Information for companies

SECO has published a publication on corruption in international business transactions. Its aim is for companies to become familiar with the applicable regulations of the Swiss criminal law. Useful legal concepts are specified with the help of specific scenarios. The publication highlights the effects of corruption on businesses and proposes tools that can be used to prevent and combat corrupt conduct.

What is corruption and why to fight it?

Corruption refers to the abuse of the power entrusted to us for personal gain. It damages the economy and society, distorts competition and undermines trust in public and private institutions. For this reason, the fight against corruption is a top priority, both at national and international level.

What is corruption?

Corruption is the act by which a person provides or offers an undeserved advantage to lead a person to carry out an act that goes against his or her duties or depends on his or her discretionary powers. The act of soliciting or accepting such an advantage also falls within the definition of corruption.

Corruption can take many aspects: small gifts in anticipation of a future advantage, large sums of money, holidays to a purchasing manager, false invoices, etc.

For many Swiss companies operating abroad, corruption is a real problem. Obtaining a contract, an authorization, marketing a product are all important elements. In such situations, you might be made to understand that “greasing the palm” could facilitate many processes.

Why fight corruption?

According to estimates from the World Economic Forum (WEF), the costs generated by corruption amount to 2,600 billion dollars (5% of world GDP) per year.

Above all, corruption has a very high economic and social cost. It increases inequalities in access to state benefits. It undermines social cohesion. It prevents transparency and distorts competition.

A Swiss company bribing a public official or private individual, in Switzerland or abroad, commits a criminal offence in Switzerland, punishable according to the Criminal Code (art. 322). Natural persons shall be sanctioned by deprivation of liberty or a pecuniary penalty. Companies that have “failed to take all reasonable and necessary measures to prevent” corruption will also be prosecuted and punished with a fine of up to five million francs.

A conviction for corruption leads to other consequences. The concerned company may be excluded from state service programmes or international projects. In addition, its reputation can be seriously damaged if investors, partners or the public learn that corruption has occurred. Finally, a company that corrupts is exposed to blackmail from those who are aware of it.

How to prevent corruption?

Depending on the country and economic sector, it is likely that you will one day find yourself involved in a corruption case. Make sure that you aren't caught by surprise! The following advice will help you confront corruption risks.

1. Inform yourself!

Any anticorruption strategy should start with information. Where does corruption occur and what aspects can it take ? What risks are you running as a result? What measures can you take to prevent it?

In Switzerland: The International Chamber of commerce (ICC Switzerland) has extensive experience in dealing with corruption issues. Transparency International assesses the extent of corruption annually in nearly 180 countries. Finally, the United Nations Global Compact has launched an online learning tool for the private sector.

Abroad: Learn about the legal system and local customs. Swiss representations abroad have a mission to monitor developments and inform Swiss companies about local conditions.

2. Take appropriate measures!

Anti-corruption measures may vary. It is important that they are adapted to the size and structure of your company, as well as to the countries and sectors concerned. An anti-corruption strategy will include the following items:

• Organisationnal measures: process transparency, skills definition, risk reduction.
• Measures concerning personnel and management: awareness-raising, special attention to employees most at risk, contact point to report irregularities.
• Control and corrective measures: knowledge tests, correction of weaknesses, external audits.

3. Adopt an anticorruption code of conduct!

In this way, employees will be made aware of the phenomenon of corruption and its consequences, they will have a guide to recognise corruption on time and fight it, and your business partners, your customers and the public will perceive you as a responsible and trustworthy company.

Even more important than the code of conduct is its implementation: corruption rarely hits companies whose management actively addresses this problem and sends explicit signals that any payment or gift under cover will neither be made nor tolerated, in any form whatsoever.

What to do when faced with a concrete corruption case?

The information collected and the preventive measures already implemented will allow you to accurately assess the situation in a specific case. If necessary, seek help.

Assess the situation!

Establish a list of warning signals containing clues that will help employees identify and report a risk. These indicators include: some countries, certain economic sectors, irregularities or delays, opaque accounting, unusual expenses, an expensive lifestyle, etc.

Enforce disciplinary sanctions!

In the event that unethical or illegal conduct is uncovered, the disciplinary sanctions provided for in the code of conduct must be applied consistently and proportionately, and flaws corrected.

Get help!

