Switzerland

Researcher4182: Non-defence related assets, such as real estate or basic material, are sold in a transparent way and the material to be sold is widely advertised online (5). The army operates three shops in Switzerland for the disposal of non-defence related assets.

For defence related assets, no official numbers of the numbers of disposed assets are available to the public. However, there are clear procedures as to how the disposal of such assets should be done in line with Swiss foreign and security policy. Armasuisse has been identified as the responsible agency and issues of disposal are evaluated at the stage of acquisition planning. The gross financial results of such disposals are available in the detailed budget of the Ministry of Defence.

Researcher4182: The Control Committee is the primary organ for the scrutiny of defence asset disposal. In addition, upon request of the Control Committee of the Parliament, the Swiss Federal Audit Office is charged to review and scrutinise the disposal of defence-related assets. The last SFAO audit of materiel disposal was conducted in 2007 and is publicly available. The Office stated that armasuisse overall complied with relevant procedures and legislation (including export controls) and assessed revenue management as good, but it also noted varying standards of information provision: while comprehensive information was available on some decommissioning transactions, for others only estimates were available. The assessor was also unable to find publicly available summary information on what materiel has been disposed of.

The State Secretariat for Economic Affairs is also in charge of providing licenses for the resale of the materials abroad. The granting of the licenses take into account various humanitarian, security and foreign policy elements. The sale of defence-related assets to foreign countries cannot happen without this license. Press and independent commentators have focused more broadly on weapons sales to third countries, and not specifically on the liquidation of assets by the Swiss army. A key area of scrutiny here has been whether Swiss materials are being used in conflict situations, which commentators argue is a breach of neutrality (5).

Researcher4182: While not every budget line in the MOD budget is communicated, there are no blanks in it. Press or CSOs have not recently reported on secret expenditure.

The 2015 budget of the intelligence services is just over CHF 70 million, which is below 3%, but over 1% of the overall defence budget of over CHF 6 billion (1.08%).

Researcher4182: The sub-commission of the Finance committee in charge of the Ministry of Defence has full access to the secret items of the budget of the Ministry of Defence, as mandated by the Swiss Constitution. The Control Delegation, which oversees the security services, is also granted access to confidential information. The strength of these provisions suggests that the information provided is detailed if the MPs request this.

There is no evidence in the press/CSO publications to suggest that the finance commission is not independent and has not received full clarity of the Ministry of Defence budget.

Researcher4182: Annual reports of the Swiss Federal Audit Office indicate annual audit of the intelligence services' finances.

The Defence Policy Committee and the Control Committee are provided with detailed audit reports related to the security sector and those are debated (2, 5). Moreover, the parliament has to approve the budget of the Ministry of defence on a yearly basis. Secret services are controlled on a yearly basis by an auditor on the mandate of the parliament. On some occasions additional information is requested of the Ministry of Defence, which then provides additional reporting. As parliamentarians have access to classified information, it is reasonable to assume that the information they receive is detailed.

Researcher4182: Swiss laws permit expenditure additional to the official budget in cases where funds are allocated separately by Parliament: the Swiss parliament can create an ad-hoc law for special funds when needed. This happens only with regard to large armament purchase and there is a clearly stated manner in how those are conducted.

There is lively debate and criticism of this way of proceeding. The Swiss system allows the population to conduct a referendum on such off-budget purchase. The latest one was defeated by the Swiss population in May 2014 and the government needed to cancel the proposed purchase which was to be financed by a special fund.

RESPONSE TO GOVERNMENT AND PEER REVIEWERS: Additional sources incorporated. Score revised from 2 to 4 to reflect parliamentary and public control over additional expenses, which as a result do not seem to result in increased corruption risk.

Researcher4182: There is clear parliamentary oversight and a thorough legislative process to approve extra purchases by the army. Large armament purchases, which are considered too expensive to be included in the regular budget of the army, are conducted with ad-hoc budget. The latest was the special budget regarding the acquisition of a new fighter-jet, which was an off-budget purchase. The purchase was subsequently cancelled when the people of Switzerland voted against it in a referendum in May 2014.

