Advocacy for the tightening of economic criminal law in Switzerland

Rumors of a Credit Suisse (“CS”) takeover follow one another and are not being verified. But the fact is that CS stock has been steadily declining since 2007, from 81 francs in April 2007 to about 6 francs in mid-2022. The Financial Conduct Authority, the UK’s financial regulator, recently put CS on its list of supervised institutions due to its weak culture of governance and risk control.

Conversely, UBS has seen its share remain at around 15 francs for a dozen years, after a near-bankruptcy, narrowly avoided in 2008 and then in 2009 thanks to the intervention of the Federal Council and the US authorities to settle the dispute with the United States.

Also read our large format: How Credit Suisse lost control

Too much to protect Swiss companies

What to say? Certainly politico-financial factors may justify the decline in CS action, such as the end of bank secrecy, competition for places such as Dubai, Singapore, and so on.

But what strikes bar practitioners is Switzerland’s willingness to protect, again and again, “Swiss” companies, and especially banks, from any legal “attack.” Including and perhaps especially when the attackers are foreign customers of these companies and banks.

Thus, the provision of the Swiss Criminal Code on corporate criminal liability (art. 102 CC) is probably one of the weakest in the Western world. It provides that the enterprise may be prosecuted only if no culprit is found in the enterprise (in the case of Figure 1), except in cases of terrorist financing, criminal organization or money laundering, for example. than corruption (case of Figure 2).

But, in any case, it is still necessary to prove a “lack of organization” of the company. Thus, a bank of which a manager swindles a customer, commits unfair management, misuse of trust or forgery of securities has no reason to fear the horrors of the Swiss criminal justice system, since it is precisely the culprit. manager all found.

Gap regulation, unsatisfactory application

And even in the case of a conviction, the maximum fine is 5 million francs, with possible confiscation of the profits directly related to the offense.

Corporate criminal liability is so difficult to implement in Switzerland that since its introduction in 2003 in the Criminal Code, only 13 companies have been convicted in Switzerland in almost twenty years: four in the case of Figure 1 ( found not guilty) and new in the case of Figure 2 (terrorist financing, criminal organization or money laundering, as well as corruption), as Transparency International’s 2021 report on corporate punishment in Switzerland in three terms: flawed regulation, unsatisfactory application, insufficient transparency.

The only fear of a bank is that it will have to support possible civil actions on the part of the injured customer, which are often suspended until the criminal proceedings against the unscrupulous manager are completed.

However, civil actions are often extremely long and expensive for individuals, including and especially for individuals who have lost most of their fortunes due to the turpitudes of their manager. In particular, court costs to advance are often prohibitive, not to mention the high amounts to be filed to secure the costs of the opposing party, the costs of lawyers, financial experts, and so on. Individuals also often have to open parallel proceedings against their bank, which is usually reluctant to obtain documentation or information due to them.

Swiss companies are losing customers

Criminal proceedings against managers are just as discouraging. In most cases, prosecutors – especially cantonal ones – have little interest in investigating cases where “rich” people are being scammed. It even happens that prosecutors turn against the plaintiffs. They know the long and complicated banking procedures, think that they are detrimental to the handling of their day-to-day business and will be subject to dilatory tactics. As a result, prosecutors procrastinate, file cases, or even simply lack the competence or interest in this type of case or procedure.

So: victory for Swiss banks and companies? No, because the result of this lack of Swiss sanctions is felt on two levels: the harms of Swiss companies turn to foreign courts, and trust in Swiss companies is lost, and so they lose their customers.

Maybe it’s time for the Swiss legislature and prosecutors to start seriously considering policing the economy. Work tracks exist. Political will is still needed. It could also boost Credit Suisse’s stock!

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