Introduction
Background
Existing legislation
Limited scope of proposed bill
Comment
In its October 21 2011 report on the third evaluation round concerning the effectiveness of measures adopted by the Swiss authorities to comply with the Criminal Law Convention on Corruption,(1)(2) the Group of States Against Corruption (GRECO) identified certain deficiencies of Swiss criminal law. In response to the GRECO report and related motions brought in Parliament, on May 15 2013 the government published a draft bill on the amendment of Swiss anti-corruption laws for consultation, aiming to accommodate GRECO's concerns.(3)
While conceding that Switzerland had a solid body of legislation complying largely with the requirements of the Criminal Law Convention on Corruption, the GRECO report noted:
"Given its economic and financial importance and the large number of multinationals with their headquarters there, Switzerland appears to be particularly exposed to the risks of bribery in the private sector and of foreign public officials. However the number of convictions is low in relation to the number of investigations opened and these almost solely concern the bribery of Swiss public officials. To date there have been no convictions for private sector bribery. The GET [scil. the GRECO Evaluation Team] considers this to be a matter of concern and raises the question of the effectiveness of Switzerland's criminal provisions."
GRECO identified the following shortcomings of the legislation and invited the government to consider the respective remedies:
- The provisions of the penal code on undue advantages fail to cover cases unambiguously where such advantages are offered, promised or given, solicited or accepted for the benefit of a third party rather than for the official himself or herself.
- The statutory definition of bribery of foreign and international public officials, judges and officials of international courts and foreign arbitrators and jurors fails to include acts that do not constitute a breach of official duty or that do not relate to the discretionary powers of such officials, judges or arbitrators.
- Prosecution of bribery in the private sector requires that a respective formal complaint be brought. Although the law provides for an extensive definition of parties and organisations entitled to bring a complaint, this prerequisite has proven to be a hurdle impeding significantly the efficiency of the anti-bribery legislation.
- Swiss law does not criminalise trading in influence (hence the promising, giving or offering, directly or indirectly, of any undue advantage to a person who asserts or confirms that he or she is able to exert an improper influence over the decision-making of an official - known as background corruption).
- Swiss law does not provide for a basis for Swiss judicial authorities to prosecute and adjudicate cases of bribery that have occurred abroad unless the incriminated act is also an offence in the foreign place where it was committed (dual criminality requirement).
Bribery in the public sector
The law distinguishes between two levels of bribery offences in the domestic public sector.
First, Articles 322ter and 322quater of the Penal Code specify active and passive bribery of domestic public officials in the strict sense. These provisions are concerned with offers of or requests for undue advantages in exchange for a public official's carrying out or omission to carry out an act in his or her official capacity, either in contravention of his or her duties or in the exercise of discretion. Active and passive bribery of public officials in the strictest sense constitute serious crimes.
The second level of offences is defined in Articles 322quinquies and 322sexies of the code. These provisions declare as punishable the offering or receipt of an undue advantage with a view to the public official's mandate, without there being a nexus to the official's carrying out or omission to carry out a specific act. They would typically apply to small favours given to build up a favourable relationship, or "facilitation payments" to prompt an official to perform an act in accordance with his or her duties where no discretion can be exercised. The offering or taking of an undue advantage in the sense of Articles 322quinquies and 322sexies is a lesser offence. Consequently, it cannot qualify as a predicate offence to money laundering pursuant to Article 305bis of the code.
As regards foreign and international officials, Swiss law declares that only bribery in the strictest sense is punishable. Article 322septies, which applies to foreign and international public officials, including members of foreign and international and parliamentary bodies, judges and officials of international courts and foreign arbitrators and jurors, covers acts and omissions which constitute a breach of official duties, as well as acts and omissions linked to the exercise of discretion.
Bribery in the private sector
Punishment of bribery in the private sector is not, as might be expected, regulated by the Criminal Code, but rather Articles 4a and 23 of the Unfair Competition Act. The act aims to ensure fair and undistorted competition.(4) As such, it prohibits any conduct that is deceptive or in any other way infringes the principle of good faith among competing parties or suppliers of goods and services on the one hand and customers on the other.(5) The existing law thus defines bribery in the private sector as conduct necessarily affecting the competitive relationship between two or more players in a particular market.
Consequently, the payment of bribes in a non-commercial context is typically not punishable under Swiss law. In particular, Swiss law does not provide for effective instruments to prosecute the granting of undue advantages to officers of sporting associations – for example, the International Federation of Football Associations or the International Olympic Committee (in the context of a tender process for major sports events).
