Switzerland falls behind in the anti-corruption ranking
Switzerland is perceived as a relatively “clean” country when it comes to public sector corruption, but overall it could do more to root out the practice, says financial watchdog Transparency International. The Swiss public sector is considered particularly vulnerable to nepotism, while the private sector has been criticized for allowing corruption and money laundering.
This content was published on January 25, 2022 – 09:00
Pauline Turuban
The Alpine state does well overall in the NGO’s Corruption Perceptions Index 2021 – but slipped from third to seventh place with one point less than in 2020 and is even surpassed by other countries,” says Martin Hilti, Director of Transparency International Switzerland.
Launched in 1995, the index measures “perceived vulnerability to corruption” rather than actual instances of corruption, which is based on evidence from business and science. This year’s top countries – considered least prone to corruption – are Denmark, Finland and New Zealand. Norway, Singapore and Sweden also outperformed Switzerland. The Netherlands, Luxembourg and Germany complete the top 10.
The conflict-torn nations of South Sudan, Syria and Somalia received low marks. Transparency International concludes that corruption control has stagnated or deteriorated in 86% of countries over the past decade. It finds that 27 countries – including Switzerland – have received their lowest score since the earliest comparable year of available data (2012).
In Switzerland, several scandals in the public sector have made waves in the past year. One of the biggest involved overpriced IT contracts, culminating in a four-year prison sentence for a former State Secretariat for Economic Affairs official.
conflicts of interest
What worries Hilti most is the industry’s susceptibility to nepotism and a frequent failure to identify clear conflicts of interest. A classic example of this is the municipality of Arosa, a popular ski destination in the canton of Graubünden. Local politicians have regularly received a free ski pass worth CHF 550 – and have publicly defended the practice, although such actions are clearly problematic, he says.
“The main problem we have is nepotism,” he told SWI swissinfo.ch. “Switzerland is a small country, we know each other, we went to school together. Men have done military service together, are in the same sports clubs and suddenly find themselves in a professional context. Too often, the Swiss lack the sensitivity and knowledge to deal with such situations: this often implies a conflict of interest.”
Even if most of these situations do not reach the threshold of criminal responsibility, they are still very problematic as they involve abuse of power and violate the integrity of officials.
problems of the private sector
According to Hilti, the most serious shortcomings in Switzerland are in areas that the index does not measure. He highlights the fight against money laundering, the regulation and transparency of political interest representation and the protection of whistleblowers as areas in urgent need of improvement.
“The main problems we have in Switzerland are in the private sector,” he says.
The challenge in the private sector, which is dominated by small and medium-sized enterprises (SMEs), is that many do not know what corruption is or how to deal with it. Large companies now have codes of conduct, but struggle to establish a company-wide culture of zero tolerance.
“We have some higher-risk sectors, like the whole financial sector,” he adds. “There is money laundering, corruption. And in addition to the financial sector, we have the entire enabling industry in Switzerland.”
Enabling Industry refers to lawyers, notaries and real estate agents who help criminals invest their illegal money or hide it, for example by investing it in shell companies. Advising a client to deposit money with a specific financial institution or country does not fall under Swiss anti-money laundering law as long as the adviser does not have direct access to the funds, he notes.
Switzerland is also home to important players in the pharmaceutical and raw materials industries, as well as international sports federations. “These are all exposed to increased risks of corruption,” says the expert.
Some recent examples include the $729 million (CHF688 million) payment by Basel-based Novartis to settle bribery cases in the United States and Greece in 2020, or Zurich-based bank Julius Baer’s admission of money laundering over $36 million in bribes in a FIFA case last year.external link Credit Suisse, which was embroiled in a “tuna bond” corruption scandal in Mozambique, struck a delayed law enforcement deal with the United States in October 2021.
Scandals like the Panama Papers and the Pandora Papers have shown that Switzerland needs a more robust anti-money laundering and anti-corruption strategy. But efforts to tighten the laws have met strong opposition. At least with a view to better legal protection for whistleblowers.
“Our anti-money laundering laws will only be improved when international pressure is so great that we really have to act, but then we do what is necessary,” he says.