Long proceedings and tactical game playing

Sealing of evidence is anchored in Article 248 of the Swiss Code of Criminal Procedure and is known as an immediate measure. It enables a proprietor or other person who enjoys a protected right to documentation and property (e.g. bank documents or data carriers) to prevent the law enforcement authorities from searching them or using them in the criminal proceedings. It is also childishly easy to achieve – the brief and vague wording “sealing is demanded” will suffice to prevent the Office of the Attorney-General from accessing confiscated or retained evidence. In such a case, the investigative authorities then have to file a request for the removal of the seals with the Compulsory Measures Court and to wait for its legally binding ruling on the matter, before they are able to start their work – i.e. their investigation.

Proceedings on the removal of seals take a long time, above all if the decision is referred to a federal court. According to a study, on average it takes 328 days for proceedings on the removal of seals to go through all the relevant entities; in cases of economic crimes it can take 397 days. In individual cases of extensive economic crimes, proceedings on the removal of seals have taken two to three years just to reach a first instance decision.

Even in clear-cut cases, the right to seal evidence is used as a tactical game in a manner that borders on abuse of rights.

Even if a request for evidence sealing is lodged without a valid reason it can severely delay criminal investigations and prevent potential evidence from being examined. In practice, evidence sealing has been increasing for years, mostly however with only limited success (according to the survey, the courts considered sealing of evidence in white-collar crime cases to be justified in only 6.7% of the first-instance proceedings).

In the world’s globalised economy, crime does not stop at borders. In cases of bribery of foreign officials and in cases where white-collar crimes involve offences committed in several countries, the prosecuting authorities rely on evidence from abroad. To obtain it, they file mutual legal assistance requests. According to a 2020 report issued by the Swiss Federal Audit Office (SFAO), Switzerland receives on average over 2,300 requests a year. Exact figures on the number of requests for mutual legal assistance issued by Switzerland to other countries do not appear in any statistics or are insufficiently recorded – an issue for which the OECD recently criticised Switzerland. Nevertheless, the SFAO concluded that “Switzerland is highly solicited by other countries for assistance in economic matters, and is therefore more likely to provide mutual legal assistance than to request it”.

Despite international pressure for acceleration, procedures relating to requests for mutual legal assistance in Switzerland remain slow. According to the report, in cases of economic crimes it can take a full year or even longer (on average 462 days) for a request to be processed – despite this, the quality of Switzerland’s legal assistance supposedly stands out as above average.

The right of appeal is often one of the reasons why the process takes so long. The federal auditors even recognise that “the right of appeal is often used as a delaying tactic”. For there is little other reason for it to be used – appeals are only filed with the Federal Criminal Court in relation to 3-4% of requests for legal assistance. The Court then only approves 7% of the appeals. Approximately a quarter are referred to the Federal Court, which does not even address 90% and only approves approximately 3%.

Historically, the right of appeal has been connected to banking secrecy. It was introduced alongside the Federal Act on International Mutual Assistance in Criminal Matters (Mutual Assistance Act, IMAC), when this bill was introduced in 1981. The right of appeal was introduced at the same time, because banks feared that the legal assistance provided by other countries would be abused to circumvent banking secrecy. However, following its entry into force it became clear that it was not mutual legal assistance itself that was being abused, it was rather the right of appeal that was serving to facilitate the defence of criminal interests. When IMAC was revised in 1996, the mutual legal assistance process was accelerated by limiting the role of the Federal Court. In addition, the option to successively dispute the summary ruling on whether to consider the case and subsequently the final ruling was removed. However, the revision did not introduce a deadline to limit the mutual legal assistance procedures to nine months.

International mutual legal assistance presented and continues to present a challenge in the complex case of Petrobras (Lava Jato). The Brazilian investigations referred to the predicate offence of money laundering investigated in Switzerland. By some accounts, in the case of Petrobras, the Office of the Attorney-General pursued the strategy of providing the competent authorities in Brazil with spontaneous information on the availability of relevant banking documents on a regular basis, so that the Brazilian authorities could issue a request for mutual legal assistance to the Attorney-General’s Office. See (in German) the perspective of a Brazilian prosecutor on the cooperation.

Three points stand out from the publicly available judgments on bribery of foreign officials. Firstly, the majority of the sanctions apply with probation, secondly there are many suspended monetary penalties and thirdly, the majority of judgments took the form of summary penalty orders. Even just the latter point should attract attention. The reason summary penalty order proceedings were introduced across Switzerland in 2011 was to relieve the burden on judicial authorities by allowing petty, everyday crimes to be processed rapidly. Their use in cases of bribery of foreign officials begs the question of whether that offence is a trivial matter. 

