Swiss plans for whistleblowers fall short, critics say

Coming out of the shadows with revelations is risky for employees. Keystone

Swiss government plans to update laws on whistleblowers will fail to provide sufficient protection for employees who reveal corporate wrongdoing, according to anti-corruption campaigners.

The role of whistleblowers in uncovering European company scandals has been highlighted this year by Danske Bank, where a former executive helped to reveal a €200 billion money-laundering scandal.

Legislative changes proposed by the Swiss government fall short of international best practice on protecting whistleblowers from dismissal and the circumstances in which they can report corruption to law enforcement authorities or the media, said Martin Hilti, executive director in Switzerland of Transparency International, a non-governmental organisation.

“Unfortunately, Swiss lawmakers so far have consistently avoided providing adequate whistleblower protection. They seem to have not yet understood its importance for employees, but also the value added for Swiss companies and Switzerland as a business location,” Hilti said.

Switzerland is the world’s largest cross-border wealth manager and relies on its financial sector as a bastion of its economy. Its banks have since the global financial crisis focused increasingly on looking after the assets of the world’s richest. But the country has a mixed reputation on the treatment of whistleblowers.

Among the best known is Hervé Falciani, a former HSBC IT specialist who leaked data about thousands of wealthy customers. Falciani argued he was a whistleblower who wanted to expose a banking system which encouraged tax evasion. But Swiss authorities claim he stole and then attempted to sell confidential data and have tried to have him extradited from Spain. A Spanish court rejected the request in September.

Swiss companies have a tradition of discretion and protecting privacy, despite a global crackdown on tax evasion. “I am not convinced that whistleblowers like at Danske would have a lot of protection in Switzerland,” said Simone Nadelhofer, partner at the Lalive law firm in Zurich. “On the contrary, experience shows that in Switzerland whistleblowers are regularly convicted by criminal authorities for breach of secrecy obligations.”

Hilti said: “If you are a whistleblower [in Switzerland] you have to carefully consider the risks because you are risking an awful lot — losing your job, not getting another one, becoming a social outcast or even criminal prosecution. It’s a high price.”

Transparency International argues that robust rules on whistleblowers are in companies’ interest and essential for uncovering white collar crimes. “Whistleblower protection must be part of the culture from the top down,” said Hilti.

The biggest Swiss companies have taken their own action — some 70 per cent have internal or external reporting stations for whistleblowers, according to a survey this year by the University of Applied Sciences in Chur. But just 10 per cent of small and medium-sized business had such systems.

Switzerland’s two largest banks, UBS and Credit Suisse, have aligned in-house whistleblower schemes to global standards. Credit Suisse told the Financial Times that its provisions went beyond the requirements of Swiss law with systems that included a 24-hour staffed “integrity hotline”.

Swiss politicians have been arguing for more than a decade about steps to strengthen protections. In the latest draft, published in September, Bern sought to clarify when whistleblowers could turn to law enforcement organisations or go public with information.

The plans have yet to be discussed in the Swiss parliament. But Hilti said that even after the revisions, the obstacles would be too great for whistleblowers who wished to escalate reports to law enforcement agencies.

Transparency International also argues for much higher compensation payments for employees dismissed after acting in good faith as whistleblowers.

In response, the federal justice office in Bern said the government was undertaking a general review of laws on dismissing employees but that politicians had so far failed to agree reforms with employers and trade unions.

Meanwhile, the conditions under which whistleblowers could refer complaints to law enforcement authorities or the media had to take into account employees’ duties to their companies.

The planned revisions to the Swiss law represented a “reasonable balance”, said an official.

Copyright The Financial Times Limited 2019