This includes in particular the recourse to a lawyer, your professional association or the relevant chamber of commerce. Abroad, it may be advisable to contact the Swiss representation, which will examine the advisability of intervening with the local authorities.

The Federal Office of Police fedpol maintains an online reporting platform through which individuals can report possible wrongdoing related to bribery. The anonymity of the whistleblower is guaranteed.

Be aware of your responsibility!

As a company manager, it is your responsibility to actively combat corruption and to make the right choices to achieve this. Conduct your business activities abroad in accordance with the law to avoid negative implications.

Case study – Evaluate the situation

The following scenarios allow you to test and deepen your understanding of the issue. Try to evaluate the various fictional situations and weigh up their consequences. Media coverage of corruption cases may also help you to identify the risks involved.

Initial situation

Your company is willing to strengthen its presence in Country X. To this end, management has decided to set up a subsidiary there. Your research indicates that the process of setting up a company in Country X is very complicated and can take more than a year.

Possible scenarios

(1) Your goal for the subsidiary is to begin operations as soon as possible. According to reports, other foreign companies have successfully been entered into the register of companies within a few weeks, without meeting all the necessary requirements, in return for a payment of approximately 100,000 USD to a certain government agency. You direct your project manager to make a similar offer to this agency.

• Did you do the right thing?

  An ‘undue advantage’ is being offered to a foreign public official in exchange for the commission of an act contrary to his or her duties: the registration of a subsidiary without fulfilling all the statutory requirements. It is irrelevant whether or not money actually changes hands – the offer or promise alone is sufficient – or whether the government office has already been bribed by other companies. This is a case of (active) bribery of a foreign public official, which is a criminal offence in Switzerland.

(2) Would the legal situation be judged differently if it was not money being offered to the government agency, but a holiday by the sea for the responsible civil servant's family or education in Switzerland for his or her child?

• How about this?

  The ‘undue advantage’ can be of any kind. This may include anything from a valuable object given as a gift to a surcharge above the fee for a service rendered. Granting an advantage to a third party is also expressly mentioned by the law as an act of bribery.

(3) What if it was not your company offering money, but it was being requested by the government agency?

• Would this be OK?

  If your company fulfils the request of the agency, it is also considered by Swiss law to have committed the offence of bribing a foreign public official.

(4) Would the legal situation be judged differently if, rather than your project manager contacting the government agency, he or she authorised a local legal representative to ‘manage’ the registration of your company within a few weeks in return for 100,000 USD?

• Would this be OK?

  Indirect bribery is also considered an offence. Indeed, according to Art. 102 par. 2 of the SCC, companies are required to take ‘all requisite and reasonable organisational precautions’ to prevent the bribery of public officials or private individuals ‘within the company’ (for requirements relating to organisational precautions, see scenario 8 below). Further, it is recognised that if an employee of the company incites a third party – in this case, a legal representative – to engage in bribery (or to accept a bribe), the act is considered to have been committed ‘within the company’, which results in the company being criminally liable. It should be noted that the employee can also be prosecuted as an instigator.

(5) Would the legal situation be judged differently if you did not yet want to establish a subsidiary in Country X, but in anticipation of a potential future need, you asked your local representative to offer an expensive gift to the head of the government agency each year?

• Would you have done well?

  An annual gift constitutes an ‘undue advantage’. The main question in this case is whether there is a sufficient connection between the gifts and an official act committed in the future. This aspect determines whether the act constitutes criminal bribery or the granting of an advantage (which can be grouped together with a payment intended to maintain a relationship), an act that is not punishable under Swiss law with regard to foreign public officials. However, it is important to remember that the granting of an advantage may be punishable under the laws of Country X.

(6) For almost a year, your company has undertaken all the necessary legal steps to have the subsidiary registered in Country X. All that remains is the certification of the required documents and the entry into the register of companies, both simple formalities that are particularly time-consuming in Country X. The responsible authority is faced with an overwhelming workload, and a delay of several more weeks is expected. To speed the process up, you send them 2,000 USD.

• Were you right to do so?

  In this case, it's the expedition of an official procedure being purchased. The preferential timing has negative repercussions for other applicants, whose applications face additional wait time, which may result in them suffering losses. The payment also influences the discretion of a public official, which is again a case of criminal bribery under Swiss law.

(7) Would the legal situation be judged differently if the registration were overdue even according to local custom, with only the affixing of a stamp still required, and you were to send 100 USD to the responsible public official so that he or she would finally handle the matter?

