by co-operation during proceedings may be taken into account by the criminal authorities when determining a sentence (Article 102 paras 3, 47 and 48 of the SCC).

Also, according to Article 53 of the SCC, if an offender has made reparation for the loss, damage or injury, or made every reasonable effort to right the wrong that he or she has caused, the competent authority shall refrain from prosecuting him or her, bringing him or her to court or punishing him or her if the requirements for a suspended sentence are fulfilled and the interests of the general public and of the persons harmed in prosecution are negligible.

Alternatively, if the aforementioned requirements are not met, but the facts are acknowledged in a spontaneous report or during the subsequent investigation, the offender may apply for a so-called accelerated proceeding and thus avoid a long trial. Typically, the sanctions imposed in such accelerated proceedings are of a lesser severity.

The maximum penalty for an individual convicted of the active or passive bribing of (either Swiss or foreign) public officials is five years’ imprisonment or a monetary penalty. The maximum penalty for granting or accepting an undue advantage is three years' imprisonment or a monetary penalty. Bribery in the private sector carries a sentence of up to three years of imprisonment or a monetary penalty. The maximum monetary penalty is CHF540,000. Depending on the circumstances of the case, penalties may also include a ban on exercising professional activities or a revocation of a residence permit for foreigners. A legal entity may be sanctioned with a fine of up to CHF5 million.

As a further significant sanction, the court may order the forfeiture of illegal profits obtained through corrupt acts or assets intended to commission or to reward the offender (Article 70 of the SCC). If the assets subject to forfeiture are no longer available, the court may uphold a claim for compensation by the State, in respect of a sum of equivalent value (Article 71 of the SCC). There is no cap on the amount of money for such forfeiture or compensation claims.

Often bribery will include parallel violations of accounting or bookkeeping obligations, or falsification of accounting documents, and sometimes tax offences. Such violations may lead to the same or similar criminal sanctions as bribery (imprisonment or monetary sanctions), as well as to administrative sanctions in certain regulated sectors. Lastly, Swiss criminal procedure law provides that an individual who has suffered harm from bribery or corruption may file a civil claim as a private claimant in the criminal proceedings.

Swiss Criminal Law does not provide for general guidelines applicable to the assessment of appropriate penalties. Rather, based on the Swiss Criminal Code, the authorities have broad discretion in determining the appropriate sanction. Factors to be considered include the degree of fault, previous convictions, the personal circumstances of the offender, and the impact of the sanction on his or her life (Article 47 of the SCC). To determine the amount of the monetary penalty for an individual, the court particularly takes into account the offender’s personal and financial circumstances at the time of conviction (Article 34 of the SCC). To determine the amount of the fine in the case of a conviction of a corporation, the court takes into account the seriousness of the offence, the degree of the organisational inadequacies, the damage caused, and the economic capability of the company (Article 102 para 3 of the SCC).

Repeated offences will lead to an increase of the sentence by up to 50% based on the most serious offence (Article 49 para 1 of the SCC). Although Swiss law does not contain provisions to reward spontaneous reports of irregularities generally, self-reporting followed by co-operation during criminal proceedings may be taken into account when the sentence is determined (see 7.4 Discretion for Mitigation).

Swiss law does not explicitly provide for duties to prevent corruption, in particular by setting up a compliance programme, and the failure to prevent bribery itself is in itself not an offence. However, corporate criminal liability exists, if a felony or misdemeanour is committed in a corporation and if it is not possible to attribute such an act to any specific natural person due to the inadequate organisation of the corporation (Article 102 para 1 of the SCC). Furthermore, a company may also be punished irrespective of the criminal liability of any natural persons if the enterprise did not undertake all requisite and reasonable organisational precautions required to prevent bribery (Article 102 para 2 of the SCC), thus applying criminal liability for a legal entity which failed to prevent bribery from occurring. Such precautions may consist of risk analysis, training, internal controls and internal policies. Accordingly, if a company lacks an adequate compliance programme, the company may become criminally liable. In any case, and depending on the circumstances, an effective compliance programme may at least help to mitigate the criminal liability of the corporation. If convicted, a legal entity may be sanctioned with a fine of up to CHF5 million.

Swiss anti-money laundering legislation contributes to the detection of bribery to the extent that all Swiss financial intermediaries are required to inform the Money Laundering Reporting Office Switzerland (MROS) immediately when they become aware of or have “reasonable grounds” to suspect that assets involved in a business relationship fall under at least one of the criteria set out in the Anti-Money Laundering Act (AMLA), including if they originate in a predicate offence to money laundering (Article 9 AMLA). Corruption of public officials, in contrast to corruption in the private sector, qualifies as a felony and is thus a predicate offence for money laundering (Article 305bis of the SCC). In fact, it is one of the predicate offences that most frequently underline reports of suspicious transactions to the MROS. Once the cases have been processed by the MROS, the cases are forwarded to the Federal Office of the Attorney General (OAG) or cantonal attorneys' general offices, as appropriate. The MROS is the most frequent source of information leading to criminal proceedings for international corruption, followed by international mutual legal assistance.