Switzerland comes off in a negative light in the OECD experts’ report in this regard too. In their view, their assessment of sanctions that were imposed on natural persons in cases of bribery of foreign officials raised serious questions in relation to whether they are effective, proportionate and dissuasive. In addition, the Working Group indicated that few prison sentences were imposed despite the severity of the offence and the high responsibility of the accused person. The use of suspended fines is expressly criticised.

The same conclusion was reached by the experts at the Financial Action Task Force (FATF) who regularly review the implementation of minimum standards on combatting money laundering.

The general rules of sanctions law provide for the possibility to apply higher penalties in moderate and serious cases of bribery of foreign officials. However, this would require a change in mindset. Attitudes started to change over 30 years ago, but the process is far from complete. It is not surprising that at the end of the 1990s, bribes were still tax deductible as ‘useful expenses’, Switzerland still did not have a ‘clean’ money strategy and that the offence was viewed as trivial or a simply misdemeanour is not surprising. It is however imperative that, nowadays, the law enforcement authorities pursue money laundering and corruption consistently and that they impose dissuasive sanctions.

The maximum sanction of a fine of CHF 5 million provided for under corporate criminal law is low. The OECD’s Working Group on Bribery has repeatedly criticised this, on the basis that the level of the fine does not meet the requirements of the OECD Convention.

In relation to legal persons, the OECD states that it is “hard to draw a definitive conclusion as to any change in the effective, proportionate and dissuasive nature of the sanctions” imposed on companies. The connection with forfeiture does not change this, especially when one considers the alleged facts and the at times exorbitant sums that were earned through the offence. The OECD experts also note that the fines handed down never reached the maximum amounts provided for in the law, although at CHF 5 million the maximum fine remains relatively low. Switzerland could increase this maximum sanction and not exceed those of other countries (see the table above).

The Federal Council does not consider there to be cause for action, despite the international criticism.

The government even had the nerve to note that, in the case of Gunvor, the OAG imposed a fine of CHF 4 million. It held that in light of this the current maximum sanction provided for in the law was not being used in practice.

In this regard, the Federal Council is overlooking the fact that, for the fine imposed on the company to be determined, the seriousness of the offence and of the organisational inadequacies, the damage caused and the economic ability of the company to pay the fine must all be considered. In the aforementioned case of the summary penalty order against Gunvor, the OAG had started at the maximum sanction in light of the severity of the offence. However, it considered it appropriate to reduce the fine by a fifth due to the company’s efforts “since 2012 to improve the way it is organised and to prevent corruption by implementing measures based on recognised standards”.

The Federal Council does however plan to review the legislative maximum sanctions as part of a possible harmonisation of administrative penalty procedures. It has stated that it does not exclude the option that the solution selected could have consequences for Article 102 of the Swiss Criminal Code in the medium term. Unfortunately, that does not sound like a real recognition of the problem and a strategy to improve the mechanisms relevant to the fight against white-collar crime.

For company fines to have a meaningful deterrent effect, they must be increased to at least CHF 10 million. If CHF 10 million appears too low in individual cases, there also needs to be a possibility to impose a fine of up to 10% of the average revenue of the past three years. The Federal Council and Parliament would be well advised to legislate on further possible sanctions. The 1991 draft could serve as a template. This would also provide for: forfeiture of assets, directives, supervision, activity bans and even dissolution of the company.

Criminal convictions of companies are not entered into the Swiss Criminal Records; this is why there are no official statistics. The investigating prosecutor is therefore unable to know whether the accused company is a repeat offender. Trials at a court of first instance or a court of appeals are public as a matter of principle. However, this is not the case for summary penalty order proceedings without trial, even though these constitute the direct conclusion of OAG investigations. Summary penalty orders are also not systematically published even though nowadays many court judgments are.

The OECD Working Group on Bribery recommended that Switzerland “publish, promptly and in conformity with the applicable procedural rules, certain elements of these summary punishment orders including the legal basis for the choice of procedure, the facts of the case, the natural and legal persons sanctioned (anonymised if necessary), and the sanctions imposed”. At the OAG, all legally binding summary penalty orders can be viewed within 30 days at one of its sites. However, there remains no publicly accessible database of judgments that details legally bindings rulings against companies.

The system currently used for access is burdensome and has defects, particularly in relation to transparency around criminal proceedings. The fact that there is no criminal record of verdicts against companies is highly concerning, and not only from a perspective of transparency – companies that are repeatedly and mostly convicted of the same offence are not recorded as repeat offenders.