Introduction
Anti-corruption legislation
When is an advantage negligible?
Comment
Corporate policies and procedures on combating corruption often seek to define thresholds for gifts and hospitality. At a higher level, such thresholds draw the line between acceptable and unlawful conduct. At a lower level, they usually trigger reporting duties or approval requirements.
In an ideal world, such policies would provide a fine-tuned, well-balanced, user-friendly set of rules for each jurisdiction, allowing the practitioner to recognise permissible and non-permissible conduct. However, in reality, such guidelines are never more than a compromise between risk and practicability.
Public sector and private sector
Like many other countries, Switzerland applies stricter rules to the public sector than the private sector. The public sector includes public officials and any person or entity providing public services. Though Swiss penal law specifically defines the term 'public official'(1) and further specifies in the provisions on bribery who may qualify as a member of the public sector,(2) drawing the line between the sectors is difficult. Private individuals who fulfil official duties are subject to the same provisions as public officials.(3)
Bribery
Bribery is a criminal offence in both the public and private sector.
For the public sector, 'bribery' is defined by law as any act by which 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 is offered, promised or granted an undue advantage, for his or her own or another's benefit, to commission or omit an act in relation to his or her official duties that is contrary to his or her duties or depends on the exercise of his or her discretionary powers.(4)
Similarly, in the private sector an act of bribery is committed by anyone who offers, promises or grants an undue advantage to an employee, partner, representative or another agent of a party in the private sector, to commission or omit an act related to his or her function or business activities, that is contrary to his or her duties or depends on the exercise of his or her discretionary powers.(5)
In the public sector, even the grooming of public officials without nexus to a specific transaction or official act is considered a criminal offence.(6)
Undue advantage
With respect to the public sector, the Criminal Code specifies that:
"advantages that are permitted under the regulations on the conduct of official duties as well as negligible advantages that are common social practice are not regarded as undue advantages".(7)
Likewise, for the private sector, Swiss law states that advantages approved contractually by the third party as well as negligible advantages that are common social practice are not regarded as undue advantages.(8)
An advantage will not be considered as undue if:
- the value of the advantage is negligible; and
- the exchange of the advantage (because of its low value) may be regarded as common social practice.
The second criterion thereby depends on the first. Only the exchange of advantages of low value may be regarded as common social practice. However, even a low value does not guarantee that the benefit be regarded as common social practice. For example, offering advantages to judges cannot be considered as common social practice, irrespective of the (low) value of the advantage offered. Generally, any benefit offered to a public official that is apt to influence the official's attitude towards his or her official duties is considered undue, independent of the value involved.(9)
The compliance policies put in place by the governmental body, organisation or undertaking employing the recipient of a benefit typically provide standards of their own as to what may be considered common social practice. 'Common social practice' is therefore not a purely objective criterion, but has a subjective notion, and it does not depend on the views and values of the party granting the benefit, but primarily on those on the receiving side.
When is an advantage negligible?
Swiss law does not define a specific benchmark of negligibility. However, a number of rules may be used as guidelines for approximation.
Pursuant to Federal Tribunal case law on Article 172ter of the Penal Code (which deals with minor offences against property), a minor offence may be assumed if the illicit profit gained by the offender or the loss incurred by the victim(s) does not exceed Sfr300 per year.
Article 33(1) of the Federal Act on Medicinal Products and Medical Devices prohibits the granting, offering or promising of material benefits to persons who prescribe or dispense medicinal products or to the organisations which employ such persons.
Pursuant to the guidelines of Swissmedic (the Swiss agency for the approval and supervision of therapeutic products), the limit of Sfr300 per year (set by the Federal Tribunal with respect to Article 173ter of the Penal Code) shall apply by analogy to gifts, but not invitations to events or conferences. Invitations to events or conferences may not be considered as of modest value if they last longer than half a day or if the hospitality exceeds basic catering. Invitations to events and conferences of a duration of more than half a day or with more generous hospitality are prohibited, unless the participants bear up to 33% of the cost of their participation. Costs for participating in fringe events may not exceed 20% of the costs of participation in the conference. If the costs exceed 20%, they must be borne fully by the participant.
Article 21(3) of the Federal Act on Personnel of the Federal Administration provides that federal personnel may not request or accept gifts or other advantages for themselves or for third parties. Pursuant to Article 93(1) of the implementing ordinance to the act, negligible advantages are exempt if their granting reflects common social practice. The ordinance further specifies that gifts with a market value below Sfr200 may be considered negligible. However, departments and governmental agencies may set lower thresholds if they deem it appropriate. Regarding invitations, the act specifies no limit. Explanatory guidelines state that circumstances may exist where invitations can be considered negligible advantages even if their value exceeds Sfr200. When deciding whether to accept an invitation, federation employees must preserve their independence regardless of the value of the invitation and must not accept any benefits whatsoever if offered with a view to a specific decision or official act.
Benefits (including gifts and invitations) up to a value of Sfr200 may be considered negligible if they are not given repeatedly and if the total benefits do not exceed Sfr300 per year.
In order to assess whether such benefits are permissible, it must also be considered whether they meet the criteria of common social practice. In that regard, the thresholds established by the policies applicable on the receiving side must be taken into account, as they take precedence over those of the giving side.
A threshold of Sfr200 or less will generally work in the private sector, but not necessarily in the public sector. Much lower values or even a zero-tolerance policy may apply, depending on the function of the public official and the policies of the governmental body (or private provider of public services) concerned. It is recommended that benefits of whatever kind or value in the public sector may be granted only subject to the approval of senior management or a special compliance unit. Moreover, the policies of key clients in the public sector should be checked regularly for changes.
For further information on this topic please contact Bernhard Loetscher or Axel Buhr at CMS von Erlach Poncet Ltd by telephone (+41 44 285 11 11), fax (+41 44 285 11 22) or email ([email protected] or [email protected]). The CMS von Erlach PoncetLtd website can be accessed at www.cms-vep.com.
Endnotes
(1) Article 110(3) of the Penal Code provides (informal translation of the German original text):
"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."
(2) Cf Article 322ter of the Penal Code.
(3) Cf Article 322octies of the Penal Code. For example, a private company in charge of evaluating offers in a tender process relating to the reconstruction of a waste treatment plant (Federal Tribunal Decision 1A 175/2004, cons 3.5)
(4) Article 322ter and 322septies of the Penal Code.
(5) Article 4a of the Federal Act on Unfair Competition.
(6) Article 322quinquies of the Penal Code.
(7) Article 322octies(2) of the Penal Code.
(8) Article 4a(2) of the Act on Unfair Competition.
(9) A gift of Sfr10 offered to a police officer to induce him to cancel a traffic ticket for Sfr40 is considered an undue benefit (cf Group of States Against Corruption, Third Evaluation Report on Switzerland, Page 21, October 21 2011).
