Criminal Liability of Companies Survey. Switzerland Pestalozzi Lachenal Patry

Transcription

1 Criminal Liability of Companies Survey Switzerland Pestalozzi Lachenal Patry CONTACT INFORMATION: Dr. Hans Bollmann Pestalozzi Lachenal Patry Corporate & Commercial Practice Group Löwenstrasse Zurich, Switzerland Tel: / Fax: zrh@plplaw.ch Website: 1. General 1.1. Can a company be prosecuted in your jurisdiction in a similar way as an individual offender? Please explain the main differences, if any. B. Before October 1, 2003 the prevailing opinion in Switzerland was that only natural persons could be held criminally liable whereas enterprises cannot be accused of guilty conduct and therefore are excluded from criminal liability. As an exception to this, there existed a possibility to hold a company liable for a fine under the administrative criminal law since quite a long time: If a maximum fine of CHF 5' is considered, an administrative authority can demand the fine from the company, in which the offense has been committed, according to Article 7 of the Criminal Law of Administrative Proceedings. 1 In 2003, special provisions were added to the Swiss Penal Code and now enterprises can be held criminally liable and are subject to punishment and fines. 1 Bundesgesetz über das Verwaltungsstrafrecht (VStrR), SR

2 These provisions are of significant practical relevance and every enterprise doing business in Switzerland needs to be aware of them. In particular, Article 102 of the Swiss Penal Code 2 (hereafter called the "SCC") defines the material preconditions for punishment and Article 102a SCC provides special procedural rules for the trial of a business enterprise. Unlike individual liability, the SCC limits corporate criminal liability by establishing a subsidiary liability: An enterprise can be held liable only if an offense is committed within the enterprise and in furtherance of business activity and if this offense cannot be attributed to a specific individual due for lack of organization (see Article 102 para. 1 SCC). In addition to this subsidiary liability of the enterprise, the Swiss Penal Code also imposes primary criminal liability with respect to a limited number of significant offenses which are highly relevant in practice: Criminal Organization (Article 260ter), Finance of Terrorism (Article 260quinquies), Money Laundering (Article 305bis), Bribery of Swiss Public Officials (Article 322ter), Granting an Advantage (Article 322quinquies), Bribery of Foreign Public Officials (Article 322septies) 3 or Bribery in the Private Sector (Article 4a para. 1 lit. a of the Swiss Unfair Competition Act 4 ; see answer to number 1.3). If any of these offenses are committed within an enterprise, even without the knowledge of the management, the enterprise will be held liable, provided that it has not taken all necessary and reasonable organizational prevention measures. If so, an enterprise can be held criminally liable regardless of the criminal nature of a specific individual. If a specific individual can be identified as the offender, a cumulative criminal liability of the enterprise can result: Both, the offender and the enterprise can be held liable 1.2. Can other types of sanctions under criminal law been imposed on companies? Describe the major types of sanctions and their legal prerequisites. B. Under Swiss federal criminal law the only punishment that can be imposed on enterprises is a fine (see number 2.1 below) because even though the Swiss Penal Code contains an array of therapeutic 5 and other measures (e.g. peace bond, prohibition of practicing a profession, ban on driving, publication of judgment, Schweizerisches Strafgesetzbuch (StGB), SR The full text of the Swiss Penal Code is available on " in German, French and Italian. An excerpt in English, i.e. a translation of 65 selected articles that are significant in business is available from the Swiss-American Chamber of Commerce, Talacker 41, CH-8001 Zurich. Article 102 para. 2 of the Swiss Penal Code. Bundesgesetz gegen den unlauteren Wettbewerb (UWG), SR 241. Articles of the Swiss Penal Code. 2