Suspected or actual misconduct in the business domain of a corporation requires senior management (board of directors, executive committee) to initiate an internal investigation and, if the internal investigation results in evidence of misconduct, the corporation has to decide whether to self-report the misconduct. There is, however, no duty to disclose violations of anti-bribery and anti-corruption provisions in Switzerland, and neither does Swiss law explicitly provide for credit or leniency during a criminal investigation. Self-reporting followed by co-operation during criminal proceedings may be taken into account when the sentence is determined.

Currently, there is no specific protection afforded to whistle-blowers in the private sector pursuant to Swiss law. Rather, the competent courts decide on a case-by-case basis whether the reporting of irregularities is legitimate. Swiss courts assess in each individual case, applying a balancing of interests’ test, whether the employee’s notification of an irregularity to the employer, the authorities or the media was lawful in the concrete case, and examine the facts of the case, primarily in relation to the employee’s duty of loyalty. However, it is regarded as best practice to have reporting mechanisms in place which adequately protect the whistle-blower from negative consequences. The termination of an employee solely on the grounds of lodging a complaint may constitute an unfair dismissal under Swiss law. In the public sector, under the relevant Cantonal or Federal Personnel Acts, Swiss officials may be required to report crimes and offences to their supervisors or directly to the criminal authorities.

The EU Whistle-blower Directive (2019/1937) entered into force in December 2019, and the EU Member States must implement the requirements resulting from the EU Directive into national law by December 2021. As Switzerland is not an EU Member State, there is no obligation to implement the EU Whistle-blower Directive into national law. Nevertheless, Swiss companies with business branches in the EU, with at least 50 employees, may fall within the scope of the EU Whistle-blower Directive. Compliance with the requirements of the EU Whistle-blower Directive can therefore also be of great importance to Swiss companies.

There are no specific incentives for whistle-blowers to report bribery or corruption in Switzerland.

In practice, many corporations have established mechanisms for employees to report suspected or actual misconduct to an independent person and corporations sometimes encourage or oblige employees to report suspicions of bribery: for example, to the compliance department, to an external lawyer or to a specific whistle-blower portal. Upon such reporting, an employer may choose to waive its right to take civil action against the reporter, even if he or she is involved in the bribery or corruption. An employer’s waiver, however, does not protect the employee from prosecution by the criminal authorities.

Currently, under Swiss law, there is no specific protection afforded to whistle-blowers in the private sector (for the public sector, see 6.4 Incentives for Whistle-Blowers).

Anti-bribery and anti-corruption laws are in principle enforced by criminal authorities and, to a certain extent and less directly, by administrative bodies such as the Swiss Financial Market Supervisory Authority (FINMA) and the Money Laundering Reporting Office (MROS) (see 7.2 Enforcement Body).

Furthermore, an individual who has suffered harm from bribery or corruption may file a civil claim for compensation of damages or surrender of profits based on the Federal Law on Unfair Competition. He or she can file the civil claim in separate civil proceedings or as a private claimant in the criminal proceedings (see 5.1 Penalties on Conviction).

In principle, the enforcement of anti-bribery and anti-corruption offences lies with the prosecutor’s office at the cantonal or federal level. The Office of the Attorney General of Switzerland (OAG) will lead the investigation if the offence has been committed to a substantial extent abroad or in two or more cantons, with no single canton being the clear focus of the criminal activity. An agreement is in place between the cantonal prosecution authorities and the OAG governing the question of jurisdiction. Remaining conflicts of competence are decided by the Swiss Federal Criminal Court.

In relation to banks and other financial intermediaries, the FINMA is authorised to enforce its supervisory powers independently from any criminal investigation led by the prosecution authorities. In a landmark case, the FINMA ordered a bank to terminate its activities in view of the bank’s involvement in corruption. In other cases, the procedures led to sanctions, such as the confiscation of illegal proceeds, naming and shaming, restriction or termination of activities, or a ban on practising for several years for individuals. The FINMA and the competent prosecution authorities have broad competences to co-operate and exchange the information that they require in the context of their collaboration.

The MROS also plays an important role in the enforcement process. It receives suspicious activity reports from financial intermediaries and, after analysis, forwards them to the criminal authorities for follow-up action. Such suspicious activity reports may in particular relate to corruption as a predicate offence of money laundering (see 6.2 Disclosure of Violations of Anti-bribery and Anti-corruption Provisions).

In a criminal investigation for bribery, the prosecution authorities may use all coercive measures provided for by the Swiss Criminal Procedure Code (SCP). In particular, they may order interrogations of witnesses and suspects, house searches or, against non-suspect third parties (eg, banks and other financial intermediaries), the disclosure of documents and/or information. The right against self-incrimination (principle of nemo tenetur se ipsum accusare) provides a ground for refusing to co-operate (including the right to remain silent or not to disclose documents) with the prosecution authorities. In addition, documents covered by an attorney-client privilege or obtained by illegal means are not admissible in criminal proceedings. It is noteworthy, however, that the attorney-client privilege does not extend to in-house counsels. In the case of doubt, documents may be sealed and a judicial authority must rule on their admissibility (Article 248 of the SCP).

