Switzerland: Corporate Investigations Laws And Regulations Switzerland 2023

Chapter Content Free Access

1. The Decision to Conduct an Internal Investigation

2. Self-Disclosure to Enforcement Authorities

3. Cooperation with Law Enforcement Authorities

4. The Investigation Process

5. Confidentiality and Attorney-Client Privileges

6. Data Collection and Data Privacy Issues

7. Witness Interviews

8. Investigation Report

9. Trends and Reform

1. The Decision to Conduct an Internal Investigation

1.1 What statutory or regulatory obligations should an entity consider when deciding whether to conduct an internal investigation in your jurisdiction? Are there any consequences for failing to comply with these statutory or regulatory regulations? Are there any regulatory or legal benefits for conducting an investigation?

Swiss law does not contain any explicit regulatory obligations that would require a company to conduct an internal investigation. Internal investigations are part of an effective compliance management system and serve a variety of objectives and purposes. If there is a suspicion of a compliance violation, the company will often come to the conclusion that it wants to clarify the matter internally. The internal investigation usually holds more advantages than disadvantages for the company. Based on the results of the internal investigation, the company retains control of the matter and can ideally avert an official investigation or, if necessary, cooperate with the authorities in full knowledge of the facts, which can have a positive effect on the assessment of sanctions.

In addition, compliance with certain statutory obligations may implicitly require an entity to cooperate. In particular, the Swiss Financial Market Supervisory ("FINMA") imposes regulations on financial service providers, which have a standing duty to proactively notify FINMA of the occurrence of any substantial events. Such notification regularly requires a prior investigation of the facts and an analysis of the legal consequences. Furthermore, FINMA may, and regularly does, order the entities under its supervision to make information and documents available in relation to occurrences that come to its attention. The SIX Swiss Exchange, the Swiss stock exchange, further imposes ad hoc notification duties, and financial intermediaries have the duty to investigate and report to the Swiss Money Laundering Reporting Office ("MROS") regarding any reasonable suspicion of money-laundering activities.

Regulatory authorities such as FINMA typically also have the authority to order entities to conduct internal investigations and, if deemed necessary, appoint an independent investigator in the matter, with said independent investigator often being an audit or law firm. If an entity is able to demonstrate that a comprehensive and independent internal investigation has already been conducted, they may be able to prevent the appointment of an external investigator, thereby preserving control over the entity's internal affairs. Early investigations also allow for a level of preparation for answers to governmental or media enquiries, should they arise.

Non-compliance with reporting duties can trigger serious sanctions, and thus the conducting of internal investigations remains one of the only means through which an entity is able to systematically gather, process and evaluate the necessary information in order to be in compliance with its respective regulatory obligations. The provision of FINMA with false information by a natural person is a criminal offence bearing a fine of up to CHF 250,000 when done so negligently, and a maximum sentence of three years' imprisonment in the instances of intentional non-compliance. The sanctions against the entity involved may include the disgorgement of unlawfully generated profits and can go as far as the revocation of the entity's licence to conduct business, in particular in cases of repeated misconduct. Comparable sanctions apply in case of the violation of other reporting duties, e.g. to the MROS.

Further, it is also important for legal entities to consider that they may be held criminally liable if they are deemed to have failed to take adequate measures to detect or prevent the commission of crimes within their company. Primary liability is levied for specific offences such as, in particular, money laundering and corruption, if the entity failed to take all the reasonable organisational measures that were required in order to prevent such an offence. Subsidiary liability of the entity arises in respect of any other felony or misdemeanour committed in the exercise of the entity's commercial activity, provided that due to inadequate/inefficient organisation, it is not possible to attribute the offence to any specific natural person acting for the company. The entity's criminal liability may also lead to civil liability.

Finally, the senior management and compliance officers of a company may be held criminally liable for failure to intervene or prevent criminal behaviour within their organisations. They are furthermore subject to civil liability if they violate duties of care imposed by Swiss corporate law in order to protect the financial interests of the company and stakeholders. Timely internal investigations may prevent or mitigate such criminal or civil liability.

Compliance with competition law may also require internal investigation to avoid respective sanctions. In particular, there are statutory leniency programmes within competition law that offer partial or complete immunity from sanctioning if the entity reports the unlawful restraint of competition before the other transgressors. This operates as a further incentive for proactive internal investigation.

1.2 How should an entity assess the credibility of a whistleblower's complaint and determine whether an internal investigation is necessary? Are there any legal implications for dealing with whistleblowers?

The adequate response to the complaint of a whistleblower will need to be established in each case individually, based on the circumstances. However, any such complaint should be taken seriously and be investigated with due care and diligence.

