Switzerland's justice minister Simonetta Sommaruga is part of the country's executive body (Keystone) - Click to enlarge
Following revelations in the so-called “Paradise Papers” of questionable deals done by Swiss-based commodities companies in Africa, Switzerland’s justice minister has said that the country – historically hands-off in regulating the sector – needs new legislation to force those companies to play by the rules.
“If the sector cannot manage to stick to its own rules, then it needs state regulations,” Justice Minister Simonetta Sommaruga told the SonntagsZeitung newspaper in an interview.
Her statements came after the International Consortium of Investigative Journalists (ICIJ) published leaked documents from law firm Appleby which expose behind-the-scenes dealings of the commodities giant Glencore, based in Switzerland. The papers uncovered a deal involving an Israeli businessman which allowed the Katanga mining operation, in which Glencore holds a 78% stake, to mine copper in the Democratic Republic of Congo at a quarter of market prices at the time.
In response, Glencore said it “complies with its tax obligations in line with the laws and regulations in the countries and territories in which we operate.external link”
Pending legislation
Switzerland’s seven-member Federal Council, of which Sommaruga is a part, has sent an anti-corruption measure to parliament for consideration. It would require companies in the commodities sector to publicly reveal any payments above CHF100,000 ($100,398) per year. This, says Sommaruga, would allow citizens in countries where the commodities sector is active to know how much money their government collects from raw materials extraction.
“The anti-corruption project in parliament is a first step,” Sommaruga said, adding that it is based on new European initiatives that force the commodities sector to publish detailed reports.
The Justice Minister specifically raised the issue of bribing foreign officials, which is illegal in Switzerland. She said that more than a quarter of cases regarding such bribery in 2016 were related to the commodities sector.
Reputational damage
Switzerland has generally been willing to allow commodities companies to self-regulate on issues of financial transparency. However, Sommaruga said the investigations related to the Paradise Papers put the political sphere under pressure to act. If it does not, she warns of serious risks to Switzerland’s reputation.
While underlining it is not good to negotiate based on international pressures, the justice minister said that “it would be very damaging for our country to find itself, yet again, under fire because of certain commercial practices”.
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