3 confiscation) 6, therapeutic measures only apply to natural persons and cannot be imposed on enterprises. Whether the investigating judge may order non-therapeutic measures as listed above has not been explicitly addressed yet. The prevailing opinion assumes that confiscation of the tortuous financial benefit 7 (Einziehung) is the only measure that can be imposed on enterprises under Swiss criminal law. The judge can order the confiscation of assets that have either been acquired through the commission of a crime or that are intended to be used in the commission of a crime or as payment for the commission of a crime. The assets may not, however, be awarded to the person harmed for the purpose of restoring him to his prior legal position 8. Further, confiscation is not permitted if a third party has acquired the assets in good faith and has paid consideration (of fair market value) or if that confiscation would cause him to endure disproportionate hardship. The criminal laws of each canton can provide for further types of sanctions Are there any other kinds of sanctions in other fields of law which can be impposed on companies following the commission of an offence by its directors, managers or employees (e.g. fines, dissolution of a company, etc.)? Please describe the relevant sanctions and summarize the legal prerequisites. B. There are numerous civil laws that contain sanctions if an offence is committed by the directors, managers or employees of an enterprise for things such as the breach of contractual obligations and unlawful acts under Article 41 of the Swiss Code of Obligations 9 as well as other laws such as the Swiss Road Traffic Act, Swiss Products Liability Act. Of significant financial relevance and therefore special importance for an enterprise are the potential administrative sanctions provided for in the Swiss Antitrust Law. Under this law coordinated behavior causing a restraint on competition or abuse of a dominant market position may be fined up to 10 % of the turnover realized in Switzerland over the last three financial years 10. Also, under the Swiss tax law, legal entities can be held criminally liable for tax delinquencies (tax fraud, attempted tax fraud, violation of procedural duties). The enterprise can be fined up to CHF 10'000 for a violation of procedural duties and Articles of the Swiss Penal Code. Articles 69 ff. of the Swiss Penal Code. Article 70 of the Swiss Penal Code. Bundesgesetz betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht, OR), SR 220. Article 49a of the Swiss Anti-Trust Code (Bundesgesetz über Kartelle und andere Wettbewerbsbeschränkungen, SR 251). 3

4 triple the amount of the evaded tax in case of tax fraud. Attempted tax fraud can be fined up to two-thirds of the fine in cases of tax fraud 11. Except for situations where strict liability and absolute liability are imposed e.g. as they arise in the Swiss Road Traffic Act and the Products Liability Act, in most cases the enterprise will be held liable for its own negligence and it will be held liable for the negligence of its directors, managers or employees if such conduct occurs as a part of their duties. 2. Criminal Liability of Companies 2.1. What types of sanctions can be imposed on a company? What is the minimum/maximum punishment for each sanction? If the sanctions distinguish between certain types of offences please describe the sanctions for the most relevant offences or groups of offences. Under Swiss criminal law, an enterprise can only be fined. The law does not allow the judge to prohibit a certain degree of activity of the enterprise or to order the closure of a firm under the Swiss criminal law. The Swiss Penal Code provides for a fine up to 5 million Swiss Francs for enterprises What are the legal requirements for each type of sanction? Art. 102 para. 1 SCC sets out the principles governing secondary criminal liability of an enterprise. It reads as follows: 1 A crime or offense shall be attributed to the enterprise if committed while it exercises a business activity within the scope if the enterprise and if, due to the deficient organization of the enterprise, such act cannot be attributed to a natural person. In such case, the enterprise shall be punished with a fine up to 5 million francs. The following requirements must be met: 1. The "Enterprise" is a legal entity as defined in the Swiss Penal Code Enterprises are subject to the Swiss Penal Code. Article 102 para. 4 SCC contains an exhaustive list of all of the included legal entities 13, among them mainly the following: a) legal entities created under private law (stock company, Aktiengesellschaft, AG; partnership limited by shares, Kommandit-Aktiengesellschaft; limited Articles of the Swiss Federal Act on Direct Federal Tax (Bundesgesetz über die direkte Bundessteuer; SR ). Article 102 para. 1 of the Swiss Penal Code. Article 102 para. 4 of the Swiss Penal Code. 4

5 liability company, GmbH; association, Genossenschaft; foundation, Stiftung; society, Verein) b) legal entities created under public law (e.g. Swiss Federal Railways, SBB; cantonal hospitals) with the exception of local authorities (Federation, Canton, Municipality) c) partnerships (private limited partnership, Kommanditgesellschaft; general partnership, Kollektivgesellschaft; simple partnership, einfache Gesellschaft). The scope of application of the provision is intended to be broad so consequently the law can also apply to foreign legal entities doing business in Switzerland. The Swiss Penal Code does not impose on enterprises general criminal liability regarding all offences currently existing under Swiss criminal law. The criminal liability of enterprises is limited to offenses that are committed in the course of business activity. Therefore, business activity subject to the Swiss Penal Code involves the exchange of goods or services. Whether the enterprise actually serves a commercial purpose or not is not relevant. Thus, even non-profit-organizations can fall into the scope of application of the provision, assuming that they act at least to some extent as a commercial enterprise. 2. Limitation to Crimes or Misdemeanors Committed "within an Enterprise and in Furtherance of Business Activity" Corporate criminal liability is limited to offences that are committed in the exercise of a business activity within the scope of the enterprise 14. Hence, the enterprise can be liable for an employee's crime if committed within the scope of their employment, even if it is committed contrary to corporate orders. All offences not inherently connected to the business activity of the respective enterprise are excluded from corporate criminal liability of the enterprise (e.g. offences that occur in the course of business activity but that are not in accordance with the objects of the enterprise). 3. Failure of Attribution to any Specific Individual An enterprise can only be held solely liable for offenses committed within the enterprise if it is not possible to attribute the offense to a specific individual (see also number 5.1 below). 4. "Lack of Organization" as Special Requirement for Corporate Criminal Liability Intent is a required element of the crime. The intent necessary to find the enterprise guilty is found in Article 102 of the Swiss Penal Code. Under the Swiss Penal Code it is required that there be a lack of organization. Unfortunately, there is no definition of 14 Article 102 para. 1 of the Swiss Penal Code. 5