Corporate entities of a certain size should have internal policies in place that set out the necessary measures for the handling of whistleblower complaints and the assessment of their credibility. These policies ensure, among other things, that the reported facts are expertly reviewed, necessary interviews are conducted, and any further reports that may support the complaint are evaluated. It is additionally important to ensure that such measures are taken in a timely manner in order to preserve any evidence that may be relevant. The investigative process should be sufficiently documented. If a complaint proves to have merit, measures should be taken to sufficiently sanction and mitigate the misconduct internally (especially adaptation of the compliance management system) and prevent negative consequences externally (criminal/civil liability or administrative sanctions).

Currently, there is no specific Swiss law granting protection to whistleblowers in the private sector under Swiss law. However, in July 2022, the Organisation for Economic Co-operation and Development (OECD) announced a statement that if Switzerland does not take concrete steps towards implementing whistleblower protections, the OECD will commence preparations for a High-Level Mission to Switzerland in December 2022.

In the meantime, the competent courts decide on a case-by-case basis whether the reporting of irregularities is legitimate. Swiss courts assess in each individual case, applying a balancing of interests' test, whether the employee's notification of an irregularity to the employer, the authorities or the media was lawful in the concrete case, and examine the facts of the case primarily in relation to the employee's duty of loyalty. However, it is regarded as best practice to have reporting mechanisms in place which adequately protect the whistleblower from negative consequences. The termination of an employee solely on the grounds of lodging a complaint may constitute an unfair dismissal under Swiss law. In the public sector, under the relevant Cantonal or Federal Personnel Acts, Swiss officials may be required to report crimes and offences to their supervisors or directly to the criminal authorities.

The EU Whistleblower Directive (2019/1937) entered into force in December 2019, and the EU Member States were required to implement the requirements resulting from the EU Directive into national law by December 2021. As Switzerland is not an EU Member State, it was not subject to such obligation. Nevertheless, Swiss companies with business branches in the EU, with at least 50 employees, may fall within the scope of the EU Whistleblower Directive. Compliance with the requirements of the EU Whistleblower Directive can therefore also be of great importance to Swiss companies.

1.3 How does outside counsel determine who "the client" is for the purposes of conducting an internal investigation and reporting findings (e.g. the Legal Department, the Chief Compliance Officer, the Board of Directors, the Audit Committee, a special committee, etc.)? What steps must outside counsel take to ensure that the reporting relationship is free of any internal conflicts? When is it appropriate to exclude an in-house attorney, senior executive, or major shareholder who might have an interest in influencing the direction of the investigation?

The company should clearly define the reporting lines from the outset of the investigation. The specific facts of the investigation will determine who is best suited to be the outside counsel's liaison within the client's corporate structure.

The responsible person will generally internally coordinate the investigation, and outside counsel will report to them. There are various factors that outside counsel should bear in mind when determining who the effective "client" is, such as the events leading up to the initiation of the investigation, the severity of the allegations, the rank of those potentially involved, and whether or not reporting obligations may have been or will be triggered. The potential level of media interest should also be taken into account. Swiss in-house counsel do not enjoy legal professional privilege but may be chosen as the "client" for other reasons. In the case of multijurisdictional investigations, it may be advisable to have, or include, in-house counsel as the client in order to ensure that communication remains privileged. In large-scale or sensitive investigations, it may be prudent to establish a steering committee to oversee the investigation. Furthermore, it is important to plan internal investigations carefully from beginning to end, i.e. remediation.

In order to avoid potential conflicts, it must be ensured that the investigation team, both internal and external, does not include any persons who may be involved with, affected by or hold any other interest in the conclusion of the investigation. In order to ensure this, outside counsel, amongst other things, should request uninhibited access to the relevant internal records and employees.

2. Self-Disclosure to Enforcement Authorities

2.1 When considering whether to impose civil or criminal penalties, do law enforcement authorities in your jurisdiction consider an entity's willingness to voluntarily disclose the results of a properly conducted internal investigation? What factors do they consider?

As for criminal proceedings, the competent authorities take factors such as self-reporting of the offence, cooperation in detecting the facts, remorse or efforts towards remediation into account. The disclosure of the outcome of an internal investigation may thus qualify as a mitigating factor. There has been one notable case in which a company self-reported the bribery of foreign officials to the authorities, shared information from an internal investigation and admitted to being guilty in failing to implement adequate measures to prevent the bribery. Due to such unrestricted cooperation combined with the commitment to improve its compliance systems, the company was sanctioned with a symbolic fine of only CHF 1. However, the company did not avoid the disgorgement of illegal profits in the amount of CHF 30 million.

In its investigations, FINMA has wide discretion to mitigate sanctions in view of the financial intermediary's cooperation during the investigation, including efforts towards reparation.

As mentioned above, in competition law the voluntary disclosure of violations can trigger immunity for the entity which is first to self-report.

2.2 When, during an internal investigation, should a disclosure be made to enforcement authorities? What are the steps that should be followed for making a disclosure?

