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.

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(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.

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(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.

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(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.

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(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.

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(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.

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(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.

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(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.

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(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.

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(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.

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Last modification 17.04.2020