6 the expression lack of organization in of Article 102 SCC. In practice this provision either refers to the fact that the offense cannot be attributed to a specific person because there is a lack of organization (para. 1) or to the failure of the enterprise to exercise all reasonable and necessary measures to prevent criminal conduct, regardless of a specific individual (para. 2). However, the mere fact that an offense has been committed within an enterprise is not regarded as evidence of a lack of organization. It is also not sufficient proof if the lack of organization just enables or facilitates the individual to commit an offense. The lack must rather cause the fact that an offense cannot be attributed to an individual. Further, not every lack of organization may lead to corporate criminal liability. Liability is limited to a serious lack of organization (lack of a sufficient description of personnel responsibilities, confused delegations, lack of l supervision for personnel, etc.). Art. 102 para. 2 SCC imposes primary liability of the enterprise and states: 2 In a case of a punishable act according to Articles 260ter, 260quinquies, 305bis, 322ter, 322quinquies, or 322septies, the enterprise shall be punished independently from the punishability of natural persons if the enterprise is accused of not having taken all necessary and reasonable organizational measures to prevent such offense. Contrary to para. 1 of the provision, para. 2 does not turn on whether a specific individual can be identified as the offender or not. Material to the liability of the enterprise is the question of good organization and therefore whether the enterprise has taken all necessary and reasonable organizational measures to prevent such criminal conduct. Once again, it has to be examined whether there was a lack of organization within the enterprise (see number 4 above) Is the prosecution of a company confined to certain types of offences or to offences committed by certain hierarchy of company staff? If yes, please explain in more detail. A. No B. Under Swiss laws, enterprises may be prosecuted and may be held liable for offenses committed by employees who are acting within the scope of their job duties. Affirmative support for an offense by corporate executives or managers is not required to establish corporate liability. In general, every offense committed in the exercise of commercial activities can lead to a prosecution of the enterprise but only a limited number of significant offenses even lead to unlimited, primary liability of the enterprise (see answer to question 1.1 above). 6

7 In both cases, prosecution of the enterprise is not confined to offenses committed by certain hierarchy of company staff. All activities of the enterprise must comply with the law and the enterprise is subject to prosecution for violations regardless of who acted or should have acted inside the enterprise How will acts (or omissions) of individuals (directors, managers, employees) be attributed to a company? Can acts or omissions been attributed if the individual violated only internal (but not statutory) rules or regulations? The guiding principle of criminal liability of an enterprise is a direct charge of guilt. Contrary to vicarious liability, liability of the enterprise for torts committed by an enterprise and/or its employees is based on failure to establish and maintain proper organizational structures How will mens rea of the company be established? To obtain a conviction, the prosecutor must prove both the commission of the prohibited act and the requisite guilty mental state. Until special provisions regarding criminal liability of enterprises were implemented in 2003, the Swiss concept of criminal law followed the principle of societas delinquere non potest. Thus, enterprises were unable to be accused of guilty conduct and therefore excluded from criminal liability. The substantive criminal law has since been changed and now there is corporate criminal liability for the enterprise's own wrongdoing. The provisions dealing with corporate criminal liability 15 directly apply to the mens rea of the enterprise - while the mens rea of the real offender in this regard is not relevant. Therefore, the criminally relevant accusation is not the mere fact that someone committed an offense, but that an offense could have been committed because of a lack of organization. The Swiss Penal Code uses two basic strategies to impute liability to corporations by establishing the mens rea of the enterprise itself as follows: a lack of organization that prevents an identification of the offender (Article 102 para. 1 SCC) or the lack of organization that caused the commitment of the offense (Article 102 para. 2 SCC). In the Swiss understanding, corporate criminal liability is a question of liability for organizational failure and therefore a lack of compliance Is there a strict liability of a company for certain kinds of offences for which mens rea is not required? Please describe for which kind of offences mens rea is necessary and for which not. A. No. 15 Articles 102 et. seq. of the Swiss Penal Code. 7