With the exception of competition law, which requires early disclosure to benefit from statutory lenience provisions, or other ad hoc reporting obligations that may come into play, a company is generally free to determine the appropriate time for disclosure. From a strategic point of view, the factors to be considered when determining the timing are: what effect the disclosure will have on the internal investigation, if still ongoing; what form of support may be needed from the authorities regarding gathering of evidence, asset recovery, interrogations, etc.; and what will be the likely consequences of the self-reporting, such as coercive measures ordered by the investigating authority, legal assistance requests by other domestic or foreign authorities and media coverage. Once the authorities have been informed and involved, the company will lose control over the investigation and will become subject to external pressure. It is thus advisable not to rush into self-reporting, but to first get a clear view of the main facts, the persons involved and the potential legal implications.

2.3 How, and in what format, should the findings of an internal investigation be reported? Must the findings of an internal investigation be reported in writing? What risks, if any, arise from providing reports in writing?

If the investigation is ordered by the authorities, they will regularly require a written report. As for voluntary self-disclosure, there are no formal requirements. However, in practice, the submission will usually be in writing: on the one hand, for evidentiary reasons and transparency; and on the other hand, to demonstrate the highest level of cooperation and diligence towards the authorities.

Once a written report is voluntarily submitted to an authority, any related legal professional privilege is considered to be fully or partially waived and, accordingly, the report can be held against the submitting entity. In relation to other authorities or third parties, legal professional privilege may in principle still apply. However, the authority receiving the report may often be obliged to cooperate with other domestic or foreign authorities and, thus, the report may end up circulating beyond the authority to which it was submitted. The risk of media leakage and statutory or contractual obligations to protect employees or third parties should also be taken into account. It is therefore advisable that companies discuss the format, scope and handling of their reports with the authorities and external or internal counsel prior to any disclosure or submission.

3. Cooperation with Law Enforcement Authorities

3.1 If an entity is aware that it is the subject or target of a government investigation, is it required to liaise with local authorities before starting an internal investigation? Should it liaise with local authorities even if it is not required to do so?

Entities subject to government investigations are not required to liaise with the authorities, except for government investigations (i.e. by FINMA) related to certain regulated markets. In general, being in contact and maintaining good relations with the authorities can generate goodwill and potential credit at sentencing. If entities investigate in parallel to the authorities, they risk frustrating the government's fact-finding and may expose themselves to allegations of tampering with or destroying evidence. Thus, it may be advisable for entities to inform the authorities that they intend to start their own investigation. In any case, it will be crucial for the entity to carefully weigh whether it will liaise with the authorities or, rather, behave defensively. For example, an entity may be able to minimise the disruption caused by a dawn raid by agreeing mutually beneficial terms for producing evidence in advance.

3.2 If regulatory or law enforcement authorities are investigating an entity's conduct, does the entity have the ability to help define or limit the scope of a government investigation? If so, how is it best achieved?

In criminal proceedings, the prosecuting authorities determine the scope of their investigations independently, i.e. without giving the concerned entity the opportunity to comment on the extent of their investigation. However, in an investigation conducted or ordered by regulators, such as FINMA, there may be more flexibility to discuss and agree on the scope of the investigation. In particular, the most efficient methodology and the deadlines may be subject to discussion on a regular basis.

3.3 Do law enforcement authorities in your jurisdiction tend to coordinate with authorities in other jurisdictions? What strategies can entities adopt if they face investigations in multiple jurisdictions?

In recent times, Swiss law enforcement authorities have been regularly cooperating and coordinating their investigations with the authorities of other jurisdictions. Switzerland has ratified multiple treaties and implemented legislation regulating the subject matter and procedure of the cooperation between Swiss and foreign law enforcement authorities. There are numerous cases involving international cooperation (e.g. Siemens, Panalpina, FIFA, Odebrecht and PDVSA).

Where investigations into an entity are pending in multiple jurisdictions, it is beneficial for the entity to coordinate the various proceedings, and to have a strategy in place regarding all related jurisdictions. Coordination and global resolution are mostly in the its best interests, and it is necessary for the entity to continuously strategically weigh and coordinate the effects of an investigation in one jurisdiction with regard to possible developments in the other jurisdictions involved. This includes seeking legal advice in all jurisdictions concerned and contacting foreign authorities at an early stage. This will also help to explain the restrictions resulting from Swiss "Blocking Statutes" to foreign authorities (e.g. Art. 271 Swiss Criminal Code [SCC]), as well as data protection and/or confidentiality.