RESPONSE TO PEER REVIEWER 2: Even if this is the case, there is no evidence that off-budget expenditures are a frequent phenomenon. Score N/A selected as discussion in Q27 concludes that the additional expenses should not be considered off-budget due to parliamentary scrutiny.

Researcher4182: The main principle within the Swiss federal government is that of transparency: any citizen can request access to information and refusals need to be supported by a justification. The Federal Data Protection and Information Commissioner (FDPIC) is in charge of controlling the legal standards of the classification of information and can access the relevant classified information during its periodic control.

The Ordinance on the Protection of Federal Information sets out the criteria for classifying information and points to the authors of particular documents as responsible for classifying them. Detailed classification criteria are set and verified by the General Secretaries' conference prepared by the Coordination Committee for Federal Information Protection (composed of the delegates of government departments and the Federal Chancellery), and classification of documents needs to be reviewed every five years.

There are periodic controls by the Control Committee. The reports are publicly available and the findings are widely discussed in the press.

Researcher4182: Defence institutions are allowed to have financial interests in defence-related companies under Article 3 of the Loi fédérale sur les entreprises d’armement de la Confédération, in order to guarantee the armament need of the country. Legally, only companies that are active in the defence sector can be partially owned by the Ministry of defence. Such ownership is properly regulated via the Federal law on armament companies. The details and the operation of such companies are fully published following international auditing principles and their ownership by the government is publicly disclosed.

RUAG, a defence production company usually counted among the largest 100 defence companies in the world, is currently the only public company owned by the government. The sole shareholder is the Swiss Confederation; the Ministry of Defence, Civil Protection and Sport exercises shareholder rights on behalf of the government and the Chief of the Armed Forces Planning Staff sits on the company's Board of Directors. RUAG has been established under private company law and their sales, revenues and profits have been publicly disclosed in a transparent manner. Its business dealings come under regular scrutiny by the government and the press. The 2014 SFAO Annual Report stated that RUAG accounts - at least the part pertaining to asset disposals - was kept according to 'clear criteria', but also criticised the comprehensiveness of publicly available information on asset sales.

RESPONSE TO PEER REVIEWER 2: Partially agree, score changed to 3 to reflect ownership of a significant commercial enterprise with a reporting standard that an independent audit found 'clear', even if with shortcomings.

Researcher4182: RUAG, the armament company owned by the Swiss Confederation, publishes (and makes available on the website) its annual reports and is audited by one of the big 4 auditing firm (PriceWaterHouse Coopers). PwC has not only reviewed the account, it has audited in detail the consolidated financial statement of the company. Such an audit is not required by law for Swiss private companies, but has been nonetheless implemented by RUAG.

As a state-owned enterprise responsible for armaments to the Swiss Army, RUAG can also be audited by the Swiss Federal Audit Office. In 2014, the SFAO audited asset disposal processes and stated that RUAG accounts - at least the part pertaining to asset disposals - were kept according to 'clear criteria'. However, the Office criticised the comprehensiveness of publicly available information on asset sales.

Finally, RUAG's activities can also be looked at by the Swiss Parliament, as exemplified by the 2015 work plan of the supervisory committees.

Researcher4182: The Federal Personnel Ordinance prohibits unauthorised enterprise which could create a conflict of interest and requires employees to obtain authorisation for employment.

The Federal Authority is aware of the issues that unauthorised private enterprise could bring, as it has conducted audits and issued some relevant recommendations (3). In practice it seems that from a public point of view the enforcement of those principles and sanctions has some shortcomings. This can, for example, be attested to by the recent case of a computer consultant who apparently abused the system with the help of individuals within the Ministry of Defence. Media reports have also raised concern about the risk of conflicts of interest occurring within the arms industry in the allocation of offset contracts.

The legal framework forces employees of the federal state to declare any additional activities to the government. There is no mention of sanctions for unauthorised private enterprise or for failing to declare such activities, but the Swiss criminal code applies more generally to these situations (4). According to the Federal Personnel Ordinance, sanctions for non-compliance with second employment regulations vary from a fine of up to CHF 3'000 to being demoted.