In contrast, based on Article 29 of the Federal Act on the Swiss Financial Market Supervisory Authority (FINMASA), financial intermediaries supervised by the FINMA are obliged to provide the FINMA with all documents and information the FINMA deems necessary to fulfil its supervisory duties.

The enforcing bodies act ex officio and are thus obliged to investigate and sanction bribery without exception. Swiss law does not provide for plea agreements, deferred prosecution agreements and non-prosecution agreements exactly equivalent to such instruments in other jurisdictions. However, Swiss law provides for the following mechanism to achieve similar results.

According to Article 53 of the SCC, the competent authority shall refrain from prosecuting or punishing an individual or corporation if the offender “admits the facts” and “has made reparation for the loss, damage or injury or made every reasonable effort to right the wrong", the interests of the general public and of the person harmed are negligible, and the requirements for a suspended sentence of not more than one year are fulfilled. In such cases, the reparation requested can be discussed ex ante between the prosecution and the defence, and could, for example, consist of a payment to a charitable organisation.

Articles 352 et seq of the SCP provide that, if the offender admits the facts brought against him or her or if the facts are “otherwise sufficiently established,” the prosecution authorities may issue a summary penalty order, which can be appealed to the court and is thus, so to speak, a plea agreement offer by the prosecution authorities. The offer may be the result of discussions between the prosecutor and the defence.

Articles 358 et seq of the SCP provide that an offender who admits the relevant facts brought against him or her and accepts civil claims raised by damaged parties may apply for so-called accelerated proceedings, which may involve "sentence bargaining" between the prosecutor and the defence. The sentence is reduced and a long trial avoided in return for the offender admitting the relevant facts.

Finally, Article 48(d) of the SCC provides for mitigation of a sanction if the offender has shown sincere remorse for his or her actions and in particular has made reparation for the damage, in so far as this may be expected of him or her. This provision can be applied, for example, in the case of self-reporting and/or improvement of the company’s compliance and governance practice.

As regards FINMA investigations, the FINMA has a wide discretion to mitigate sanctions with a view to the financial intermediary’s co-operation during the investigation, including efforts for reparation.

According to Article 3 of the SCC, the Swiss criminal authorities are competent to prosecute corruption committed in Switzerland. According to Article 8 of the SCC, a bribery offence is considered to be committed both at the place where the person concerned acts or unlawfully omits to act and at the place where the offence has taken effect.

The place of commission is broadly construed. Arguably, corruptive payments to or from a Swiss bank account suffice to create Swiss jurisdiction even though all persons involved act outside Switzerland.

In the case of corporate liability (Article 102 para 2 of the SCC), it is not necessary that the bribery offence itself was committed by a Swiss corporation in Switzerland; it is sufficient that a lack of organisation occurred (at least partially) in Switzerland, which may be the case in the situation of a subsidiary, affiliate or branch located in Switzerland that is responsible for the compliance of the group of companies.

The FINMA is authorised to issue administrative orders relating to corruption against persons and entities that are required to be licensed, recognised or registered by the FINMA.

Alstom Case

In November 2011, after three years of investigation, the OAG issued a summary punishment order against Alstom Network Schweiz AG for breach of Article 102 para 2 of the SCC in conjunction with Article 322septies of the SCC and fined the company CHF2.5 million and imposed a compensatory claim of CHF36.4 million. Alstom Network Schweiz AG, the company responsible for the compliance of the group, but not otherwise involved in the bribe payments, was convicted of not having taken all necessary and reasonable organisational precautions to prevent bribery of foreign public officials in Latvia, Tunisia and Malaysia. The investigation into the parent company, Alstom SA, was closed without punishment, based on Article 53 of the SCC, in return for a reparation payment.

SIT Case

In November 2013, the OAG concluded a criminal investigation into the Swedish company Siemens Industrial Turbomachinery (SIT). The case concerned illegal payments to senior executives of Gazprom in relation to a contract for gas turbines for the pipeline linking Russia’s Yamal peninsula to Western Europe. The investigation was closed, based on Article 53 of the SCC, after SIT admitted inadequate enforcement of compliance regulations in relation to Yamal gas-pipeline projects and paid reparation of CHF125,000 in the form of a donation to the International Committee of the Red Cross (ICRC). SIT also paid compensation of USD10.6 million for unlawfully obtained profits.

As for the individuals involved, the FCC two years later issued an acquittal on the grounds that the senior executives of Gazprom receiving the commissions were not public officials in the sense of Article 322septies of the SCC.