4. The Investigation Process

4.1 What steps should typically be included in an investigation plan?

An investigation plan should typically include the following steps:

• definition of the purpose and the scope of the investigation as well as the legal issues that shall be addressed by outside counsel during the investigation;
• establishment of an investigative team;
• evaluation of the need and, if necessary, implementation of interim measures, in particular in regard to securing evidence;
• identification, preservation and collection of relevant evidence;
• review and analysis of documents (electronic and physical);
• interviews with employees (scoping and substantive);
• reporting milestones (including the structure and format for reporting);
• communication with internal and external stakeholders and, if necessary, the authorities and the media; and
• conclusions and consequences with regard to possible sanctions against employees and the identified weaknesses in the compliance management system.

4.2 When should companies elicit the assistance of outside counsel or outside resources such as forensic consultants? If outside counsel is used, what criteria or credentials should one seek in retaining outside counsel?

The decision to engage outside counsel for the purpose of an internal investigation should be taken at an early stage, in order to give effect to legal professional privilege as early as possible. There are multiple reasons why the engagement of outside counsel could be beneficial. Apart from ensuring that the investigation is conducted independently and lending it credibility, the main purpose of such engagement is to guarantee that the results of the investigation are privileged. For cross-border investigations, it should be noted that Swiss in-house counsel do not enjoy legal professional privilege (cf. question 5.3 below).

When selecting outside counsel, entities should consider the abovementioned reasons, as well as the following: know-how and experience; their reputation for being independent; and their available resources for dealing with the investigations. With respect to cross-border investigations, outside counsel should in particular have experience in conducting large-scale investigations in multiple jurisdictions and in cross-border issues (e.g. in relation to Swiss "Blocking Statutes" (e.g. Art. 271 SCC), data protection and confidentiality law).

5. Confidentiality and Attorney-Client Privileges

5.1 Does your jurisdiction recognise the attorney-client, attorney work product, or any other legal privileges in the context of internal investigations? What best practices should be followed to preserve these privileges?

Internal investigations are covered by attorney-client privilege as long as the internal investigation is conducted by lawyers registered to practise law in Switzerland and, in certain circumstances, in EU and EFTA countries and in the UK, and the investigation is related to the attorney's typical professional activity. In a recent ruling, the Swiss Federal Supreme Court confirmed that correspondence and documents with lawyers admitted to practise in jurisdictions outside of these listed countries, in particular the US, are not protected by attorney-client privilege in Switzerland and may be seized (decision 1B_333/2020 of June 2021). Conversely, investigations carried out purely internally, without the involvement of external attorneys, are not protected by attorney-client privilege (see below question 5.3).

While the conduct of internal investigations potentially qualifies as providing legal services, due to decisions of the Swiss Federal Supreme Court, there is uncertainty as to which activities are specifically protected by legal privilege. Caution should be applied in the case of investigations involving money laundering or banking regulatory compliance. According to the Swiss Federal Supreme Court, the work product of attorneys in an investigation is not privileged if the client was obliged by statute or regulation (i.e. anti-money-laundering regulations) to undertake the investigative measures (decision 1B_433/2017 of March 2018 and reiterated in 1B_453/2018 of February 2019). How this precedent will unfold outside of money-laundering compliance remains to be seen.

Careful planning of the investigation is required to counteract this uncertainty and to preserve privilege. The best practices to follow include:

• The scope of the attorney's engagement and the purpose of the investigation must be carefully defined at the outset of the investigation.
• Documents of a highly sensitive nature are best kept in the custody of outside counsel and are only shared on a "need-to-know" basis.
• By means of personnel or organisational measures, potentially unprotected tasks may be separated from privileged tasks, thus ensuring attorney-client privilege.
• The term "Privileged & Confidential" should only be used when appropriate.
• Companies who retain lawyers from outside the EU, EFTA or the UK must be aware that their communications may not be protected under attorney-client privilege.

5.2 Do any privileges or rules of confidentiality apply to interactions between the client and third parties engaged by outside counsel during the investigation (e.g. an accounting firm engaged to perform transaction testing or a document collection vendor)?

Third parties, such as forensic experts or accounting firms, supporting outside counsel may fall under the legal privilege of the instructing attorney if they can be categorised as a person assisting an attorney. For a third party to be equally bound by the professional rules of confidentiality, as applicable to the attorney, they must qualify as a person assisting the attorney in the performance of their duties in some form. The main requirement for privilege to be applicable is that the attorney exercises the required amount of direction and supervision.

To make sure that the third party ensures adequate confidentiality measures, and to preserve privilege, the scope of the assistance provided by the third party should be established in writing. To exercise and comply with the required amount of direction and supervision, reports to the attorney should be made on a regular basis and the attorney should be copied into all correspondence.

5.3 Do legal privileges apply equally whether in-house counsel or outside counsel direct the internal investigation?

No, legal privileges do not apply to in-house counsel when directing the internal investigation. Legal professional privilege in Switzerland is currently reserved for attorneys who are registered with the Bar Association, and does not extend to in-house counsel (see question 5.1 above).

