Switzerland tackles more international bribery cases but gaps remain
Last week, a Swiss court ordered the son of former leader Muammar Gaddafi's oil minister to pay $1.5 million in a corruption case. The case involved Mohamed Ghanem, the CEO of a Bahrain-based Islamic investment bank and the son of Shokri Ghanem who drowned in mysterious circumstances in 2012.
The Swiss Federal Criminal Court said in its judgment that
it found Ghanem "guilty of passive bribery of foreign public
officials" without giving further details of the alleged incident. At the
heart of the affair was a payment of $1.5 million (CHF1.4 million) made into
the Swiss account of one of Ghanem’s offshore companies in 2007. For the
prosecution, this money was a kickback received for having facilitated –
through his father – a joint venture between Libya’s National Oil Corporation
(NOC) and the Norwegian multinational Yara, which was seeking to establish a
presence in Libya. His father was the chair of NOC from 2006 to 2001 and a key
figure in Muammar Gaddafi's regime.
For the defence, the man is innocent: he provided
consultancy services; moreover, Switzerland lacks territorial jurisdiction over
this case.
Such legal cases are rare for Switzerland, a signatory of
the Organisation for Economic Co-operation and Development (OECD) Anti-Bribery
Convention, and home to many multinationals doing business in high-risk
jurisdictions. But they are on the rise. To date, the Office of the Attorney
General of Switzerland (OAG) has convicted 11 people and seven companies for
bribery of foreign public officials. These figures are by no means high but the
OECD gives credit to Switzerland for picking up the pace on prosecutions.
Switzerland: a country exposed to foreign bribery
“Switzerland has a leading, and sometimes dominant, position
in a number of the economic sectors that not only play a key role in its
economy but also expose it to relatively acute risks of foreign bribery,” reads
an OECD report on Switzerland published in 2018. One of the sectors highlighted
as particularly prone to corruption is raw materials. That’s because the
businesses active in this field deal with authorities and state-owned companies
in economically vulnerable countries with weak legal frameworks.
The financial sector is also exposed, as demonstrated by the
involvement of various Swiss banks in international bribery scandals. In 2019,
the government’s Interdepartmental Coordinating Group on Combating Money
Laundering and the Financing of Terrorism published a report highlighting the
elevated risk of money laundering in connection with foreign bribery in
Switzerland.
Among the individuals convicted so far are executives of
Swiss and foreign companies, an intermediary, a business lawyer, a financial
operator and an oil trader. One of the sectors most affected by the court rulings
is raw materials, in particular crude oil.
An OECD report on Switzerland and bribery said in 2020 that
these convictions represent progress relative to previous periods. The OECD
Working Group on Bribery commended “the continued action” of the Swiss attorney
general but also urged Switzerland to increase its efforts to enforce foreign
bribery legislation.
“We have repeatedly recognised Switzerland’s performance
with respect to cross-border bribery,” Patrick Moulette, head of the OECD
Anti-Corruption Division, told SWI swissinfo.ch. “Switzerland is one of the
most active countries in this field.”
He stressed, nonetheless, that Switzerland must step up its
efforts and implement some of the recommendations issued by the working group,
such as strengthening the regulatory framework protecting whistleblowers.
Can do better
Given the magnitude of risks, experts find it problematic
that Switzerland has convicted less than 20 people for bribery of foreign
public officials in the past two decades. They warn shortcomings remain in the
Swiss judiciary system. “This is a real problem, as the actual figures are much
higher,” says Martin Hilti, director of Transparency International Switzerland.
He sees many reasons for the lack of cases bought to court: “Corruption is a
hidden practice that is difficult to unearth; prosecutors often lack the
initial suspicion to open a case. Moreover, proving the crime of bribery is not
easy, in particular in an international context that requires international
judicial assistance, which often does not work with the countries involved.”
Some experts also believe the Swiss courts are too lenient
with their penalties in foreign bribery cases.
“Where cases do lead to a conviction, the penalty is usually
very light and hardly a deterrent,” laments David Muhleman, an expert at the
Swiss NGO Public Eye.
OECD specialists share that view. “An analysis of the
sanctions imposed against natural persons in concluded foreign bribery cases
raises serious questions as to whether they are effective, proportionate and
dissuasive,” the 2018 OECD report said.
The maximum penalty under the Swiss Criminal Code is five
years’ imprisonment. But very few offenders are actually incarcerated. They
generally get suspended prison sentences or may have to pay a fine.
“This is the practice for financial crimes involving people
who are coming before the criminal courts for the first time," explains
Katia Villard, who teaches law at Geneva University. “What is more, most
convictions for bribery of foreign public officials are made through summary
penalty orders, which limits the scope of the sentence.”
Cases drag on for years
Investigating money-laundering and bribery cases is
difficult, expensive and time intensive.
Cases are complex and can drag on for years. The acts for
which the banker from Bahrain is being charged date back to 2007; the
investigation was only launched in 2012. Further delays were caused by the
accused filing multiple appeals. This is a legitimate legal action, but is
often used by the defense to gain time.
According to Martin Hilti, effective prosecution of acts of
bribery is also challenging because of internal shortcomings within the OAG:
“It clearly lacks the resources to conduct complex proceedings and has
organisational problems, plus the voluntary and forced departure of experienced
attorneys has led to a significant loss of know-how in recent years.”
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