Fertiliser Case

By a summary punishment order of 31 May 2016, the OAG convicted the company of failure to take reasonable and necessary organisational measures to prevent corrupt payments to foreign public officials and ordered it to pay a fine of CHF750,000 for a corrupt payment of USD1.5 million to a senior Libyan official (Minister for Oil) in exchange for the right to build a fertiliser plant in Libya.

Construction 1 Case

The Construction 1 case concerns charges of bribery of foreign public officials against a former senior executive of a Canadian construction company. Inducements were given to the son of the late Libyan dictator in order to secure contracts which were valued at more than USD21 million and generated assets worth more than EUR70 million. The former executive was the beneficial owner of the companies which allegedly made illicit profits of over EUR30 million. After having launched a criminal investigation on 11 May 2011 against the former executive, the Office of the Attorney General (OAG) filed a simplified-procedure indictment against the Canadian group and its former executive on 18 July 2014. On 1 October 2014, the Federal Criminal Court upheld the judgment recommended by the OAG. With regard to another aspect of the procedure (retrocessions to the senior executive), the Canadian company was acknowledged as the injured party in this case. The Federal Criminal Court held that the former executive’s breach of his duty of due diligence had caused a damage to the company. The former executive was sentenced to three years' custody. Some of his assets were confiscated and he was ordered to pay damages in the amount of CHF12 million plus interest to the Canadian company, which passed this amount on to Switzerland.

Construction 2 Case

A businessman belonging to an eminent North African family had acted as intermediary in a corruption case in Libya involving a Canadian engineering group (see Construction 1 Case). He was convicted of complicity in the bribery of foreign public officials in a summary punishment order of the OAG dated 22 March 2016 and given a suspended pecuniary day-fine of 150 days at CHF2,500, ie, a total of CHF375,000. Assets in the amount of CHF425,264 were confiscated.

Port Infrastructure Case

In four summary punishment orders of 1 May 2017, the OAG convicted a Belgian company and its subsidiary, specialists in port infrastructure development, for failure to take reasonable and necessary organisational measures to prevent bribes to foreign public officials (Article 102 para 2 of the SCC). The investigation revealed a financial set-up whereby the Belgian subsidiary and two individuals paid funds to public officials in Nigeria, in part through companies whose beneficiaries were politically exposed persons (PEPs). These payments were moved through three letterbox companies domiciled in the British Virgin Islands. More than CHF20 million was allegedly paid in bribes between 2005 and 2013. The subsidiary was fined CHF1million and had to make a compensation payment of CHF36,741,473. The parent company was fined CHF1.

Odebrecht/CNO Case

In a summary punishment order of 21 December 2016, the OAG convicted the Brazilian company Odebrecht SA and its subsidiary Construtora Norberto Odebrecht SA (CNO) for not having taken all reasonable and necessary organisational measures to prevent bribery and money laundering in connection with the Petrobras affair. The conviction, which took the form of a summary punishment order, is part of a co-ordinated conclusion of the proceedings, initiated by Switzerland and also involving Brazil and the USA.

Odebrecht and CNO were held jointly and severally liable by the OAG to pay to Switzerland CHF117 million in an equivalent claim; the subsidiary was sentenced to a fine of CHF4.5 million and the parent company Odebrecht SA to a fine of CHF0. The company Braskem SA had also paid bribes via the same channels as Odebrecht SA and CNO. Proceedings in Switzerland against Braskem SA have been abandoned as the company was being held accountable in the USA. However, the Swiss decision to abandon the proceedings involved the company paying compensation of CHF94.5 million in Switzerland. Altogether, the claims against the companies ‒ which were based in Brazil on civil proceedings, in the USA on a guilty plea and in Switzerland on the summary penalty order ‒ amounted to around USD2 billion.

Banknotes Case

Company DD, a subsidiary of company D (a world leader in the manufacture of machinery for the printing of banknotes), self-reported to the OAG on 19 November 2015 a possible breach of Article 102 para 2 in conjunction with Article 322septies SCC in connection with a deal in Nigeria. This spontaneous initiative was followed in April 2016 by the reporting of further suspicions concerning other deals in Morocco, Brazil and Kazakhstan. The value of the contracts secured by the company in these four countries was CHF626 million and the total paid in bribes was CHF24.6 million. In a summary punishment order of 23 March 2017, company DD was convicted and fined CHF1. It was also required to make a compensation payment of CHF35 million, of which CHF5 million was paid into a fund for the improvement of compliance standards in the banknotes industry.

Gunvor Case

In a summary penalty order from October 2019, the OAG convicted the Geneva commodities trader Gunvor of failing to take all the organisational measures that were reasonable and necessary to prevent its employees and agents from bribing public officials (Article 102 para 2 in conjunction with Article 322septies of the SCC). The investigation revealed that Gunvor’s employees and agents bribed public officials in the Republic of Congo and Ivory Coast to gain access to their petroleum markets. The company failed to prevent these acts of corruption due to serious deficiencies in its internal organisation. Gunvor was fined CHF4 million, which took into account the efforts that had been made since 2012 to improve their compliance and governance practice. In addition, Gunvor must pay compensation of almost CHF90 million, which corresponds to the total profit that Gunvor made from the business in question in the Republic of Congo and Ivory Coast.