Foreign proceedings have shown that Swiss companies may suffer procedural disadvantages due to the lack of legal privileges for in-house counsel. After numerous failed attempts to change this regulation, at present there is a parliamentary proposal to extend privilege to in-house counsel in civil proceedings. According to this proposal, attorney-specific activities of in-house counsel would be protected by legal privilege. In order to guarantee privilege, such activities must also be those that would be considered profession-specific for a Bar-registered attorney. The proposal is currently being discussed at the legislative level. It is, however, not foreseeable whether the proposal will be accepted.

5.4 How can entities protect privileged documents during an internal investigation conducted in your jurisdiction?

As mentioned above (see above question 5.3), in-house counsel are not allocated attorney-client privilege, and therefore the use of external attorneys is recommended in internal investigations. It is further recommended to follow the best practices outlined in question 5.1.

5.5 Do enforcement agencies in your jurisdictions keep the results of an internal investigation confidential if such results were voluntarily provided by the entity?

Enforcement agencies are bound by official secrecy. The disclosure of the results of an internal investigation depends on whether the enforcement agency has a duty to notify another authority of any unlawful conduct they may have become aware of. If submitted, the manner of obtaining these findings – whether voluntarily or involuntarily – is not important.

However, the disclosure of voluntarily submitted investigation results to other enforcement authorities discourages voluntary submitting and affects cooperation in the long run. Entities are torn between disclosure and criminal self-incrimination. The approach of agencies dealing with voluntarily disclosed results is not uniform. In the past, FINMA has refused requests by criminal prosecuting authorities to divulge internal investigation reports that were submitted to them on a voluntary basis. Other agencies, however, strictly follow their obligation to report. It is therefore recommended to consult with the relevant enforcement agency before voluntarily disclosing the results of an internal investigation.

6. Data Collection and Data Privacy Issues

6.1 What data protection laws or regulations apply to internal investigations in your jurisdiction?

The collection and processing of data is regulated by the Federal Act on Data Protection ("FADP"). The FADP recently underwent a comprehensive revision. The revised Act was approved by Parliament in September 2020 and will enter into force on September 1, 2023. The aim of the total revision was to adapt the existing FADP (dating from 1992) to today's social and technological developments and to bring it in line with the more recent and modern regulations in the European data protection environment (in particular, the General Data Protection Regulation ("GDPR")). While the basic principles of Swiss data protection law remain unchanged, the newly revised FADP will amend the law in a wide range of areas. The sanctions for non-compliance have also been amended and increased in the new draft. The GDPR is applicable to Swiss companies that process personal data in relation to the offering of goods or services to, or the monitoring of the conduct of data subjects in, the EU.

Due to the employer's duty of care as set out in the Swiss Code of Obligations ("CO"), the employer must ensure that the personal rights of all individuals, affected by an internal investigation, are protected and that the processing principles under data protection laws are observed. Also, employment law may restrict which employee data may be processed within an internal investigation. Cross-border disclosure of personal data is not permitted if this would seriously endanger the personality of the persons concerned, in particular if there is no legislation that guarantees adequate protection. This is especially the case for the US. In this case, such a transfer is only permitted if it is legally justified. Under the current FADP, this requirement is regularly one of the biggest hurdles in cross-border investigations, and the adequate protection of personal data has proven to be one of the most challenging, time- and cost-intensive requirements in cross-border internal investigations.

In addition, in cross-border internal investigations, the so-called Swiss "Blocking Statutes" must be observed (Art. 271 SCC). Swiss law provides that whoever, without authorisation, carries out activities on behalf of a foreign state or a foreign party or organisation on Swiss territory, where such activities are the responsibility of a public authority or public official, and whoever encourages, aids or abets such activities, shall be liable to imprisonment or to a monetary penalty. Thus, Art. 271 SCC prevents an "official act" from being performed on behalf of a foreign authority on Swiss territory, and can have the effect of blocking the collection of evidence located in Switzerland if it is intended for use in foreign proceedings. Formal interviews of employees in the course of an investigation that are carried out for a foreign investigating government, or if the work products of such interviews are later made available to the authority of a foreign state, fall under the prohibition of this provision. Under certain conditions, the competent federal department may, in individual cases, issue a permit for cooperation with the foreign state authority.

6.2 Is it a common practice or a legal requirement in your jurisdiction to prepare and issue a document preservation notice to individuals who may have documents related to the issues under investigation? Who should receive such a notice? What types of documents or data should be preserved? How should the investigation be described? How should compliance with the preservation notice be recorded?

There is no general requirement to preserve documents, unless required under specific legislation (e.g. tax or corporate law) or so ordered by an authority. International companies operating in Switzerland are often subject to the US obligation to retain relevant data as soon as a lawsuit or investigation is imminent, or when such an event can reasonably be expected. For a credible investigation and in the case of foreseeable regulatory or litigation proceedings, companies tend to issue data preservation notices. There are no formal requirements on how such notices are to be issued.

