On September 25 2015 Parliament adopted amendments to the Penal Code introducing new provisions on corruption in the private sector (for further details please see "Combating corruption in the private sector").(1) The amendments will enter into force on July 1 2016.
The new Articles 322octies and 322novies of the Penal Code declare it punishable – with imprisonment of up to three years or a monetary penalty – for anyone to offer or request undue advantages in exchange for an employee, member, agent or another auxiliary person carrying out, or omitting to carry out, an act in connection with his or her function in an undertaking or organisation in the private sector, either in contravention of his or her duties or in the exercise of his or her discretion. The provision covers undue advantages for the benefit of the employee or a third party.
The law has been shaped to apply to cases only where bribes are being offered or requested with a view to the violation of a specific obligation to preserve another party's interests (eg, employer or principal interests). Such obligation may emanate from a contractual relationship (eg, employment or agency agreement) or a corporate relationship (eg, membership interest in a company, board membership or executive position). On the other hand, conduct by which someone seeks to influence a party's exercise of discretion without that party being subject to a particular obligation to loyalty will not qualify as bribery. A banker, for example, who seeks to induce a wealthy individual to grant him or her an asset management mandate by inviting him or her to a prestigious sporting event would not commit a criminal offence, whereas the same advantage, if offered to an employee of the individual's family office, would be punishable under Article 322octies.
The new law further abolishes the requirement of a criminal complaint as a prerequisite to prosecution of bribery in the private sector, with the exception of minor significance.(2) This caveat reflects the fact that the investigation and prosecution of an act of corruption may not only significantly affect the offender, but could also impair the victim's position. In circumstances where public interest in prosecuting an offence does not prevail over a potential interest of the concerned party to have the matter settled privately, the law leaves it up to such party to decide whether the case should be reported to the authorities.
The parliamentary debate revealed the following criteria to constitute 'minor significance':
- The undue advantage offered, granted or demanded must not exceed a few thousand Swiss francs;
- The offence must not jeopardise the health or safety of third parties;
- The offence must not consist of multiple or repeated acts of bribery, and the offender must not have conspired with others to commit the offence; and
- No document forgery must have been committed in connection with the act of bribery (this criterion refers to the fact that bribe payments are often disguised by the falsification of company accounts).
Similarly to the provisions that exist regarding bribery in the public sector, Article 322decies of the Penal Code specifies for the private sector that the term 'undue advantage' does not cover:
- advantages which are permitted by applicable internal regulations or contractually approved by the undertaking or organisation employing the receiver of the advantage; and
- advantages of minor value that are considered customary in the relevant social environment (in this context, the meaning of 'customary' must not be determined by way of reference to practices prevailing in the possibly overly tolerant country of the receiver of the advantage, but on the basis of the standards which apply in Switzerland).
Active bribery in the private sector does not only expose the individuals committing the act to prosecution, but by virtue of Article 102(2) of the Penal Code it may also trigger penal liability of the legal entity which employs the offender's services, provided that the legal entity is found responsible for having failed to take all reasonable organisational measures required in order to prevent such an offence.
Switzerland has thus enacted the necessary legal framework to effectively combat corruption in the private sector. The nexus of the revision with the recent scandals surrounding FIFA becomes apparent from the Federal Justice Department's explicit statement that the new provisions will allow for effective prosecution, notably of bribe payments in relation to the awarding of a sports competition.(3)
As an immediate consequence of the new law, corporate undertakings and organisations should scrutinise internal regulations and directives with a view to their compliance with the standards set by Article 102(2). Moreover, internal control procedures, as well as programmes for the training of employees and agents (including distributors), should be reviewed to strengthen the overall resistance against corruption. Undertakings and organisations are advised to consider establishing an internal reporting mechanism for suspected wrongdoing (eg, a whistleblower hotline) to effectively combat wrongful practices.
For further information on this topic please contact Bernhard Loetscher or Nino Sievi at CMS von Erlach Poncet Ltd by telephone (+41 44 285 11 11) or email (firstname.lastname@example.org or email@example.com). The CMS von Erlach Poncet Ltd website can be accessed at www.cms-vep.com.
(1) See www.admin.ch/opc/de/official-compilation/2016/1287.pdf (in German).
(2) See Articles 322octies Paragraph 2 and 322novies Paragraph 2 of the Penal Code.
(3) Justice Department press release, April 20 2016, available at www.bj.admin.ch/bj/de/home/aktuell/news/2016/ref_2016-04-20.html (in German).
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