8 B. An enterprise can be held strictly liable for some significant offenses: participation in a criminal organization, financing of terrorism, money laundering, bribery and corruption 16. However, mens rea of the enterprise regarding the lack of organization is required Is it necessary to identify and/or convict the individual offender in order to prosecute a company? A. No. B. The Swiss Penal Code does not require identification or conviction of the individual offender. Article 102 para. 1 SCC allows an enterprise to be prosecuted and even requires that the individual offender cannot be identified What additional defenses (except of lack of offence) can a company raise? The enterprise can only be found guilty of criminal offenses if there was a lack in its organization. The burden of proof that there was no organizational lack lies with the enterprise: it can only escape conviction if it proves that it is not due to a lack of organization that the individual offender cannot be identified (Article 102 para. 1 SCC) or that it has taken all reasonable organizational measures that were required in order to prevent such an offense (Article 102 para. 2 SCC) Can a company avoid punishment if it is sufficiently organized, has duly instructed its directors, managers or employees and has taken reasonable care to exert control on its directors, managers or employees? What extent or organizational requirements and control are necessary to avoid conviction? B. Regarding the special provisions of corporate criminal liability in the Swiss Penal Code, enterprises can avoid being punished if they avoid a lack of organization in the meaning of Article 102 para. 1 and 2 SCC. The possibility of holding enterprises criminally liable may have the effect that potentially liable employees try to shift responsibility to the enterprise and allege a lack of organization. Therefore, an enterprise can quite easily be confronted with a criminal investigation. Whether such accusations can be defended or not primarily depends on evidence, especially documentary evidence of adequate organizational precautions having been taken. To avoid conviction, enterprises in Switzerland are well advised to continually review and adjust their internal organization structure. With respect to Swiss Criminal Law, every enterprise doing business in Switzerland should implement an internal organization structure, which explicitly defines responsibilities, authorities, accountability, discretionary decision-making powers, as well as 16 Article 102 para. 2 of the Swiss Penal Code. 8

9 information flows. All employees on all levels must be aware of and understand their responsibilities and tasks. Further, enterprises should adopt sufficient control mechanisms to prevent its members from engaging in criminal conduct. A failure to do so will entail the risk of criminal liability. It is for these reasons that enterprises must institute internal compliance programs that can allow reduce the possibility of culpability in the event there is criminal activity. In assessing whether or not an enterprise is likely to be prosecuted for the criminal offenses of its employees, a main critical factor is the strength of its compliance program. What the required standard is cannot be defined: it depends on the size of the enterprise and its field of activity. However, the expectations are higher with regard to enterprises with international activities than in cases of small-sized organizations with only domestic activity. Further, compliance and corporategovernance models must be adapted to the characteristics of the specific enterprise as the degree of the internal organization depends on the size, its field of activity, its business partners, etc Can certain kinds of sanctions been executed during the investigative phase of a criminal proceedings (e.g. preliminary seizure of bank accounts, attachment of claims)? B. Provisional or other measures can be executed during the formal judicial investigation, especially regarding the assets of the suspected person. At present, Swiss criminal procedure law is regulated by every canton individually. Some of the cantonal laws provide preliminary seizure of bank accounts, such as the Code of Criminal Procedure of the Canton of Zurich. Therefore, assets of a suspected person can be preliminarily seized provided they serve for evidence or are needed for securing costs, penalties and monetary fines as well as potential compensation Can both the individual offender and the company been convicted for the same offence? No. See answer to questions 2.2 and 2.5 above Can a parent/group company been prosecuted for offences being committed within a subsidiary? A. No. 17 Article 83 of the Zurich Code of Penal Proceedings; Article 262 of the Swiss Code of Penal Procedure (draft). 9