RESPONSE TO GOVERNMENT REVIEWER: Score 2 maintained as no evidence of sanctions being applied could be found.

Researcher4182: The Minister of defence has publicly stated that he is committed to the fight against corruption. In 2014, the defence Minister was involved in a new initiative against corruption in sport (which in Switzerland is organized under the Ministry of defence). Following the publication of a report, the Minister publicly criticised corruption and recommended measures to act against it.

Moreover, the Chief of the Armed Force has publicly commented on the need to abide by a proper and correct conduct and to comply with existing rules. The Army's official doctrine (dating from 2007) refers to transparency as a key way to build domestic trust and connect with the civilian population. Moreover, Switzerland is a lead nation and a funder of the NATO Building Integrity programme. It also sponsors centres of excellence such as the Geneva Centre for the Democratic Control of Armed Forces, which engages in security sector reform aimed at, among other things, enhancing transparency and accountability.

RESPONSE TO PEER REVIEWER 2: Commitment is shown through policy initiatives such as the NATO Building Integrity programme.

Researcher4182: Even though corruption (particularly bribery) is considered an offence under the Swiss Military Criminal Code, there is no public evidence of any measures being taken for corruption cases in the defence sector. The known cases only involve media allegations or enquiries from members of parliament or its commissions. A government auditor has stated that this hotline is also open to members of the Defence department and that they also have received information from the Defence department, indicating some investigations are likely to have taken place. There is an ongoing internal investigation into a case involving over-payment of defence IT consultants; no information has been issued by the DDPS to date.

Both the Swiss Criminal Code and the Swiss Military Criminal Code have fines and imprisonment sanctions available against those who commit acts of corruptions.

RESPONSE TO PEER REVIEWER 1: Indeed, doubts have been expressed in the media that all corruption-related issues are being properly addressed (5, 6). However, the magnitude of these cases does not seem to warrant a 2.

Researcher4182: Whistleblowing is encouraged at various levels. The law on federal personnel contains an obligation to report wrongdoing (article 22) as well as prohibition against retaliation toward employees who do blow the whistle.

If military personnel notice irregularities, they can use the chain of command identified in regulation DR04 to solve the issue by talking to the commander or their superior about the issue. There are also hotlines (reachable by email/ phone number) provided that could help military personnel to raise the alarm: the hotline for military personnel, which could provide them support on how to react and the hotline of the military police. Furthermore, the Swiss Audit Office operates a whistleblowing desk for the whole federal government, and the Federal Office of the Police have an online corruption reporting system which preserves the anonymity of the whistleblower (4, 5).

Whilst there is no evidence of commentary on this subject in the press or by academics, there is also no evidence to suggest that whistleblowing is not taken seriously. However, in 2013 the Swiss Federal Council issued instructions prioritising internal reporting chains, placing strong emphasis on the employees' duty of loyalty and limiting their ability to report concerns publicly (they can still report to the SFAO or other authorities). The Council also decided not to strengthen the protection against retaliation following a report of wrongdoing, arguing that the regulations against unjustified dismissal needed to be reviewed in their entirety. The revision is ongoing (7, 8).

Researcher4182: Special attention appears to be paid to personnel employed in some sensitive positions. These positions are not listed, but it is implied that they are those for which a security clearance is necessary. Thorough security checks are required by law, with different levels of scrutiny according to the position the person will have. The armasuisse corruption prevention plan also identified defence procurement as vulnerable to corruption risks, but the document focuses on acceptance of gifts and corporate governance, and does not provide information regarding the selection of personnel or their time in post.

In practice overall, the recruitment process is opaque (also discussed in Q41-42) and it is hard for the public to know which measures are actually used. The Control Committee report into senior management recruitment asserted that the security checks were lax and decisions were sometimes taken before they were completed, indicating possible weaknesses in recruitment systems overall. No regulations regarding oversight and time in post could be found.

