Companies and individuals are increasingly confronted with the challenge of navigating Swiss blocking statutes when trying to provide US enforcement authorities with materials based in Switzerland. Gibson Dunn & Crutcher's F. Joseph Warin, Jason H. Smith and Susanna G. Schuemann examine how practitioners can work with US authorities to address these situations.
When a foreign enforcement authority requests materials or information located in Switzerland, companies often face a challenging risk calculus: comply with the request at the risk of violating Swiss privacy laws and blocking statutes or jeopardise valuable cooperation credit. Although failure to cooperate with international enforcement authorities can result in stiff corporate penalties and the loss of cooperation credit and advantageous resolution vehicles, the prospect of violating Swiss law introduces its own set of problems. Sanctions for a violation of Switzerland's blocking statute can include both stiff monetary penalties and imprisonment of up to three years. The gravity of Switzerland's blocking statute first made waves in 1988, when a Swiss lawyer was imprisoned for 10 days after helping to draft meeting notes that he knew would be used in an Australian criminal proceeding. More recently, in 2017, Swiss authorities imposed a fine of 274,000 Swiss francs ($270,000) and a two-year probation on an in-house lawyer for providing information to the US Department of Justice (DOJ). In both cases, the Swiss Supreme Court concluded that the lawyers violated Switzerland's blocking statute.
Navigating the requirements of Swiss law and conflicting expectations from international enforcement authorities is therefore critical for any company contending with a crossborder investigation with Swiss touch points. It is critical to consult with experienced Swiss counsel to identify possible touchpoints with Swiss requirements and how to comply with them. Against this backdrop, we identify some of the more common roadblocks that can arise in an investigation involving Switzerland and how companies can best position themselves to address them.
International enforcement authorities incentivise fulsome investigations and disclosures
It is no secret that enforcement authorities in the United States and elsewhere expect robust internal investigations leading to candid disclosures of factual findings. Using a carrot-and-stick approach, companies that truncate an investigation (or fail to conduct one altogether) or withhold relevant information often face higher penalties and burdensome post-resolution requirements, such as an independent compliance monitor. Cooperation, by contrast, can result in drastically reduced fines and open the door to favourable remedies, including deferred prosecution agreements, non-prosecution agreements or even declinations.
For example, as a prerequisite for any cooperation credit whatsoever, corporate criminal defendants resolving charges with the DOJ "must identify all individuals substantially involved in or responsible for the misconduct at issue, regardless of their position, status or seniority, and provide to the Department all relevant facts relating to that misconduct." The Foreign Corrupt Practices Act (FCPA) Corporate Enforcement Policy contains a presumption in favour of declination if the company voluntarily discloses FCPA-related misconduct, cooperates fully in the ensuing investigation, and appropriately remediates the misconduct. Even if a declination is unavailable due to aggravating circumstances, such as pervasive misconduct, up to a 50% reduction off the low end of the US Sentencing Guidelines range is available to companies that cooperate.
Because Switzerland's blocking statute can stand as a significant impediment to comprehensive investigations and disclosures, enforcement authorities are willing to reward companies that find workarounds, as underscored by the DOJ's April 2019 nonprosecution agreement with Zurich Life Insurance Company Ltd. In reaching a nonprosecution agreement, the DOJ noted that the company cooperated fully by working with Swiss authorities "to waive Article 271 of the Swiss Criminal Code, which restricted the disclosures that Zurich Life could make to the Department, thereby facilitating Zurich Life's production of certain information that would have otherwise been prohibited."
The DOJ is not the only enforcer that is willing to offer favourable resolution vehicles and penalty discounts to companies that cooperate fully. In considering whether to enter into a deferred prosecution agreement, the UK's Serious Fraud Office (SFO) gives "considerable weight" to companies that adopt a "proactive approach" in their cooperation, including by identifying witnesses and the documents shown to them, disclosing account information, making witnesses available for interviews, and providing a report of any internal investigation with underlying source documents. The SFO will also seek significantly reduced penalties for cooperating companies. For example, in resolving bribery charges against Rolls-Royce, the SFO agreed to a fine of nearly £498 million ($605 million) after a 50% discount owing in part to the company's cooperation.
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