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Switzerland - Corruption

Switzerland has an effective legal and policy framework to combat domestic corruption. Laws are enforced effectively. U.S. firms investing in Switzerland have not complained of corruption to the Embassy in recent years. Corruption is reportedly not pervasive in any area or sector of the Swiss economy. Switzerland maintains effective investigative and enforcement procedures to combat domestic corruption. The giving or accepting of bribes in Switzerland is subject to criminal and civil penalties, including imprisonment up to five years.

To prevent the misuse of Switzerland‘s liberal market framework for money-laundering or criminal activity, provisions to regulate certain aspects of portfolio investment are regularly updated. One important firewall established by the Swiss banking industry is the 1997 Due Diligence Convention, under which banks must identify the beneficial owner of the invested funds. The EBK (now FINMA) updates the 1977 Due Diligence Guidelines on average every five years. Nevertheless, widely used investment techniques still permit customers to hedge their investments against tax exposure. The EBK guidelines also increased the banks' awareness of Personally Exposed Persons (PEPs), such as well-known foreign political figures. The guidelines are designed to deter corruption through the application of several risk assessment criteria (customer name, nationality, country of residence, and business activity). The EBK guidelines apply to domestic and foreign banks based in Switzerland and to Swiss banks' subsidiaries abroad. The Swiss penal code explicitly recognizes money laundering as a criminal offense, as is membership in, or support of a criminal organization. The change in the law facilitates confiscation of illicitly acquired assets without having to establish an exact linkage between a given asset and a specific crime. Money laundering regulations extend to non-banking financial institutions.

Switzerland signed the OECD Anti-Bribery Convention in 1997 and it entered into force in the country on May 1, 2000. In February 2001, Switzerland signed the Council of Europe's Criminal Law Convention on Corruption and in December 2003 it signed the UN Convention against Corruption. In order to implement the Convention, the Parliament amended the Penal Code to make bribery of foreign public officials an offense (Title Nineteen "Bribery", Articles). The amendments entered into force on May 1, 2000. In accordance with the revised 1997 recommendation, Parliament amended the legislation on direct taxes of the Confederation, cantons and townships so as to prohibit the tax deductibility of bribes. The amendment of the Tax Code became effective on January 1, 2001.

Under Swiss law, Staff members are urged not to accept anything that would "challenge their independence and capacity to act." According to the law, the range of the possibility to receive “individual advantages” reaches from no advantages at all (i.e. Financial Market Authority) to several hundred Swiss Francs. The upper-limit value of presents such as bottles of champagne and watches is a grey area that poses a problem because it varies according to department and canton. Transparency International believes a maximum sum valid at the federal level should be fixed. Some multinationals have assisted with the fight against corruption by setting up internal hotlines to enable staff to report problems anonymously.

The law provides criminal penalties for official corruption, and the government generally implements these laws effectively. Investigating and prosecuting government corruption is a federal responsibility. A majority of cantons also require members of cantonal parliament to disclose their interests. A joint working group comprising representatives of various federal government agencies works under the leadership of the Federal Department of Foreign Affairs to combat corruption.

Corruption is generally regarded to have decreased in the public sector over time. After several visa abuses in 2005 and 2006 in Swiss consulates abroad, a government audit highlighted 33 embassies and consulates with potential problems. The problematic cases identified occurred in Morocco, Turkey, Peru, Russia, Oman, Nigeria, Serbia, Macedonia and the Democratic Republic of Congo. The Swiss Federal Foreign Affairs Department also confirmed around 100 cases of visa fraud at the Swiss Embassy in Pakistan.

There were isolated reports of government corruption and other cases during the year. In 2010, the World Football Association (FIFA) received much media attention as two foreign functionaries were accused of receiving bribes in exchange for advantageous behavior. Transparency International among other entities criticized the Swiss anticorruption law for not being applicable to international sports association since they are considered non-profit entities.

Switzerland ratified the Council of Europe's Criminal Law Convention on Corruption on July 1, 2006. Switzerland’s penal code was amended so that foreign diplomatic staff and members of international organizations can be brought to court if they accept bribes. On September 24, 2009, Switzerland ratified the United Nations Convention against Corruption. Government experts believe this ratification will not result in significant changes since passive and active corruption of public servants is already considered a crime under the Swiss Criminal Code (Art. 322).

In June 2008, the Group of States against Corruption (GRECO, Council of Europe) welcomed Switzerland's efforts. Switzerland is among the top ten European countries in effectiveness for fighting corruption. For its first evaluation of Switzerland, the GRECO expressed satisfaction with the 2000 and 2006 revisions to the criminal law on corruption. The implementation of the criminal responsibility of the person (2003) was well perceived, as was the prohibition on tax breaks on bribes (2001). GRECO also recommended that Switzerland consider the introduction of additional penalties and examine the possibility of a criminal record for legal persons previously convicted. However, some of these recommendations were not taken into account in current version of the law of public procurement (in force since July 1, 2010). The draft federal law on public procurement’s plans to exclude from public bids any company previously sentenced for corruption was not included in the final version. Nevertheless, in March 2010, in the Joint First and Second Evaluation rounds, GRECO stated that Switzerland had implemented almost all recommendations.

In early 2009, the government announced a proposed change of the Swiss Obligation Code to ensure better protection for “whistle-blowers” against unfair dismissals by an employer. Public consultations are being held on these draft revisions. Currently, employees who report wrongdoing in the workplace can be fired. The draft bill will add a new article to the Obligations Code. Reports made in good faith to an employer will fall within the duty of loyalty towards the company. If the employer fails to take effective measures, the employee can report the facts to the competent authority. If the authority does not undertake the required steps, the employee can report the wrongdoing to the public. The rules on professional secrecy, however, are reserved. The bill also provides that if the whistle-blower is dismissed the employer will be required to pay compensation equivalent to a maximum of six months' salary.

The Federal Law on Federal Personnel obliges government staff to report wrongdoings. In the draft Federal Law on the Organization of Federal Criminal Authorities, the Swiss government proposes a new article requiring employees to report any crimes or offenses. The cantons remain however competent to resolve the whistleblower issues of their cantonal employees. Members of parliament must also disclose their interests, professional activities, supervisory board or executive body memberships, and expert or consulting activities every year.

In June 2009, Transparency International (TI) said Switzerland was the export nation most effective at preventing bribery in its companies. Switzerland ranked eighth globally with a score of 8.7 out of ten in 2010. TI noted that Switzerland had no transparency laws on political party financing. According to the organization's anti-corruption report, Switzerland still did well when it came to preventing illegal political donations and in the fight against money laundering. Transparency International reports that the problem lies mainly with minor incidents of corruption, especially in the area of public procurement. There were 15 corruption cases in 2007 and 9 in 2008.

A number of federal administrative authorities are involved in combating bribery. The State Secretariat for Economic Affairs deals with issues relating to the OECD Convention, the Federal Office of Justice with those relating to the Council of Europe Convention, and the Department of Foreign Affairs with the UN Convention. The power to prosecute and judge corruption offenses is shared between the cantons and the Confederation. For the Confederation, the competent authorities are the Office of the Attorney General, the Federal Criminal Court and the Federal Police (“Fedpol”). In the cantons, the relevant actors are the cantonal judicial authorities and the cantonal police forces.




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