An article in the press mentions subcontractors being involved in sensitive defence deals without having been through security controls beforehand. The Ministry of defence justified this position by stating that the subcontractor in question did not having access to sensitive materials and that time constraints applied to some armament projects. (3)

Researcher4182: The army conducts a census annually which lists the number of troops in training, instruction and support, and in the reserves (due to its militia organisation and mandatory and voluntary conscription, the numbers are not pre-set). The figures have been judged accurate by the press. The number of civilian employees working on defence issues is not accurately known. This is partly because of the structure of the ministry responsible for defence (DDPS), which also deals with civil protection and sport. The DDPS website states that about 70% of its 12,000 employees are civilian (i.e. about 8,400), but it is not clear how many of those work in the defence unit.

Researcher4182: There are various salary classes outlined for the Swiss Confederation public sector employees; these also apply to non-militia army members of the DDPS. There is no indication as to which salary class a specific officer may be in, however. The Law on Personnel also mentions allowances related to place of work and specific requirements of the post, but details could not be located. Militia army members, the non-professionals soldiers, receive military pay (&quoute;Solde&quoute;) that is made public, plus a loss of earnings allowances that relates to the job they do in their civilian life, which is not publicly disclosed.

CSOs and academia have not commented on pay matters for defence personnel, while the press uses figures published by the MoD. It is assumed that this information could be accessed through the Law on transparency (see Q12B).

Researcher4182: The Swiss Confederation portrays itself as an attractive employer, evidenced through publication of various leaflets, career fairs, and through engagement with the press. This goes hand-in-hand with an efficient pay routine that is publicly disclosed (1). In Switzerland work contracts are regulated by the Code of Obligations, with Art. 323 stating that the salary is due to be paid at the end of each month. The absence of any auditing concerns, public critiques or anecdotal evidence suggests the payment system is well-established and routine.

Basic pay is non-discretionary (the soldiers' pay is stated publicly and the Law on Personnel mandates a minimum salary to be established) and soldiers are required to cover their own expenses when they are not serving or when they are temporarily released (such as during weekends).

Researcher4182: A defence official interviewed has indicated that an appointment system procedure exists. It is not made public, but the appointments are based on previous military qualifications of the candidate and include security screening, depending on the positions to be filled.

The Armed Forces Personnel office is responsible for handling the procedure and the final decision lies with the Federal Council. (2, 5)

Evidence from the 2008 Roland Nef case, where the highest ranking Swiss officer (Chief of the Armed Forces) was appointed while he was subject to a criminal investigation for domestic abuse, cast doubt on the robustness of the selection process. (4) A following audit by the Control Committee published in 2013 heavily criticized the system in place, judging some appointments &quoute;poor&quoute;. The Committee stated that in some cases of military appointments, no recruitment planning was carried out and on occasion, required assessments had not been done (although the DDPS did carry out security checks well). The information about candidates provided to department heads and the Federal Council was also often incomplete. The case was on the Committee agenda in 2015 as well. (source 6)

Score 3 reflects procedural shortcomings. No specific evidence of appointments not based on merit was found.

Researcher4182: The Armed Forces Personnel office is responsible for handling the promotions procedure.

The interviewee has indicated that military qualifications and security screening are taken into account during the promotions process. The provisions in the Swiss Federal employment law apply here as well, thus the process should not be arbitrary and should be based on a proper assessment. However, there is limited evidence concerning particular criteria of promotion and it is unclear whether the process is subject to external oversight. The Control Committee has stated that &quoute;appointments did not rigorously follow all the established procedures&quoute; especially in the Ministry of defence, where &quoute;succession planning&quoute; has been the main reason for promotion.

Media coverage mostly follows the appointment of senior personnel. The head of the various army units (air force/army) is subject to detailed scrutiny by the press. (5) Moreover, the Control Committee has the right to conduct an internal audit should they feel the need to.

Score 2 has been selected due to significant criticism of the implementation of the promotion system.

