In a recent decision, the Federal Administrative Court addressed the question whether a former employee of a company facing an investigation may invoke the right to silence when interrogated by the Secretariat of the Competition Commission.
In April 2016 during a bid-rigging investigation against various Swiss construction companies, the Secretariat of the Competition Commission summoned an individual, Y, as a witness.
Until his retirement at the end of February 2014 and during the relevant investigation period, Y had been employed by stock company X (the complainant) as a construction foreman and branch manager. Until February 2015, Y had been granted collective (dual) power of representation.
The complainant requested Y to be questioned as its representative and not as a witness, but the Secretariat of the Competition Commission rejected the request.
The matter was brought before the Federal Administrative Court.(1)
The Federal Administrative Court held that, in principle, the assessment of the procedural role of Y (as a witness or company representative) needed to be based on the circumstances at the time of the interrogation. The court asserted that companies that are investigated by the Secretariat of the Competition Commission may be represented only by a current management body ("organ") and that only statements from members of such bodies can be attributed to the legal entity under investigation. Hence, a company's right to silence may be invoked only by such individuals.
The court also specified which individuals qualify as de jure or de facto members of management bodies. As regards stock companies, individuals within the following management bodies typically qualify as de jure members:
- board of directors;
- executive board; and
- statutory auditors.
Individuals who make decisions that are subject to the reservation of a management body's de jure members or who are responsible for actual business conduct and thus have a decisive influence on the internal decision making of the company qualify as de facto members of a management body.
The court also specified that the performance of occasional time-limited deputy tasks does not qualify as de facto management.
In the case at hand, Y no longer held a position as a member of the complainant's management body, nor could he represent his former employer. Hence, he could neither be interrogated as representing the complainant nor invoke its right to silence.
Instead, Y qualified as a third party to the investigation. Third parties may be questioned as a witness or informal respondent. Witnesses have a duty to tell the truth and can be punished if they provide a false testimony, whereas informal respondents have no such obligations. By the same token, witnesses have the right to silence only in personal or family matters.
As the penalties set out in Article 49a of the Cartel Act, which the complainant had faced in the investigation, were not directed against natural persons:
- Y could not self-incriminate himself and thus had no right to silence due to personal issues;
- Y's witness statement as a former employee could not in principle violate the investigated party's rights, as it could not be directly attributed to this party; and
- Y's interrogation as a witness did not constitute a per se violation of the minimum procedural guarantees provided under Article 6 of the European Convention on Human Rights.
However, given that Y should have been forced to testify mainly on facts that he had learned as an employee of the complainant, a particularly close relationship had existed between Y and the complainant as well as between Y and the subject of the investigation. This close relationship would have undermined the complainant's right to silence.
Therefore, Y's interrogation as a witness was permissible only if it concerned purely factual information that could have no direct incriminating effect on the complainant with regard to a possible violation of competition law. However, interrogating a witness under the threat of criminal penalty is prohibited with regard to questions that could ultimately lead to an indirect acknowledgment of guilt by the complainant. Thus, the court held that Y might be questioned as an informal respondent in case of questions that could ultimately lead to an implicit acknowledgment of culpability of the complainant.
The admissibility of witness interrogations must be based on specific questions and, ultimately, the use of the resulting statements in further proceedings. Therefore, a final and comprehensive assessment of the admissibility of certain questions can be made only in the context of a final substantive ruling or in an appeal proceedings directed against it.
Former de facto or de jure members of management bodies may be interrogated as witnesses or informal respondents after leaving their company as their function at the time of the interrogation is decisive. Therefore, former members of management bodies cannot invoke the right to silence.
However, where a particularly close relationship exists between the former employee and the party to the proceedings as well as between the former employee and the subject of the investigation, a witness interrogation is permissible only if it concerns purely factual information that cannot have a direct incriminating (ie, penalising) effect on the complainant.
The Federal Administrative Court's decision is not fully convincing. By relying on Y's position at the time of the interrogation, the court disregarded the fact that even though he could not represent the company in the ongoing proceedings, there was a likelihood that he had been part of incriminating conduct or was even the one committing such conduct, for which the company could be penalised. The court attempted to resolve this contradiction by ruling that unrestrained interrogations of former employees with a particularly close relationship to both the parties to legal proceedings and the subject of an interrogation are inadmissible.
However, the court has given the Secretariat of the Competition Commission considerable scope to define the limits of permissible interrogations, which in turn creates more legal uncertainty. Thus, it would have been more convincing if the Federal Administrative Court had adopted a clear-cut rule that former employees with a particularly close relationship to both the parties to legal proceedings and the subject of an interrogation cannot be interrogated as witnesses.
The question remains as to how the Federal Administrative Court would have ruled if Y had been employed by the complainant during the period under investigation, but had changed employer during this period and worked for a different company (V) in a managerial role until the time of the interrogation, and with both companies (complainant and V) being investigated. Presumably, the court would have performed the same triage, meaning that Y could represent only V.
For more information please contact Marcel Meinhardt at Lenz & Staehelin by telephone (+41 58 450 80 00) or email ([email protected]). The Lenz & Staehelin website can be accessed at www.lenzstaehelin.com.
Endnotes
(1) Federal Administrative Court, Decision B-3099/2016, B-3702/2016 (17 September 2018).
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