Below is the second 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 final instalment will be published on Tuesday.
4. Final administrative criminal decision dated 15 May 2023
Original: 2023-05-15 – I.45 – Strafbescheid
Translation: 2023-05-15 – I.45 – Strafbescheid_Translated to English
The company in question sought to export a wrist watch valued at CHF275,766. The export was marked as being for a person with an address in the Russian Federation. The shipment was blocked at Geneva Airport as being potentially in breach of the Swiss prohibition against exporting luxury goods.
The company sought to argue that the sale had taken place in 2020, but could provide no evidence of this, and sought to argue that the customer was resident in Dubai, but the residency document dated several months after the attempted export.
SECO noted that the prohibition covers, “sale, delivery and export”, and so the fact of a sale in 2020 (even if that was the date) did not stop the offence having been completed by virtue of the blocked export.
SECO, however, accepted that the breach was not intentional but was rather negligent but that it was unable to determine whether the breach was the result of “non-compliance with internal guidelines by the responsible employee …, insufficient implementation of these guidelines in the internal process, absence of such guidelines, insufficient and inadequate compliance structures, lax application of internal guidelines by the employee in charge, insufficient control of that person by his or her supervisor or a combination of all of these”.
As with the other fines previously published SECO chose to use the mechanism of imposing a fine of CHF 5000 or less rather than seeking to investigate the responsible individuals. SECO imposed a fine of CHF5,000 with costs of CHF 1,280.
Comment: Given the relatively high value of the watch in question, and the reliance on evidence that was not exculpatory, the company in question may have achieved a result at the lower end of the scale of what might have been expected. Under Swiss law a negligent breach can attract a fine of up to CHF 100,000.
5. Final administrative criminal decision dated 22 June 2023
Original: 2023-06-22 – I.61 – Strafbescheid
Translation: 2023-06-22 – I.61 – Strafbescheid_Translated to English
The company sought to export 10,583.9 kg of food colouring valued at €47,000 to Russia. The goods were stopped at St Margrethen custom office and an investigation was commenced.
The company admitted the facts, but stated it “had assumed the sale of food colours to a company domiciled in the Russian Federation is permitted”. As stated by SECO: “It is not clear on what basis it came to that conclusion at the time”.
Nonetheless, SECO concluded that “the conduct of the accused constitutes imprudence in breach of duty and is to be qualified as negligent” rather than intentional conduct. SECO also noted that the “execution of the export transaction by the accused is due to a chain of unfortunate circumstances” but provides no further detail on this point.
SECO again used the mechanism of imposing a fine of CHF 5,000 or less noting that “it is hardly possible to reconstruct who ultimately authorized the transaction”. The fine was CHF 4,500 plus costs of CHF 1,260.
SECO noted the company’s co-operation and early admission of the facts.
Comment: one of the justifications cited by SECO for using the CHF 5,000 fine option and not conducting further investigations was that it would be “disproportionate in view of the penalty forfeited”. This is circular reasoning. The size of the fine should not be reason for the size of the fine.
Given that the company appears to have undertaken no due diligence or investigation of any sort before seeking to export to Russia it is, perhaps, a surprising result that SECO chose to impose the fine that it did.
6. Final administrative criminal decision dated 4 September 2023
Original: 2023-09-04 – I.49 – Strafverfügung
Translation: 2023-09-04 – I.49 – Strafverfügung_Translated to English
This document takes a slightly different format as the company in question challenged the original penalty notice of CHF 7,810 and costs of CHF 1,290, which was then subsequently upheld.
The company was the authorized consignor for 10 shipments to Russia and one to Belarus. All but one of these were stopped by customs. After the opening of the investigation a further two shipments from this company which were due to be exported to Russia were stopped.
The total value of the goods was said to be CHF 15,619.18, but six of the exports were said to have the exact value of CHF 1,000 which permits some suspicion as to the declared values. The goods were a mixture of parts for luxury branded cars, and other luxury goods such as clothing, a musical instrument and a laptop.
The company sought to argue that no offence had been committed as all that it did was transport goods within Switzerland, and that at most all that could be said was that there was an attempt to export.
SECO disagreed and stated: “In order to complete the deed, it is not required that the goods must have reached the country of destination. Since consignments of goods destined for export and delivery to the Russian Federation or, in one case, to Belarus … constitutes prohibited transport within the meaning of” the respective regulations.
SECO alleged that the company had a “duty of care of a customs declarant to check whether there are any prohibitions, restrictions or conditions in relation to a consignment of goods” and that it had an “increased duty2 due to its status as a “Authorised Consignor”. Nonetheless, SECO did not alleged intentional breach of the regulations (even for those done after the commencement of the investigation) but rather negligent breaches. SECO also concluded that the breaches were not “outliers” as 12 of the breaches took place in just five months.
SECO imposed a fine of CHF 7,810 and costs of CHF 1,310.
Comment: The clarification on SECO’s views as to what constitutes “transport” and that this can be committed even through actions wholly internal to Switzerland is to be welcomed.
The lack of an allegation of deliberate breach is perhaps surprising in the circumstances, as is the giving of credit for cooperation given that conduct continued during the investigation and the initial fine was contested.