Seco Case

In September 2021, the Federal Criminal Court in Bellinzona sentenced an ex-employee of the State Secretariat for Economic Affairs (Seco) to four years and four months' imprisonment. The Office of the Attorney General of Switzerland had demanded four years. The criminal division found the former Seco employee guilty of multiple forgery of documents in office, multiple taking of bribes and forgery of documents. The bribery affair came to light in 2014 and is regarded as one of the biggest cases of corruption within the federal administration. The then-head of department at Seco had awarded overpriced IT contracts from 2004 to 2014 and received money, VIP football tickets and travel invitations in return. IT contracts worth almost 100 million francs were involved. In return, the former civil servant allegedly received benefits totalling more than CHF 1.7 million.

Three co-accused entrepreneurs whose companies had profited from the contracts received conditional prison sentences of up to 22 months and fines. Currently, it is not clear whether the Federal Criminal Court's ruling will be appealed to the Federal Supreme Court.

Based on the Swiss Criminal Code, the authorities have broad discretion in determining the appropriate sanction. Factors to be considered include the degree of fault, previous convictions, personal circumstances of the offender and the impact of the sanction on his or her life (Article 47 of the SCC). Taken as an example, in the Port Infrastructure case discussed in 7.6 Recent Landmark Investigations or Decisions Involving Bribery or Corruption and featuring a bribe of more than USD20 million, the accused individuals were convicted to suspended day-fines of between CHF8,500 and CHF360,000. In addition, the OAG confiscated from the accused individuals an amount equivalent to their bonuses.

As for the sanctions imposed on legal entities, reference is made to the cases discussed in 7.6 Recent Landmark Investigations or Decisions Involving Bribery or Corruption. While the maximum fine for companies is limited to CHF5 million, a significant sanction comes from the fact that the court may order the forfeiture of illegal profits obtained through corrupt acts or assets intended to induce or to reward the offender (Article 70 of the SCC). If the assets subject to forfeiture are no longer available, the court may uphold a claim for compensation by the State in respect of a sum of equivalent value (Article 71 of the SCC). There is no cap on the amount of money for such forfeiture or compensation claims.

In 2000, Switzerland signed up to the OECD Convention on Combating Bribery of Foreign Public Officials and in 2006 to the Council of Europe’s Criminal Law Convention on Corruption (see Section 1 Legal Framework for Offences). Against this background, Switzerland has revised the criminal provisions related to the bribing of foreign and domestic officials, as well as to bribery in the private sector.

In September 2017, Switzerland was assessed by the OECD Working Group (referred to as phase four country monitoring). The OECD Working Group details the specific achievements and challenges of Switzerland regarding bribery in international business transactions. As positive progress, it outlined the rise in the number of prosecutions and the significant level of enforcement by the Federal Office of the Attorney General. The OECD Working Group expressed its appreciation of the work of the Money Laundering Reporting Office Switzerland for its role in detecting cases of foreign bribery in connection with money laundering and the proactive policy on seizure and confiscation. Also positively mentioned was the active involvement of Switzerland in mutual legal assistance and the measures taken to improve co-operation, such as proactive mutual legal assistance. Nevertheless, they expect Switzerland to improve its enforcement in the context of bribery of foreign public officials. Negatively assessed was that several court decisions have favoured a restrictive interpretation of bribery offences and the provisions on corporate liability and also that a large number of cases have been resolved outside court proceedings. Furthermore, the OECD Working Group regrets that the Anti-Money Laundering Act does not apply to lawyers, notaries, accountants and auditors.

The OECD Working Group made various recommendations: inter alia, to initiate a legal and institutional framework to protect whistle-blowers in the private sector. In February 2021, the Phase 4 two-year follow-up Report Switzerland was published by the OECD Working Group, which concluded that Switzerland has fully implemented 11 recommendations, partially implemented 18 recommendations and not implemented 17 recommendations. The Working Group was very pleased with various progress made, but regrets that Switzerland has not deployed sufficient efforts to implement the recommendations of phase 4, particularly also concerning whistle-blower protection.

Furthermore, in August 2017, the fourth interim report regarding the conformity of Switzerland with the Council of Europe’s Criminal Law Convention on Corruption was published. This report is based on the third-country review from 2011, which covered both the penal provisions against corruption and the financing of political parties. With the entry into force of the revised Criminal Law on Corruption in 2016, all Group of States against Corruption (GRECO) recommendations on criminal law were fully implemented. However, the recommendations on the transparency of party financing remained open. In its sixth interim report, the GRECO comes to the conclusion that Switzerland's current efforts with regard to transparency in party financing are heading in the right direction and that Switzerland has made progress. 