10 B. A parent/group company cannot be prosecuted for offenses committed within a subsidiary. As a rule, criminal liability primarily lays with the subsidiary where the crime is committed and where the lack of organization leads to the offense. Direct liability of the holding or other group companies for negligence or other tortuous actions of a specific group company is a question of being able to link a firm as a guarantor. The holding group must be factually or contractually liable regarding the organization of its subsidiaries or must have caused the lack of organization of the subsidiary by own misconduct. Moreover, piercing of the corporate veil requires a close connection between the different subsidiaries. They have to be economically and factually affiliated with each other and to one single entity. In such a case the corporate veil could be pieced and the activities or operations of the subsidiary could be treated as the activities and operations of the holding company. 3. Criminal Sanctions on a Company 3.1. What other types of sanctions but a criminal punishment can be imposed on a company? Please describe the types of sanctions and their legal requirements. Under the Swiss Penal Code confiscation of the tortuous financial benefit can be imposed on a company as a complement to the actual criminal punishment (see answer to question 1.2 above) Is the imposition of these sanctions confined to certain types of offences? Describe the most relevant sanctions and types of offences? No What defenses can a company raise against these offences? See answer to question 3.2. above Can such sanctions been executed during the investigative phase of a criminal proceedings? B. See answer to question 2.10 above. 4. Procedural Issues in Cases of Corporate Liability 4.1. Does the prosecution have discretion to prosecute or not a company? Which aspects will the prosecution take into account? 10

11 B. Swiss law does not provide an automatic process where the punishment is predetermined. There are few minimum sentences and judges have a great deal of latitude to craft the appropriate sentence. The Swiss Penal Code includes assessment criteria that a court should consider in fining an enterprise: seriousness of the offence and of the organizational inadequacies, seriousness of the loss or damage caused, as well as the financial situation of the enterprise 18. Swiss law outlines the material elements of a crime in a very general and abstract way. Therefore, a relatively insignificant behavior can be punishable according to law, even if there is no need for punishment. But, if an offense is obviously insignificant with regard to the (organizational) culpability of the perpetrator and the resulting consequences, the competent authority is obligated to renounce the opening or continuation of the criminal procedure 19. Whether the resulting consequences are insignificant depends on whether the internal organization was a marked departure from the standard of organization according to the relevant body of rules and regulations or (in case there are no regulations) to the standard of organization expected under the circumstances. With regard to the organizational failure, a decision not to seek punishment can only be considered in petty cases At what stage during an investigation/proceeding does a company have the status as a suspect or similar status? In Swiss law, a suspect is a person who is suspected, blamed or accused of a crime by means of a complaint, a demand for a penalty or by a criminal authority in a proceeding 20. From the time the criminal authorities first communicate to the person that he has possibly committed an offense, this person acquires the status of a suspect. In the case of potential crimes in connection with Article 102 SCC, a criminal investigation or proceeding is directed against the enterprise itself. Thus, the enterprise has the status of a suspect from the beginning of the investigation and during the proceedings Does a company have the rights to remain silent (nemo tenetur se ipsum accusare), to refuse production of documents, to deny access to company site without search warrant, to refuse testimony, to answer questions or to any other suspects rights? Who exerts these rights if investigations are made against the company s directors? B. Article 102a para. 2 provides that the person representing the enterprise in the criminal proceedings has the same rights and obligations as any accused Article 102 para. 3 of the Swiss Penal Code. Article 52 of the Swiss Penal Code. Article 109 of the Swiss Code of Penal Proceedings (SCPP, draft). 11

12 Therefore, ordinary proceeding rules and principles must be respected also in corporate criminal proceedings, in particular presumption of innocence, the basic principle of a fair trial, nemo tenetur se ipsum accusare and due process of law. In case of a conflict of interest between the enterprise and its representative (e.g. in the case where the enterprise and its representing director are subject to the same criminal proceedings), the enterprise must designate a different legal or designated representative. In the event such person is not available, the investigating authority or the court may appoint a suitable third party. This decision will not be subject to any appeal. In particular, the shareholders do not have a right to request the appointment of such a legal representative When will a company be informed that it is or can become prosecuted? In Swiss criminal law, the investigations against a suspect are not formally opened. However, every person charged with a criminal offense has the right to be heard 21 by the investigating judge in the pre-trial proceedings and the trial judge during trial, including the right to present or indicate all exonerating or mitigating evidence. Therefore law enforcement agencies have to inform the suspected enterprise as soon as possible of all grounds for its being the subject of a criminal proceeding Can the directors, managers or employees be witness in proceedings against a company? Does this also apply if the directors, managers or employees are suspects themselves? B. In principle, directors and managers as well as employees have the right to testify in proceedings against the enterprise. According to Swiss law a witness and an accused must not be identical. Therefore, representatives may not be compelled to be a witness against the enterprise they are representing in proceedings. For the same reason representatives are a priori excluded from being a respondent 22. Persons with an unrestricted power to represent the enterprise - directors and managers - are not obliged to give evidence in a criminal proceeding against the enterprise 23. Conversely, employees of the accused enterprise are obligated to testify in criminal proceedings against the enterprise they are working for As guaranteed by Article 29 para. 2 of the Swiss Federal Constitution and Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. The right to be heard is explicitly mentioned in Article 105 of the Swiss Code of Penal Proceedings (draft). In the meaning of Articles 175 et seq. of the Swiss Penal Code. Article 102a para. 2 of the Swiss Penal Code. 12

