White-Collar Crime: Trends & Developments

Author:Dr. Andrew Garbarski and Anne Valérie Julen Berthod
Profession:Baer & Karrer
 
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Introduction

Corporate criminal liability has been applicable in Switzerland since October 2003. The key provision is Article 102 of the Swiss Criminal Code (SCC), which applies not only to private legal entities, but also to public entities (with the exception of local authorities), partnerships and sole proprietorships. For ease of reference, the word "corporation" used here is deemed to encompass any of the above entities.

In the first decade following its adoption, Article 102 SCC was only used on very rare occasions. However, over the last couple of years, the trend has changed and shows that the number of criminal investigations launched against corporations is steadily increasing. Some of these investigations relate to widely reported cases such as the prosecutions launched, on a cantonal or federal level, against Alstom, HSBC, Addax Petroleum, Petrobras, 1MDB, SICPA and NotaSys, to name a few.

Criminal investigations are very burdensome for the corporation involved, both in terms of human resources and financial costs. The corporation may face additional, unpleasant measures as a result of an ongoing criminal investigation such as dawn-raids of its premises, the seizure of its electronic and physical data and/or records, the interview of its staff, the freezing of its assets (whether or not related to the offence under investigation), and bad publicity. In addition, any ongoing criminal investigation will necessarily increase the scrutiny of the regulator, where applicable.

At the same time, criminal investigations against corporations can turn out to be a difficult and lengthy process for the prosecution authorities, in particular if means of evidence need to be gathered abroad through mutual legal assistance channels. Hence, until the outcome of the criminal proceedings, there always remains a degree of uncertainty as to what extent the authority will be rewarded for the time and energy deployed.

Against this backdrop, a corporation, and also the prosecution authorities, may have sound reasons to consider the possibility of settling the criminal proceedings by way of negotiation.

In order to better understand the incentives negotiated justice may represent for both the indicted corporations and the prosecution authorities, we will first briefly set out below the requirements of Article 102 SCC before turning to the options that are currently available under Swiss law in view of achieving a negotiated outcome. We will then present a procedural tool, inspired by both the Anglo-Saxon Deferred Prosecution Agreement and the French "Convention Judiciaire d'Intérêt Public", which could eventually find its way into the Swiss Criminal Procedure Code (CrimPC) in the future.

General Conditions for Liability Under Article 102 SCC

The application of Article 102 SCC assumes that the following three general requirements are met:

a felony or a misdemeanour was committed by an individual within the corporation; such felony or misdemeanour was committed in the exercise of the commercial activities of the corporation; and such activities are consistent with the purpose of the corporation. In addition, a particular link must be established between the felony or the misdemeanour committed within the corporation and the corporation's deficient organisation. As explained below, the nature of the link varies within Article 102 SCC, depending on the type of liability model that is applied.

Regarding the felony or misdemeanour committed by the individual within the corporation, the Swiss Federal Supreme Court recently held, in a milestone decision involving the Swiss Post, that the criminal authorities have to prove that the underlying offence is fulfilled in all its objective and subjective components. As a result of this case law, nowadays prosecution authorities tend to target more systematically all the individuals involved in the commission of the offence, which makes it vital for the defence teams advising the corporation and the relevant individuals to properly coordinate their actions in the frame of the proceedings.

Subsidiary liability

Article 102 paragraph 1 SCC establishes a model of what is called "subsidiary liability". Pursuant to this model, which is...

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