Moreover, prosecution of bribery in the private sector requires that a criminal complaint has been filed.(6) A survey conducted by the Federal Office of Justice among the cantonal public prosecution offices during Summer 2012 revealed that since Article 4a of the Unfair Competition Act came into effect, criminal investigations had been opened in a total of only eight cases. It is thus assumed that the parties involved would typically seek to regulate a case of corruption in the private sector amicably and without the involvement of judicial authorities in order to avoid any publicity and resulting reputational damage.
Conduct declared punishable under Section 4a conforms widely with the definition of 'bribery' (in the strict sense) of domestic public officials in Articles 322ter and 322quater of the Penal Code. The provision encompasses offers of or requests for undue advantages in exchange for an employee, member, agent or another auxiliary person carrying out, or omitting to carry out, an act in connection with his or her function in an undertaking or organisation in the private sector, either in contravention of his or her duties or in the exercise of discretion. The provision covers undue advantages for the benefit of the employee or benefit of a third party (eg, the employer company).
In contrast to bribery (in the strict sense) in the public sector, bribery in the private sector is defined as a lesser offence (a misdemeanour). The practical consequence is that it cannot constitute a predicate offence to money laundering according to Article 305bis of the code.
Limited scope of proposed bill
In light of the findings of the GRECO report and by way of response to related parliamentary motions, the government proposes to supplement the Penal Code with two new provisions concerning bribery in the private sector.(7) The constituent elements of punishable conduct pursuant to these new provisions will be congruent with the definition of the offence as currently set out in Article 4a, and the same penalties (imprisonment of up to three years or a monetary penalty) will apply. On the other hand, the requirement of a criminal complaint as a prerequisite to prosecution will be abolished. In addition, the government has suggested that the existing provisions of the Penal Code on granting and accepting undue advantages(8) be clarified by stating expressly that the incriminated conduct shall not be restricted to giving or accepting advantages for the official's own benefit, but encompass also advantages for the benefit of a third party.
The envisaged amendments will thus eliminate only partially the concerns raised by the GRECO report. As revealed by the explanatory notes to the draft bill of May 15 2013, the government, after considering the GRECO evaluation team's arguments, rejected as disproportionate and incompatible with existing Swiss anti-corruption legislation the team's recommendation to make the following subject to the Penal Code:
- cases where undue advantages are given to or taken by a foreign or international public official, judge, arbitrator or juror without there being a nexus to a breach of official duties or that do not relate to the exercise of such a person's discretionary powers, the application of Swiss penal laws will thus remain restricted to bribery in the strict sense as far as foreign officials are concerned;
- trading in influence (bribery of persons who claim to be in a position to influence an official's decisions); and
- acts which would be encompassed by Swiss penal laws had they occurred in Switzerland, but which are not punishable in the place where they were committed (dual criminality requirement).
The proposed amendments are likely to prompt a surge in the number of investigations of alleged bribery in the private sector, as prosecution will henceforth no longer require that a criminal complaint is filed. Moreover, as the constituent elements of bribery in the private sector will no longer include the existence of a competitive relationship in the sense of Swiss laws on unfair competition, bribery in a non-commercial context will become punishable as well. This seems to be of particular significance with a view to prevent corruption in sporting associations and non-governmental organisations.
The government's resistance to further criticism and recommendations of the GRECO report seems to be justified. The implementation of the recommendations would not strengthen substantially the effectiveness of anti-corruption legislation, but would certainly increase the risk of conflicts with established Swiss legal and political concepts. Moreover, abolishing the requirement of dual criminality would mean a breach with Switzerland's long-standing tradition as a country which exerts extraterritorial jurisdiction only with caution.
For further information on this topic please contact Bernhard Loetscher at CMS von Erlach Henrici Ltd by telephone (+41 44 285 11 11), fax (+41 44 285 11 22) or email ([email protected]).
Endnotes
(1) See www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3(2011)4_Switzerland_One_EN.pdf.
(2) ETS 173. See http://conventions.coe.int/Treaty/en/Treaties/Word/173.doc.
(3) See www.ejpd.admin.ch/ejpd/de/home/dokumentation/mi/2013/2013-05-15.html.
(4) Article 1 of the Unfair Competition Act.
(7) Proposed Articles 322octies and 322novies of the Penal Code.
(8) Articles 322quinquies and 322sexies of the Penal Code.
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