Below is the first in our series of publishing the 10 final administrative criminal decisions reached by SECO in Switzerland. The examples below relate to Russian and Belarusian sanctions.
The next instalment will be published on Monday.
1. Final administrative criminal decision dated 21 November 2022
Original: 2022-11-21 – I.41 – Strafbescheid
Translation: 2022-11-21 – I.41 – Strafbescheid_Translated to English
The company in question attempted to export 1,850kg of a kind of lubricant (customs code 3403) included in the list of banned exports from Switzerland to Russia. The value of the products was €17,440.
The goods were stopped by Swiss customs at Mendrisio. An investigation was commenced.
The company cooperated and admitted the breach but submitted in writing that it was unaware that the product was included on the sanctions list.
SECO accepted this evidence and undertook its assessment of the penalty based on the fact that the breach was negligent and not intentional. This distinction gives rise to significantly different penalties under Swiss law.
A negligent breach can give rise to a maximum penalty of CHF 100,000 and/or a custodial sentence of up to three months.
Given the low value of the breach, and the accepted evidence of negligence rather than intent, SECO relied upon a provision of Swiss criminal procedure whereby if a fine is of no more than CHF 5,000 then the company can pay the fine without the need for further investigation to determine the specific individuals responsible. This was said to be proportionate compared to the time and cost of a full-blown investigation.
In light of this a fine of CHF 4,500 was imposed plus costs of CHF 1,260.
Comment: while the result may be proportionate to the value of the goods, it is unclear from the final decision whether the company in question received the payment of €17,440. It may be hoped that if such payment had been received that those funds would have been confiscated.
It is also noteworthy that the investigation was commenced on 5 September 2022 and finished by 26 October 2022, with the final decision issued on 21 November. As described the defendant was able to make written submissions but no person was interviewed and no documents or other evidence was sought. The submission of negligent ignorance of the sanctions appears to have been accepted without being tested.
2. Final administrative criminal decision dated 18 January 2023
Original: 2023-01-18 – I.42 – Strafbescheid
Translation: 2023-01-18 – I.42 – Strafbescheid_Translated to English
The company in question sought to export pumps (customs code 8413.9130) to Belarus valued at €39,619.20. Such goods are prohibited from sale, delivery or export to Belarus under article 6 of the Swiss Ordinance dated 16 March 2022. The goods were stopped at Zurich airport and had been due to arrive in Belarus after first being transported through Turkey and Russia.
The company accepted the breach, but submitted that it had obtained SECO clearance when the order was first placed in January 2022, but that it had mistakenly failed to re-check the tariff code against the Ordinance at the time of export in June 2022. The company also undertook remediation measures and appointed a sanctions compliance officer.
SECO accepted that the breach was not intentional, but stated that “as a company active in international trade, it had a duty to carefully analyse the embargo ordinances imposed by Switzerland and to take the necessary measures to ensure that they were not contravened“.
As with the earlier final decision, SECO relied upon the provision whereby a fine of under CHF 5,000 could be paid by the company without having to investigate the culpability of individual employees.
SECO considered as aggravating factors the value of the intended export and the fact that “more thorough control and monitoring” was expected of such a company. Mitigation consisted of the company’s cooperation, the remediation undertaken, and the fact that the export was not completed.
In light of this a fine of CHF 2,000 was imposed plus costs of CHF 560.
Comment: The case is a noteworthy statement of SECO’s expectation of a trading company’s duty to ensure compliance. Also noteworthy is the credit received for cooperation and remediation.
While one may wonder whether an export routed to Belarus through Turkey and Russia was intended as circumvention it appears that it was the company’s own customs declaration which indicated accurately both the nature of the goods and the destination. Accordingly, it is understandable why SECO took the view that the conduct was not intentional especially when combined with the fact that the company had earlier sought (and obtained) clearance for the export.
3. Final administrative criminal decision dated 1 May 2023
Original: 2023-05-01 – I.63 – Strafbescheid
Translation: 2023-05-01 – I.63 – Strafbescheid_Translated to English
The company in question attempted to exporte a painting valued at CHF 1,500 (i.e. a prohibited luxury good) to Russia, with the painting seized by the customs office at Mülligen.
An investigation was commenced as part of which the company admitted the alleged facts. The company, however, also noted that the painting had first been shipped to Moscow on 22 February 2022 (prior to the prohibition on the export of luxury goods) but that it had been returned to Switzerland undelivered as the customer was not at home at the time of the attempted delivery. By the time of the second attempted export in September 2022, the prohibition had come into place.
SECO accepted the company’s submission of a negligent rather than intentional breach noting, however, that the company “was obliged to examine more closely whether the export of the said goods to or for use in the Russian Federation was permissible“.
SECO availed itself of the same provisions allowing a simplified investigation where a company is fined CHF 5,000 or less. A fine of CHF 700 was imposed plus costs of CHF 370.
Comment: SECO noted the early admission of fault and the company’s cooperation, as well as the mitigating circumstance that the sale (when first conducted) had been lawful and that if the customer had been home at the first attempt there would have been no breach. Also noted was the low value of the breach.
The case is, however, illustrative of the expectations of due diligence and compliance expected by SECO even on a company that “is a family business and very rarely exports to Russia“, and that even a one-off, low value breach may still be the subject of investigation, conviction and fine.