In April 2019, the Interdepartmental Co-ordination Group on Combating Money Laundering and Terrorist Financing published a report on corruption as a predicate offence to money laundering. The expert group comes to the conclusion that the risk of money laundering from domestic corruption does not seem to be non-existent, but is nevertheless well controlled. The expert group analyses that corruption in Switzerland is very low and is usually limited to attempted corruption. The greatest corruption-related risk of money laundering for the Swiss financial centre emanates from the corruption of foreign public officials, in particular from South America and Western Europe. The Swiss financial centre is presumably mainly used for the transfer of assets. Banks are therefore particularly susceptible to this risk of money laundering. Switzerland intends to take various measures to reduce the risk further. For example, the attractiveness of Swiss domiciliary companies is to be reduced by abolishing tax privileges.

The Federal Council of Switzerland adopted in September 2018 a legislative message to amend the Swiss Code of Obligations and to introduce clear rules and procedures for whistle-blowers (see 6.4 Incentives for Whistle-Blowers). The proposal was definitively rejected by the National Council (see 6.3. Protection Afforded to Whistle-Blowers). The majority considered the proposal to be too complex and not effective enough and especially impractical and unsuitable for small- and middle-sized enterprises. The protection for whistle-blowers in Switzerland will therefore remain inadequate for the next few years and whistle-blowers expose themselves to the risk that a court could qualify such a report as a breach of the duty of loyalty under labour law or of confidentiality obligations of the employee. Internationally, however, there is growing pressure on Switzerland to create a legal framework for the protection of whistle-blowers and against their wrongful dismissal (see 8.1 Assessment of the Applicable Enforced Legislation). It is to be expected that Switzerland will have to improve legal protection for whistle-blowers in a few years.

On 31 October 2017, the popular initiative for more transparency in financing of political activities was launched. Thereupon, the State Political Commission of the Council of States decided to draw up legal regulations providing for the disclosure of the financing of political activities. It was a long way until the Federal Assembly was able to agree on new rules in order to establish transparency regulations for parties, election and voting Committees in spring 2021. In the future, individual donations to parties and committees must be disclosed if they exceed CHF 15,000. Campaign funds must also be declared if the voting or election campaign has a budget of more than CHF 50,000. In addition, monetary donations from abroad and anonymous donations will be prohibited in the future. Due to these developments, the initiative committee has decided to withdraw the transparency initiative.

Kellerhals Carrard

Rämistrasse 5
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CH-8024 Zurich
Switzerland

+41 58 200 39 00

+41 58 200 39 11

omar.aboyoussef@kellerhals-carrard.ch www.kellerhals-carrard.ch
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Monfrini Bitton Klein was founded in Geneva by Enrico Monfrini in 1978 and has become renowned in international business law, complex litigation and arbitration. The asset recovery practice of the firm started at the end of the 1990s with the representation of foreign governments in grand corruption asset recovery proceedings, companies, individuals and liquidators of bankruptcies, and victims of fraud and Ponzi schemes. In 2017, the firm changed its name to Monfrini Bitton Klein and became a litigation-only practice in order to offer conflict-free services to its clients, focusing on asset recovery, white-collar crime, anti-corruption, cross-border bankruptcy, and enforcement of foreign judgments and arbitral awards. Monfrini Bitton Klein is the representative for Switzerland of ICC FraudNet, the leading global network of fraud and asset recovery lawyers, and has access around the world to hundreds of specialised correspondent lawyers, private investigators, forensic accountants, insolvency practitioners and litigation funders.

Case Law

Overview

The main decision of interest to mention from a case law perspective is a Federal Court ruling 6B_379/2020 of 1 June 2021 (in German) that addresses the issue of forfeiture in Switzerland of thew fees of an intermediary who entered into a plea-bargaining agreement in a foreign country.

In July 2015, the Office of the Attorney General of Switzerland begun an investigation into bribery of foreign public officials and money laundering following a suspicion report by a Swiss bank in the context of the Lava Jato investigation into bribery through a Brazilian intermediary and his companies regarding several contracts totalling USD1.8 billion between Petrobras and a US company regarding drilling vessels. The intermediary’s gross fees had been of about USD37 million.

In August 2015, following a collaboration agreement, the Brazilian intermediary was convicted in Brazil to imprisonment of eight years and a penalty of BRL70 million.

Also in August 2015, Petrobras terminated the contract with the US company on grounds that it had been obtained through bribery. The US company challenged the termination through arbitration. In June 2018, the arbitral tribunal found that the termination was illegal, holding that the contracts did not contain elements contrary to Petrobras’ interests. The arbitral award was confirmed by the US District Court for the Southern District of Texas in May 2019 and by the US Court of Appeals for the Fifth Circuit in July 2020.

On 12 February 2019, the Office of the Attorney General of Switzerland discontinued the criminal proceedings against the Brazilian intermediary on the basis of Article 8 of the Swiss Criminal Procedure Code in order to avoid duplication of proceedings and in the interests of international procedural coordination.

