Swiss companies braced as federal prosecutor widens bribery net

03 May 2019 00:00 by Martin Coyle

Swiss banks and companies implicated in bribery schemes will be braced for further scrutiny following the widening of probes initiated by the country’s federal prosecutor.

The scrutiny includes possible action connected with a long-running Brazilian bribery scandal plus suspected bribery involving oil trader Gunvor Group. But the Office of the Attorney General, or OAG, will have to find ways to conduct and wrap up these complex investigations with little hope of extra resources from the Swiss government.

In its annual report published earlier this week, the OAG said it was considering new action against companies based on intelligence it holds. One of its main priorities will be the Brazilian Lava Jato case, known in English as Operation Car Wash.

The mammoth cross-border investigation, opened in 2014, has seen major companies dragged into a massive corruption scandal that engulfed Brazil and some of its top businesses and politicians, focused on allegations of bribery and contractor bid-rigging at the state-controlled oil company Petróleo Brasileiro.

The OAG has said it will consider the feasibility of proceedings against individuals and companies in Switzerland suspected of being linked to the scandal. Evidence suggests it could pay off for a prosecutor keen to take action.

This follows an OAG announcement last week that it had received reports of suspicious transactions involving Lava Jato in around 1,000 banking relationships in recent years.

Banks look like the natural candidates for further scrutiny. The OAG's annual report noted that two proceedings were opened in 2018 against Switzerland-based financial institutions with suspected shortcomings in their internal organization and alleged lax controls.

Brazilian court documents also reveal that major Swiss banks have been instrumental in funneling bribe money linked to Lava Jato, with bank officials assisting Odebrecht, Petrobras officials, middlemen and politicians in opening offshore accounts.

An asset manager based in Rio de Janeiro for French bank Société Générale has been convicted in Brazil for her role in the money-laundering scheme, and a Lugano-based agent for Swiss bank BSI is a defendant in another criminal case led by a federal court in Paraná state.

Agents of Swiss banks Clariden Leu, Julius Baer, as well as US-based Merrill Lynch and Monaco-based ING Private Banking are also being scrutinized by Brazilian federal prosecutors. Until now, none of these banks have been fined by Brazilian authorities.

The OAG report also raised some questions for Gunvor Group. The commodity trader faces a number of probes linked to suspected bribery of public officials in Africa. The Swiss prosecutor opened an investigation into Gunvor and “several persons” in 2012 over money laundering and bribery linked to oil deals in the Republic of Congo.

In August 2018 a former Gunvor executive was found guilty in a Swiss court and handed an 18-month suspended sentence for bribing public officials. The court found that Gunvor consultants bribed Congo government officials to persuade them to make decisions in favor of the group. Similar offenses were committed in the Ivory Coast, the court ruled.

An OAG spokeswoman told MLex that investigations are ongoing against “several” financial intermediaries connected to Gunvor for suspected money laundering and criminal mismanagement.

A Gunvor spokesman declined to comment on the latest developments but pointed to a statement from last year where the trader said it had ceased all business in the Republic of Congo. “In addition, the company has been very responsive to the issues involved and has created robust checks and balances within its compliance system,” the statement said.

Swiss Attorney General Michael Lauber, in the annual report's introduction, said that the number of complex criminal proceedings would probably continue to rise. The OAG will have to cope with a burgeoning case load and “stagnating” resources by pooling its strengths and collaborating, he said.

Most of the OAG’s cases have an international element, and by working closely with other international authorities — such as those in Brazil — the prosecutor should have better chances of overcoming any resource obstacles it faces.

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