The Federal Court to decide if silence should remain golden in Switzerland

The Federal Court to decide if silence should remain golden in Switzerland

Judges at Mon-Repos are examining the appeal of an NGO requesting detailed access to imports of precious metal, of which Switzerland is the world's leading refiner. This move aims to conclude fifty years of political debates in this sensitive sector.

This Wednesday, the Federal Court is called upon to rule on the thorny issue of transparency concerning the approximately 2,000 to 2,800 tons of gold imported annually into Switzerland. The court was approached by the Society for Threatened Peoples (SPM), a Bernese NGO, which, more than five years ago, requested the names of companies shipping precious metals to four refineries established in Ticino and Neuchatel. These refineries refine the equivalent of 70% of the world's annual gold production. In 2022, Switzerland imported precious metals and gems amounting to 104 billion Swiss francs, including gold and silver in ingots.

In 2018, the SPM obtained a favorable decision from the Federal Data Protection and Transparency Commissioner, which, however, limited publicity by recommending the anonymization of postal codes and import locations and excluding any banking information. In response, the concerned companies - Valcambi, Metalor, Argor-Heraeus, and MKS - appealed to the Federal Administrative Court (FAC), which took three years to rule in their favor. The FAC deemed that the requested information is covered by tax secrecy as the authorities compile it for VAT application on imports, even though the Swiss Federal Customs Administration (SFCA) also compiles it for statistical purposes.

If the decision of the Mon-Repos judges turns out to be "positive," "the gold industry will no longer be able to invoke commercial secrecy," states Christoph Wiedmer, co-director of the SPM. He recalls that this year, dubious gold from Dubai or Russia, despite sanctions, has arrived in Switzerland. Several media and NGO investigations have shown that the emirates act as a hub for gold produced in violation of human rights and environmental standards, particularly in Africa.

First controversies

Controversies over the opacity of this sector have punctuated Swiss contemporary history, intertwining political neutrality, business, and protection of the financial sector. Import and export statistics of gold bars, long kept secret, were first made public in 1972 following approval from the Swiss National Bank. Statistics on the country of origin of gold were accessible for a fee, sparking no debate, while the main refineries were owned by major Swiss banks.

Read also: New controversies in gold imports to Switzerland

As the Federal Council explains in response to a motion filed 30 years ago by a socialist National Councillor, Jean Ziegler, things turned sour in 1980. In September, The Financial Times commented on these figures, mentioning trade with Iraq, the USSR, or South Africa, then under international sanctions due to apartheid. It was also suspected that Switzerland acted as an intermediary in an oil-for-gold swap between the USSR and oil-producing countries.

In response, NZZ and Der Bund echoed the anger of banking circles. They embraced these complaints, arguing that discretion takes precedence over the duty to inform. It was noted that publicity could harm the Swiss financial sector since its London competitor provided no data. Subsequently, the Federal Department of Finance, led by the socialist Willi Ritschard, put an end to the publication of data broken down by country, limiting it to the total volume of gold imported into Switzerland. This practice persisted until December 31, 2013.

Meanwhile, the issue resurfaced regularly in the Federal Chambers, concerning the gold reserves of Kyrgyzstan or sales from Saddam Hussein's family, despite being under embargo. These initiatives were all dismissed in the name of the nation's higher interests.

The transparency creed

Things changed in the 2000s when the debate on supply chain transparency emerged in the context of "blood diamonds" from conflict zones in Africa. The Swiss National Fund financed a research project leading, in 2005, to the publication of the book "Economic Relations between Switzerland and South Africa, 1945-1990" by historians Sandra Bott, Sébastien Guex, and Bouda Etemad. They noted that annual gold imports from Pretoria reached around 20 billion francs during the 1980s when the racist regime faced intense international pressure.

Then, in 2013, the Federal Council, examining the importance of commodity trading in Switzerland, issued a "baseline report." Among its recommendations was the disclosure of the origin of gold imports, a demand also made the previous year by a young socialist National Councillor, Cédric Wermuth, who has since become co-president of the party.

The recommendation was approved, and in February 2014, for the first time in thirty-three years, statistics broken down by country were published. It was observed, for example, that the United Kingdom or Togo were significant exporters of gold to Switzerland, even though they did not produce it. Where did these hundreds of kilos really come from? It quickly became apparent that these figures raised more questions than they provided answers.

In this context, the industry assures that its voluntary standards suffice to curb risks in supply chains, including in sensitive regions like the Sahel or the Amazon. Simultaneously, media and NGO investigations have unfolded over the past decade, revealing environmental damage, child labor, weak security, corruption, and funding of armed conflicts.

Finally, and this is crucial in light of the decision the Federal Court is set to make, a significant portion of problematically imported gold in Switzerland transits through third countries, notably Dubai, preventing its traceability. It is up to the judges to decide whether fiscal and commercial secrets hold more value than an increase in transparency.

*Translation by ChatpGPT

Original article by Marc Guéniat in French can be found here

Alexander Yearsley

Martello Risk is a business intelligence, risk advisory, litigation support, asset trace and supply chain audit company.

1 年

and surprise surprise they sided with the money launderers, tax cheats, conflict gold buyers and all round fraudsters.....way to go Switzerland! Every single consultant that works with these refineries should have a long look at themselves...oh and we havent even got to the good stuff yet....

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