Our analysis of what the biggest global companies in Switzerland are up to. This week: corporate funding in politics, diamond billionaire on trial and high hopes for the economy.
The siege at the US Capitol has caused Swiss companies to think twice about their associations with political parties in the US. But it isn’t the only place where Swiss companies are being dragged into politics and forced to choose between values and their bottom line.
Earlier this week, the German-language paper Tages-Anzeiger reported that US subsidiaries of Swiss companies including UBS, Credit Suisse and Novartis suspended funding of US political partiesExternal link until further notice.
UBS, one of the biggest spenders, told the paper that “following the shocking events that took place on Capitol Hill, the UBS PAC suspended all contributions to political parties and decided to review the criteria for future contributions”. Roche’s subsidiary Genentech took a slightly different spin, suspending donations to members of Congress who contested the November 6 election results.
While the companies aren’t allowed to finance US parties directly, their employees can, either as individuals or through political action committees (PAC). Last year, these four companies alone raised about $7 million for US political parties.
It’s not just the US where Swiss companies are coming under pressure to take a stand though.
This week, Swiss watchmaker Tissot joined calls from other corporate sponsors for the International Ice Hockey Federation to pull the planned world championships from Belarus over a crackdown on opposition groups. “Human rights are fundamental values which Tissot represents,” a company spokeswoman told the Swiss news agency, Keystone-SDA.
With such logic, eyes could quickly turn to Swiss companies active in China. Criticism is mounting over reports of ill-treatment of Uighur and other ethnic Muslim minorities that the US and Canadian governments have said amounts to genocide.
A study by University of Basel professor Ralph Weber, further analysed by the business paper Handelszeitung, found that there are communist party cells External linkwith hundreds of members inside Chinese subsidiaries of Swiss companies. This puts Swiss companies in a touchy situation especially given its business interests in the country. Swiss watchmakers have China to thank for helping them stay afloat in 2020. Watch exports to China increased by nearly one fifth.
So where do companies draw the line? Can companies remain innocent bystanders? Would be interested to hear your thoughts. [email protected]
What else caught my eye?
Swiss aircraft manufacturer Pilatus can continue its business activities in Saudi Arabia and the United Arab Emirates (UAE) after a court in St Gallen annulled a foreign ministry decision in 2019 to ban the company from operating in the countries. The ministry had said that the company’s support services to the armed forces in the countries were “not compatible with the [Swiss] government’s foreign policy objectives” in reference to their involvement in the civil war in Yemen.
The St Gallen judges’ reasoning? Pilatus is one of the largest employers in central Switzerland and essential to the country’s long-term security. When making its decision, the foreign minister should have taken into account “public interest considerations” such as the maintenance of Switzerland’s prosperity and independence, the court said.
Corruption trial of billionaire diamond magnet Beny Steinmetz opened in Geneva last week. The Israeli commodity trader is accused of making illegal payments to government officials in Guinea to score mining rights for the Beny Steinmetz Group Resources. Prosecutors say millions of francs from the deals have passed through Swiss banks. It’s highly unusual for Swiss courts to prosecute foreign nationals for alleged crimes committed outside Switzerland. Could the case be a sign of shifting winds in Swiss courts?
A rapid economic recovery is in sight. That’s what Eric Scheidegger, director of the State Secretariat for Economic Affairs, told the Neue Zürcher Zeitung on January 10. This was eight days before the country went into a partial lockdown amid fears of virus mutations spreading in Switzerland. The economy has suffered but it didn’t seem to put a damper on the founding of new companies – 46,842 new firms were added to the Swiss Commercial Register in 2020: an increase of 5.3% compared to the previous record year of 2019.
We’ll have to see what Scheidegger says at the end of February when the country is expected to open up again.
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