Researcher4182: The Swiss constitution (Article 59) states that military service is obligatory for all Swiss men and voluntary for Swiss women.

While there are no specific laws pertaining to bribery in conscription, both the Swiss Criminal Code and the Swiss Military Criminal Code prohibit the active and passive bribery of soldiers and military officials. Sanctions for bribery-related offences can reach up to 5 years in jail and/or a fine.

There has been no known instance of bribery related to the conscription process. The Swiss system offers numerous non-military alternatives for those wishing to avoid conscription, which further reduces corruption risk. Nonetheless, no specific policy is in place.

Researcher4182: The Swiss constitution (Article 59) states that military service is obligatory for all Swiss men and voluntary for Swiss women.

While there are no specific laws pertaining to bribery in allocation of preferred postings, both the Swiss Criminal Code and the Swiss Military Criminal Code prohibit the active and passive bribery of soldiers and military officials. Sanctions for bribery-related offences can reach up to 5 years in jail and/or a fine.

There is no recent evidence of corruption occurring in the conscription system in order to gain a preferred posting. Nonetheless, no specific policy is in place.

Researcher4182: There is no evidence of ghost soldiers in the press and there are no such precedent in Switzerland. Soldier numbers, budget and salary bands being publicly available, as well as the existence of a separate personnel department within the armed forces, lessen the risk of ghost soldiers on the payroll. Given that citizen-soldiers are also compensated for lost wages and thus employers and cantonal authorities (and not command chains) are involved, it is unlikely that it would be possible for the phenomenon of ghost soldiers to exist.

Researcher4182: Overall, personnel issues are handled by the Armed Forces Personnel Office at the DDPS.

The main source of income of soldiers is the compensation for loss of income (Assurance Perte de Gain) (1, 3). This is handled by civilians and done on a cantonal basis depending on the residency of the soldier. The chain of command is not involved.

A soldier's daily stipend is handled by the accounting department of the unit where the soldier is serving. The commander of their unit is not involved in the accounting department.

Researcher4182: There is a code of conduct that applies to any employee of the Swiss state, including military and civilian personnel. Part 5 of the Code de comportement du personnel de l’administration fédérale visant à prévenir les conflits d’intérêts et l’utilisation abusive d’informations non rendues publiques provides that employees are not to accept gifts, except those of a limited value (less than 200 francs). Gifts above this amount that cannot be refused for reasons of etiquette must be turned over to the &quoute;competent authority.&quoute; Part 6 provides that criminal misconduct is not tolerated amongst employees, and this specifically includes bribery (pot-de-vin). Breaches of the Code de comportement may result in a warning, disciplinary action, or dismissal (Part 8). In cases when breaches of the Code are also criminal offences, the provisions of Swiss criminal law (as well as military criminal law) would apply.

The Code is enhanced by the internal policy on corruption and bribery.

There are issues regarding oversight mechanisms in the general administration, however, as evidenced by recent emerging scandals concerning gifts accepted by civilian employees and interference by foreign officials in the decision making process for the new fighter jet.

RESPONSE TO PEER REVIEWER 1: Included useful information.

Researcher4182: Outcomes of public prosecutions are not generally made available to the public, however, there has been media coverage on the outcome of some of the key cases (1, 2). The latest bribery case at the SECO has been well followed, for example, and the media has largely covered the investigation by the Swiss Prosecutor's Office. In that case, the Control Committee stepped in and asked the involved department for more clarification on what happened, which exemplified the legislators' interest in ensuring that bribery cases are properly addressed.

Outcomes (court documents) of trial or criminal prosecution in Switzerland are not made public; as a result, neither are the outcome of trials involving bribery by public officials.

Researcher4182: All professionals, soldiers and civil servants of the Swiss administration are provided with anti-corruption leaflets and training on whistleblowing (1, 2). There is, however, no evidence that formal training happens on a regular basis, although the administration insist it is conducting proper awareness campaign against corruption. Anti-corruption training is not provided to low-ranking soldiers (2).

RESPONSE TO PEER REVIEWER 1: There is evidence of some formal training, therefore score 2 is more appropriate. Score 2 maintained.