Data protection regulations may limit which data may be preserved, especially with regard to employee data; in principle, only the employee data of persons likely to have business-related information relevant to the investigation are to be preserved. Unless there are reasonable grounds to believe that the information would risk a data deletion or otherwise compromise the confidentiality of the investigation, the FADP requires that the employee be informed of the purpose of the preservation and the anticipated use of the data. Exceptions to disclosure can be found in the FADP.

6.3 What factors must an entity consider when documents are located in multiple jurisdictions (e.g. bank secrecy laws, data privacy, procedural requirements, etc.)?

Cross-border investigations can pose multiple challenges for the company as they must simultaneously comply with the laws of several jurisdictions. Substantial hurdles for Swiss companies arise from the provisions of Art. 271 SCC (see above question 6.1) or other information protection regulations (e.g. from the FADP or employment law; see above question 6.1). In addition, the provisions on the protection of manufacturing or trade secrets must in particular be observed (Arts 273 and 162 SCC). According to these provisions, anyone who makes a manufacturing or business secret available to a foreign official body is liable to prosecution. The purpose of Art. 273 SCC is not (only) to protect the owner of the secret, but to protect the overall economic (public) interests of Switzerland. The company that has ordered for the internal investigation to be conducted, as the owner of the secret, may waive its own trade secrets. In the case of Art. 273 SCC, this waiver does not per se lead to the inapplicability of Art. 273 SCC: if there is an overall economic (public) interest of Switzerland or if business secrets of a third party are involved, the disclosure of such secrets to a foreign authority is not permitted.

The scope of the application of attorney-client privilege in all the affected jurisdictions must also be clarified. The process selected for the collection, processing and transfer of data must also be handled in compliance with the legal requirements of the respective applicable jurisdictions.

Practical experience has shown that cross-border investigations require overall strategies that address legal challenges in all the countries involved. The effects of the investigation activities in one country must be continuously weighed and strategically coordinated with regard to possible developments in all other involved countries. Companies should manage expectations and inform regulators early on of local provisions that could restrict the company's ability to share information across borders (see question 6.1 above).

6.4 What types of documents are generally deemed important to collect for an internal investigation by your jurisdiction's enforcement agencies?

There are no guidelines in place that govern document collection within internal investigations: rather, this depends on the type of investigation. The forms of admissible evidence in an investigation carried out by an enforcement agency are very broad. Thus, companies are advised to collect any and all evidence deemed necessary in the course of the investigation. This may include any type of electronically stored information (e.g. emails, SMS, chats and office data), hard-copy data (e.g. policies, minutes, HR files) or lawfully obtained telephone and audio-visual recordings.

6.5 What resources are typically used to collect documents during an internal investigation, and which resources are considered the most efficient?

The resources that are used to collect and process documents depend on the scope, funding, and subject of the investigation. Over the course of a large-scale investigation, the latest scientific technology for the collection and processing of data is used. Due to the ever-increasing amount of data, modern review techniques and tools for the analysis and organisation of very large amounts of data are becoming increasingly important. They rely on statistical, mathematical and linguistic techniques to enable a more precise review. In addition to data deduplication and email threading (only the last email in the chain remains in the review), Technology-Assisted Review (TAR) is becoming increasingly important. This includes machine learning, in particular. Here, the computer learns from the evaluation decisions of human data analysts and automatically transfers decisions to the overall data volume. By means of so-called "Artificial Intelligence Clustering", the total amount of data is categorised by algorithms to recognise conceptually similar data and information and to present it visually in groups for simplified review.

It is advisable to use trained forensic specialists for the securing of electronic evidence from the outset, who ensure that the chain of custody can be presented without interruption and that the data is not altered during the securing process or during the investigation.

6.6 When reviewing documents, do judicial or enforcement authorities in your jurisdiction permit the use of predictive coding techniques? What are best practices for reviewing a voluminous document collection in internal investigations?

There are no specific restrictions regarding the use of TAR or predictive coding techniques. When conducting an investigation, the basis should always be to plan carefully and keep records of important decisions made during the review process. The data collected on a processing platform should then be reviewed based on the search criteria aligning with the objectives of the investigation. If the company intends to cooperate with investigating authorities, the search criteria implemented should be approved prior to the conducting of the review. With regard to best practices for voluminous document collections, see question 6.5.

7. Witness Interviews

7.1 What local laws or regulations apply to interviews of employees, former employees, or third parties? What authorities, if any, do entities need to consult before initiating witness interviews?