13 4.6. Will there be a joint proceeding against the company and the individual offender? B. If a criminal investigation is initiated against the enterprise and a natural person based on the same or a related set of circumstances there can be a joint proceeding against both of them (see Article 110 para. 4 SCCP) Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. B. As a rule, the enterprise does not act itself but only through its representatives. It therefore needs a representative in the office at the time that the proceedings are initiated. The person representing the enterprise must have an unrestricted power to represent the enterprise in civil law matters 24. The enterprise may also designate another person to represent it during the proceedings, under the condition that the powers of representation of the enterprise are delegated to this person (either by law, by the articles of incorporation or by corporate decision). 5. Procedural Issues on Other Criminal Sanctions 5.1. Does the prosecution have discretion to impose or not a sanction on a company? Which aspects will the prosecution or court take into consideration? N/A 5.2. Does the company, have the status of a suspect or a similar status and at what stage in proceedings? N/A 5.3. When will the company been informed that the prosecution is considering to impose sanctions or have sanctions imposed? N/A 5.4. Which procedural rights does a company have when it is at risk that sanctions might be imposed? N/A 24 Article 102a para. 1 of the Swiss Penal Code. 13

14 5.5. Will there be joint proceedings against the company and the individual offender? N/A 5.6. Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. N/A 6. Criminal Liability of Directors or Managers 6.1. Can directors or managers be criminally held liable for offences committed by other individual directors, managers or employees? Which legal concepts apply in your jurisdiction? A. Yes with regard to employees. B. Directors and persons responsible for the management of a company will be personally liable for their own tortuous conduct regardless of whether they are acting in the best interests of the corporation or not. Conversely, directors and managers are not liable for acts of the corporation perpetrated by other directors or managers. As to the liability of directors and managers regarding the criminal offenses of subordinates, the Swiss Federal Criminal Court ruled in the leading case of Bührle/Oerlikon 25 that the director was criminally liable for omission regarding offenses committed by employees. The Bührle decision effected the creation of Article 6 of the Criminal Law of Administrative Proceedings 26 that states that the director (Geschäftsführer) can be held liable for offenses committed by employees, if he can be accused of omission (deliberately or through negligence) regarding the prevention of the relevant criminal offense (see Article 6 para. 2 SAPC). Most of the ancillary criminal laws have incorporated said provision by reference. It should be noted that a parent company or a controlling shareholder that intervenes in the company s management as if it were a director, can be regarded as a de facto director and may be subject to the same criminal liabilities C.f. Decision of the Federal Criminal Court of Switzerland dated November 27, 1970 (BGE 96 IV 155), pp. 174 et seq.; available on Bundesgesetz über das Verwaltungsstrafrecht (VStrR), SR

15 6.2. What are the legal requirements for a criminal liability of directors and managers for offences committed by others? Under current Swiss law, directors and managers can be held criminally liable for any criminal offence that they commit in the course of their duties. As election, supervision, instruction and intervention normally is a part of their duties, they can be punished for acts committed by subordinated employees if they fail to provide adequate election, supervision, instruction or intervention or fail to satisfy a duty imposed by a criminal statute (e.g. an ancillary criminal act). However, the personal failure of the director or manager must have enabled the committed offense Does a criminal liability arise only from the fact that another director, manager or employee was not adequately selected, instructed, supervised or the company not adequately organized? B. See answer to question 6.2. above What recommendations do you have to exclude or minimize criminal liability risks of directors of a company? The director of an enterprise carries the responsibility for regulation, establishment, continuity and regular supervision of an internal system of control. He must be aware of his duties and responsibilities. The director can only avoid liability if he has established an internal program of control based on a systematic risk analysis and its supervision of such. Thus, the director ensures that all of the institution s material risks are recorded mitigated and supervised and minimizes his own criminal liability risk. 15