In the same decision, the Office of the Attorney General ordered the Brazilian individual to pay a replacement claim (equivalent of a disgorgement order) of USD9.98 million to deprive him from his unlawful gain.

The Brazilian intermediary filed an appeal against the replacement claim order with the Chamber of complaints of the Federal Criminal Court, who dismissed it, leading to an appeal to the Federal Court.

The Federal Court upheld the appeal and remanded the case to the Federal Criminal Court for a new decision, making the following findings:

Discontinuance was correct

The discontinuance of the Swiss criminal proceedings was correct, since both the custodial sentence and the penalty ordered by the Brazilian court exceeded the maximum under Swiss criminal law, and in the absence of a private claimant, there was no overriding interest that prevented the proceedings from being discontinued.

Net lawful gain in bribery cases

In bribery cases, contrary to what the lower court asserted, the net unlawful gain principle applies rather than the gross gain. However, since the net gain exceeded USD10 million, this did not lead to any consequence.

Causation between criminal offence and unlawful gain

The Federal Court reminded that in issuing a forfeiture order or a replacement claim, the prosecution authorities must not only establish the existence of a criminal offence but also establish that the unlawful gain was caused by the offence. In bribery cases, the authorities must establish that the legal transaction would not have been concluded without the act of bribery. In forfeiture proceedings, the presumption of innocence does not apply since the forfeiture order or the replacement claim are not considered as penalties and may be issued irrespective of the guilt of the owner of the assets. The State must nevertheless prove all the conditions for confiscation.

However, anyone who alleges facts contrary to confiscation must reasonably co-operate in the gathering of evidence.

Proportionality

The appellant claimed that the decision breached the principle of proportionality. The Federal Court found that the entire circumstances of the specific case must be taken into account in the context of the proportionality test. In the case of forfeiture of the entire net proceeds, the bribing party is in effect required to provide its service to the state free of charge, which is disproportionate and not appropriate if legal contractual terms were agreed for the service, but the award of the contract was unjustifiably made dependent on a bribe by the persons acting for the state.

It is therefore necessary to examine in particular how the bribe payments came about and the purpose pursued with them, ie, whether the initiative for this came from the bribing party, who wanted to achieve a competitive advantage or more favourable contract conditions with it, or whether the payment was demanded by the bribed party as a precondition for consideration in the award of the contract. Since the appealed judgement did not examine those issues, the case must be remanded to the lower court.

Good faith

In Swiss criminal proceedings, the principle of good faith applies, which entitles a person to protection of legitimate expectations in an assurance, information or other conduct of an authority. The Federal Court assumed that the purpose of the penalty of BRL70 million issued by the Brazilian court was to absorb the unlawful gain. The Federal Criminal Court referred to the cooperation agreement concluded in Brazil but nevertheless ordered the appellant to pay a further USD9.98 million replacement claim.

The Federal Court indicated that it was is questionable whether such an approach was compatible with the obligation of good faith and indicated that in the event that the lower court upholds the claim for compensation in the context of the reassessment, it will therefore also have to deal with its compatibility with the cooperation agreement concluded in the Brazilian criminal proceedings as well as with the principle of good faith.

Forfeiture vs replacement claims and lifting of the corporate veil

The Federal Criminal Court had confirmed the validity of the replacement claim, indicating that it would be overly complicated to identify which assets were proceeds of crime and that therefore a replacement claim should be issued rather than a forfeiture order, and that such replacement claim could be issued against the Brazilian individual even though his companies had received the unlawful gain, as the corporate veil could be lifted. The Federal Court reminded that, according to case law, a replacement claim against the sole shareholder of a legal entity is only permissible if there is no economic distinction between the shareholder and the company he owns, and the invocation of the legal independence of the legal entity therefore appears to be an abuse of right.

The Federal Court ruled that even the presumed commingling of the assets with funds of legal origin cannot justify a replacement claim for compensation against the shareholder personally. On the contrary, the proceeds of the offence are still forfeitable from the beneficiary company if they are not mixed with assets of legal origin. If they are, then the replacement claim should be issued against the company rather than its shareholder, as long as it is not established that the funds accrued to him personally.

The Federal Court therefore upheld the appeal and remanded the case to the Federal Criminal Court for a new decision. To date, this new decision has not been published.

Conclusion

This case thus stresses the complexity of issuing forfeiture orders or replacement claims when parallel proceedings have been concluded in a foreign country and the need for the Office of the Attorney General of Switzerland to at least attempt to fully complete the paper trail.

Legislative Changes and Other Developments

No amendment to the Swiss anti-bribery provisions took place in 2021. However, important changes to Switzerland’s anti-money laundering provisions were adopted, that will impact anti-bribery investigations.

Changes to the Anti-Money Laundering Act

On 19 March 2021, the Swiss Parliament approved a revision of the Anti-Money Laundering Act (AMLA) (19 March 2021 amendment; 26 June 2019 Federal Council dispatch to the Parliament; Parliamentary debates). This includes the most important recommendations from the Financial Action Task Force's (FATF) mutual evaluation country report on Switzerland of 2016, but not all of them.