Requirements for interviews of employees arise from, among others, the provisions on employment law in the CO. The admissibility of conducting interviews and the formal and content-related parameters are limited by the employer's general duty of care. To begin with, the interview must be related to the interviewee's employment and be conducted fairly and without pressure or coercion at any time. Additionally, the employee must be informed of certain details at the beginning of the interview, such as the purpose and contents of the interview and the allegations. This ensures that the employee's right to be heard is respected and that they have the opportunity to comment on the allegations.

In May 2020, the Swiss Federal Supreme Court ruled that Art. 158 of the Swiss Criminal Procedure Code ("CPC") – which regulates the compulsory obligation to inform the charged person of their procedural rights during criminal proceedings ("Miranda Warnings") – is not applicable via analogy to witness interviews conducted in the course of an internal investigation. According to this decision, an interview transcript may be used in criminal proceedings, even without the prior granting of the "Miranda" rights. However, this lack of instruction consequently has an influence on the evidentiary value of the transcript of the interview and the statements made therein. If the company has a presumptive interest to grant its internal investigation efforts maximum weight or to submit interview transcripts in subsequent or parallel criminal proceedings, measures to increase the evidentiary weight of such transcripts should be considered (see question 7.4 below).

General data protection provisions apply to employee interviews as well as to former employees and third parties.

Formal questioning of employees in the course of internal investigations that are conducted for a foreign authority, or if work products of such interviews are later to be made available to the authority as evidence, may breach Art. 271 SCC (see question 6.1 above).

7.2 Are employees required to cooperate with their employer's internal investigation? When and under what circumstances may they decline to participate in a witness interview?

It follows from the employee's general duty of loyalty that the employee must cooperate in the clarification of the facts underlying the internal investigation. An obligation to cooperate is also derived from the employee's obligation to report all facts and circumstances of which they have become aware in the course of their employment. Based on the employer's right to issue instructions, the employer may request the employee to participate in an interview with regard to events relevant to the employer's business. However, the employer's right of instruction does not apply to former employees. Further, current employees are bound by a general duty of truth towards their employers.

However, the employee's obligation to participate and make a truthful statement is not without limitations. The employee's general duty of loyalty is limited by their own legitimate interests. Currently, whether the employee is entitled to the right to refuse to answer certain questions or to cooperate on the grounds of the right against self-incrimination has still not been clarified by the Swiss Federal Supreme Court. In special cases, the employer's duty of care towards its employee may oblige them to inform the employee of their right to remain silent.

7.3 Is an entity required to provide legal representation to witnesses prior to interviews? If so, under what circumstances must an entity provide legal representation for witnesses?

There is no general obligation to provide legal representation to witnesses prior to interviews. The question of a right to legal representation is to be decided in each individual case. A witness that is questioned as a pure source of information has neither a claim to nor a reason for legal representation. However, if there are conflicts of interest between the entity and the witness, the latter must be able to appoint an attorney. This is the case, for example, if the witness's conduct is subject to possible criminal sanctions. The involvement of an attorney can also increase the willingness of the witness to cooperate. If the witness is likely to expose themselves to criminal prosecution, the company should consider carefully whether it grants the employee legal representation.

7.4 What are best practices for conducting witness interviews in your jurisdiction?

Before an interview, the company should make the following strategic considerations:

• What is the purpose of the interview (scoping interviews vs. clarifying the role of an urgent suspect)?
• What is the intended use of the investigation results?
• Is there a possibility that criminal proceedings will be opened, and are there particularly exposed employees to be questioned?
• Is it to be expected that interview transcripts will be seized and utilised in criminal proceedings?
• Does the company have an interest in the findings of the internal investigation being incorporated into subsequent or parallel criminal proceedings?

Depending on the answers to these questions, the company may want to strategically position itself differently with regard to the reference to the right against self-incrimination, the comprehensiveness of the instruction and the recording of the interviews.

The following guidelines serve as best practices for witness interviews:

• Introduction of the interviewers and their role.
• Indication that any attorneys present represent the interests of the entity and not those of the witnesses to be interviewed.
• Purpose and background of the investigation/interview.
• Any allegations against the witness.
• Reference to the confidentiality of the interview.
• Clarification on the intended use of the information gathered.
• The witness must be given the opportunity to comment on the allegations.
• If it is deemed likely that an interviewee could expose themselves to criminal prosecution, entities should act with caution and consider carefully whether the witness should be offered legal representation and the right against self-incrimination.
• The interview should be documented in some form, and the witness must be informed about the form of documentation.

7.5 What cultural factors should interviewers be aware of when conducting interviews in your jurisdiction?

An internal investigation and, especially, an interview can be very stressful for a witness. It is therefore important that the interviewer adopt a neutral and trustworthy position in relation to the interviewee. To build trust, the interviewee must be actively listened to and should not be interrupted. This is particularly important in a predominantly hierarchical corporate structure, as is still found in many Swiss companies. Also, it should be remembered that internal investigations in Switzerland are still a new phenomenon and not many employees are accustomed to them.