• Were you right to do so?

  Here, the official act is still a mere formality. Nevertheless, the overdue registration is a legal administrative act that no longer lies within the discretion of a public official. If a small sum of money is paid so that the public official actually does the work that your company has a right to, this is considered to be a minor facilitation payment. According to Swiss law, this is regarded as ‘the granting of an advantage’ and not the payment of a bribe. In contrast to the granting of an advantage to a Swiss public official, the granting of an advantage to a foreign public official is not a punishable offence in Switzerland. However, the possibility of penalisation in the country where the act has occurred must be taken into account, and this act is not considered best practice with regard to an anti-corruption policy.

(8) In the meantime, your subsidiary in Country X has been registered and is now operational. It participates in the bidding on a major public procurement by the local authorities of the capital city. Receiving such a large order so soon after establishment would represent a significant success for your subsidiary. The subsidiary attempts to influence the decision to award the bid in its favour by paying 20,000 USD to a high-ranking official in the city administration. This action is brought to light. In response to questions from the media, company headquarters in Switzerland states that all parts of your company follow a code of conduct declaring that ‘all forms of corruption are unacceptable’. If the subsidiary in Country X has nevertheless offered a bribe, this has been done without the knowledge or instruction of headquarters. The Swiss parent company therefore maintains that it cannot be accused of having acted unlawfully. Is this reasoning sufficient?

• How about that?

  As mentioned in scenario 4, acts committed by intermediaries and subsidiaries are considered in principle to have been committed ‘within the company’. The parent company therefore cannot simply evade liability by hiding behind a subsidiary. Furthermore, it is responsible for taking all required and reasonable organisational precautions to prevent corruption. A brief section in the company’s internal code of conduct claiming that no form of corruption is tolerated will likely not be sufficient. Indeed, common practice dictates that the requirements in this respect are relatively demanding, and the company must put forth a serious effort to maintain compliance, impose strict internal standards and rigorously monitor their application.

(9) Would the legal situation be judged differently if your subsidiary in Country X had not bribed an official of the city’s government, but rather the purchasing agent of a company in the private sector?

• Is this OK?

  Bribery in the private sector taking place abroad is also a criminal offence in Switzerland. The company's liability also falls under Article 102 par. 2 of the SCC in this context. It should be noted that, since 1 July 2016, only less serious cases require that a formal complaint be registered by an injured party. The scope of this standard must be determined by Swiss courts. However, even in less serious cases, it may be in the interest of company management to lodge such a complaint against its agent in order to demonstrate the strength of its commitment to fighting corruption (see scenario 8 for further discussion). In all other cases, the offender is prosecuted ex officio.

(10) Your subsidiary in Country X has participated in a proper way in the public tender procedure mentioned above, and its offer fared well among the others. Nevertheless, the city government chooses a less favourable offer from a company in Country Y. In documents that were leaked to you, it emerges that the bid was accepted as a result of bribery by your competitor.

• What can you do?

  Depending on the circumstances, it may be suitable to submit a formal appeal of the decision under the laws of Country X. There may also be a trustworthy government authority or anti-corruption agency to notify regarding such an incident. If this act of bribery is considered an offence in Country X or Country Y, a criminal complaint can be filed in either country. If none of these avenues seem realistic or acceptable to you, please contact the Swiss diplomatic representation on site or SECO in Bern. The Swiss authorities may then contact the authorities of the country in question in a manner appropriate to the given circumstances.

Further information

Transparency International has developed a series of documents and guides for companies that can be found below.

• Downloads

  • Transparency International, Prevention of corruption in SME - Business Partnerships (in German)

    PDF572.95 kB10 October 2022

  • Transparency International, Prevention of corruption in SME - Dealing with whistleblowing (in German)

    PDF2.59 MB18 November 2021

  • Transparency International, Prevention of corruption in SME - Gifts and invitations (in German)

    PDF2.23 MB18 November 2021

  • Transparency International, Prevention of corruption in SME - Guide for swiss SMEs (in German)

    PDF3.91 MB18 November 2021

• Links

  • Transparency International - Prevention of corruption in SME: Checklist for self-evaluation (in German)
  • Transparency International - Prevention of corruption in SME: brochure self-evaluation (PDF in German)
  • Good Practice Guidance on Internal Controls, Ethics, and Compliance