Amendments adopted by Parliament

Under new Article 4 AMLA, financial intermediaries will not only have to establish the beneficial owner’s identity, but will be required to verify the identity of customers, record which services have been provided to them, and clarify their background and purpose.

The revised AMLA also provides that financial intermediaries will have to periodically update the client data (identification of the contracting party under Article 3 AMLA and of the beneficial owner under Article 4 AMLA, as well as the client’s profile) rather than only in the event doubts arise as in the current AMLA.

Under the revised Article 9 AMLA, the "reasonable grounds to suspect" money laundering that entails the obligation to report suspicious activities are now defined as "at least one concrete sign or of several indications" of money laundering that further clarifications cannot dispel. It appears that a "mere suspicion", as under current case law, will no longer to be sufficient to create a duty to report but will trigger additional duties of clarification.

Under revised Article 9b AMLA, the current 20 working day term of the Money Laundering Reporting Office of Switzerland (MROS) to process a report and provide the financial intermediary to terminate the business relationship is extended to 40 working days.

Associations that collect or distribute funds abroad for charitable purposes – which could be exposed to an increased risk of terrorist financing and money laundering – will also be required to register with Register of commerce, appoint a representative in Switzerland and keep a list of their members for five years that must be accessible from Switzerland.

Amendments rejected by Parliament

Two amendments that were included in the Federal Council’s dispatch (an in FATF’s recommendations) were rejected by the Parliament.

One was to include "advisors" within the scope of the AMLA, namely "physical or legal persons who are commercially active in connection with the incorporation, management or administration of domiciliary companies and trusts, as well as the organisation of raising funds in this context", including lawyers and notaries. The Parliament rejected this amendment, mainly in order to protect attorney-client privilege.

The second was to lower the threshold for cash payments in the trade of precious metals and gemstones to CHF15,000 from the current CHF100,000.

The new provisions should enter into force in the first half of 2022. The Federal Council is currently conducting consultations on the implementing ordinances of the amended Anti-Money Laundering Act.

Appointing a new Attorney General of Switzerland

Another development of interest is that on 29 September 2021, the Swiss Parliament appointed Mr Stefan Blättler as Attorney General of Switzerland, for a four-year term. It took three attempts and more than a year for Parliament to find a successor to Michael Lauber, the former Attorney General of Switzerland who was forced to resign in June 2020 over his handling of a probe into world football’s governing body FIFA. Mr Blättler has been the Commander of the Police for the Canton of Bern since 2006. It is expected that he will focus on re-organising the Office of the Attorney General of Switzerland, as well as maybe reduce the size of its 250-strong staff and leave more white-collar crime investigations to the cantons. This would obviously impact the way anti-bribery and money laundering investigations are conducted.

Monfrini Bitton Klein

Place du Molard 3
1204
Geneva
Switzerland

+41 22 310 2266

+41 22 310 2486

mail@mbk.law www.mnbk.law/en
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Kellerhals Carrard has more than 200 professionals, with offices in Basle, Bern, Lausanne, Lugano, Sion, Zurich and Geneva, as well as representation offices in Shanghai and Tokyo. The law firm is one of the largest in Switzerland, with a rich tradition going back to 1885. Its continually expanding white-collar crime, investigation and compliance team has 15 professionals, who conduct internal and regulatory investigations, particularly in the healthcare, pharma and life sciences sector, the public sector, anti-bribery and anti-money laundering compliance, as well as supervision in the financial services industry. In 2018, the Kellerhals Carrard team led the highly publicised investigation into Postbus. The white-collar crime department has extensive experience in providing advice and court representation for a wide variety of business crime matters and the firm’s specialists have led major international legal assistance matters, related commercial litigation and asset-tracing and recovery matters. Kellerhals Carrard’s compliance specialists have broad experience in advising companies of various industries on proper measures to address any compliance deficiencies, including for anti-bribery and anti-corruption.

Trends and Development

Author



Monfrini Bitton Klein was founded in Geneva by Enrico Monfrini in 1978 and has become renowned in international business law, complex litigation and arbitration. The asset recovery practice of the firm started at the end of the 1990s with the representation of foreign governments in grand corruption asset recovery proceedings, companies, individuals and liquidators of bankruptcies, and victims of fraud and Ponzi schemes. In 2017, the firm changed its name to Monfrini Bitton Klein and became a litigation-only practice in order to offer conflict-free services to its clients, focusing on asset recovery, white-collar crime, anti-corruption, cross-border bankruptcy, and enforcement of foreign judgments and arbitral awards. Monfrini Bitton Klein is the representative for Switzerland of ICC FraudNet, the leading global network of fraud and asset recovery lawyers, and has access around the world to hundreds of specialised correspondent lawyers, private investigators, forensic accountants, insolvency practitioners and litigation funders.

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