Interviewees should be given the opportunity to reply to questions in their native language. It is advisable to engage translators for employees who are not native speakers of the language the interview is being conducted in, in particular given the fact that Switzerland has four official languages. This allows the interviewee to build trust, and thus the interviewer is more likely to obtain the answers they need.

7.6 When interviewing a whistleblower, how can an entity protect the interests of the company while upholding the rights of the whistleblower?

In principle, the best practices for employee interviews (see question 7.4) also apply to interviewing a whistleblower. If the whistleblower is an employee, and there are grounds to believe that the whistleblower may receive a negative reaction, then measures will need to be taken to protect the whistleblower. This includes ensuring that the identity of the whistleblower is protected and preventing retaliation against the whistleblower.

7.7 Can employees in your jurisdiction request to review or revise statements they have made or are the statements closed?

It is best practice that the interview be documented. To ensure that the witness's statements have been accurately recorded and reproduced, and are processed in compliance with data protection law, the minutes of the interview should be presented to the witness for review. This way, future disputes regarding the contents may be avoided. The company should refrain from distributing the interview notes as the investigation is confidential.

7.8 Does your jurisdiction require that enforcement authorities or a witness' legal representative be present during witness interviews for internal investigations?

There is no requirement for enforcement authorities to be present during internal investigation witness interviews. Such attendance would be highly unusual and detrimental to the purpose of the internal investigation. For details on legal representation of the witnesses, see question 7.3 above.

8. Investigation Report

8.1 How should the investigation report be structured and what topics should it address?

Elements of an investigation report do not follow mandatory rules and vary depending on the objective of the investigation. An investigation report should include the following elements:

• an executive summary;
• the background of the investigation;
• the trigger for the investigation;
• the object and purpose of the investigation and the legal questions;
• the overview of the evidence gathered and the methods used, including document analysis and interviews;
• a presentation of the pertinent facts pertaining to the core objective of the investigation;
• a legal analysis (depending on mandate);
• the conclusions regarding the core objective;
• if need be, the recommendations and next steps; and
• the exhibits referenced, which usually form part of the investigation report.

In the case of a report on an investigation pursuant to statutory or regulatory obligations, it may be prudent to separate the facts found from the legal assessment (see question 5.1 above).

9. Trends and Reform

9.1 Do corporate investigations tend to lead to active government enforcement in your jurisdiction? Has this increased or decreased over recent years?

We have seen neither a decrease nor an increase in corporate investigations leading to active government enforcement in Switzerland in recent years. One prominent case of a conviction of a company under Art. 102 SCC following self-disclosure after an internal investigation is the 2017 case involving a Swiss subsidiary of Koenig & Bauer.

9.2 What enforcement trends do you currently see in your jurisdiction?

Recently, the Swiss judicial landscape has been dominated by major criminal proceedings against former top bankers, including in connection to fraud and criminal management. Overall, criminal proceedings against companies in money-laundering and corruption cases have increased in Switzerland. Although in the first years following its adoption, Art. 102 SCC was only rarely used, over the last couple of years the number of criminal investigations launched against corporations has increased. Some of these investigations relate to prominent cases, such as the prosecutions launched against Alstom, Addax Petroleum, Petrobras and 1MDB.

In the decision SK.2020.21, issued on 15 December 2021, the Federal Criminal Court sentenced a bank to a fine of CHF 3.5 million in the context of corporate criminal liability under Art. 102 SCC. This was the first ruling by the Court on the criminal liability of a financial institution. The Court concluded that the measures required by the AML had not been implemented by the bank and, as a result, the bank was found criminally liable pursuant to Art. 102 paras 1 and 2, in conjunction with Art. 305bis paras 1 and 2 SCC.

On 27 June 2022, the Federal Criminal Court sentenced another bank to a total fine of CHF 2 million for violating Art. 102 para. 2 SCC. According to the Court, it was possible to identify alleged deficiencies within the bank between July 2007 to December 2008. These deficiencies enabled the withdrawal of the criminal organisation's assets, which was the basis for the conviction of the bank's former employee for qualified money laundering. In addition, the Court established a claim for recovery of CHF 19 million against the bank. The decision has been appealed.

9.3 What (if any) reforms are on the horizon?

A revision of the CPC is currently underway, which is planned to enter into force in January 2024. The revision also provides for changes in the sealing procedure, with the aim of accelerating it. Thus, the new Art. 248 rev. CPC provides that sealing must be done within three days, and Art. 248a rev. CPC sets a non-extendable deadline of 10 days for raising objections against an unsealing request.

The parliamentary proposal to extend privilege to in-house counsel in civil proceedings is currently being discussed at the legislative level. It is, however, not foreseeable whether the proposal will be accepted (cf. question 5.3 above).

Originally Published by ICLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.