RESPONSE TO GOVERNMENT REVIEWER: Additional sources taken into consideration, however, no public evidence supporting training occurring at least annually them could be located. Score 2 maintained.

Researcher4182: There is no official defence-related policy to communicate the outcomes of corruption cases to the public. If these are being handled by a civilian court (at a higher level), the court has a policy to make those public. However, courts are not entitled to publicly release outcomes of criminal cases. There are doubts expressed in the media that all corruption-related issues are being properly addressed (1, 2).

There are examples in the press of prosecutions being properly addressed, however those cases do not relate to defence (1).

Researcher4182: Facilitation payments are illegal in domestic law: undue advantage gained in exchange for performing duties is an offence in both criminal law and military criminal law (4). There is a strict policy within the Swiss administration and the Swiss authorities are engaged in raising awareness on that point to small and medium sized enterprises. However, the Swiss legislation on bribery of foreign public officials does not criminalise facilitation payments explicitly. The OECD has pushed Switzerland to be more proactive in the fight against facilitation payments, citing the surprisingly low level of successful prosecution of criminal cases related to corruption. The OECD recommends more training for prosecutors and judges on the new legal framework against corruptions. The Swiss inter-departmental working group against corruption has agreed to push for this recommendation to be successfully implemented.

RESPONSE TO GOVERNMENT REVIEWER: Gaps remain when it comes to the bribery of foreign public officials. Score 3 maintained.

Researcher4182: Due to the Swiss principle of neutrality, Switzerland is not particularly active on peace support operations. The country thus has no specific military doctrine addressing corruption in the field, despite being aware of its significance as a strategic political issue (2). However, it has to be noted that Switzerland is active in promoting the fight against corruption in its international activities: it is a key member of NATO's Partnership Action Plan for Defence Institution Building, for example, which aims at reducing corruption in the defence sector.

Researcher4182: Swiss military course material for peace support operations does not include a specific module on corruption. However, it includes training on governance and compliance, which are tools used in the fight against corruption; there are also courses on advanced Security Sector Reform, which include issues of governance and accountability. Furthermore, there is no evidence of corruption cases happening when Swiss troops have been deployed abroad.

RESPONSE TO GOVERNMENT REVIEWER: It is unclear whether the training mentioned applies to commanders at all levels and whether it tackles corruption as an issue on operations.

Researcher4182: Although the Swiss experts deployed include the International Military Police and Swiss officers deployed abroad are monitoring money transactions and budgets as part of their mission, there is no positive evidence that monitoring corruption risks in a comprehensive way is specifically included in the scope of Swiss missions abroad.

RESPONSE TO GOVERNMENT REVIEWER: Incorporated relevant information. Score raised to 2 due to some activity being present, but insufficient evidence for a higher score.

Researcher4182: Every employee of the Swiss army is subject to the Swiss law against corruption and contractors have to follow ArmaSuisse guidelines, including the ISO 9001 certificate on procurement. There is no emphasis on the specific risks that might occur during the deployment abroad, however. It has to be noted that Switzerland has a very limited foreign deployment of troops.

The LMS Lesson Compliance D/ Learning addresses general governance issue which includes corruption. It does not, however, specifically target corruption risks.

RESPONSE TO PEER REVIEWER 1 AND GOVERNMENT REVIEWER: Relevant incorporation incorporated. Score changed to 2 due to general nature of guidelines and lack to clarity as to the extent and comprehensiveness of contracting training.

Researcher4182: Private military contractors are not employed to any significant extent by the Swiss government. Evidence indicates that the only time that Private Military Contractors are known to have been used by the Ministry of Defence was for a single short-term (3 month) contract to UK firm Aegis in order to protect the Swiss embassy in Libya. Swiss special forces, DRA-10, have since taken over.

Switzerland is signatory to the Montreux Document and the International Code of Conduct for Private Security Service Providers (ICoC), both of which lay out good practices and guidelines when it comes to employing PMCs. The Document stipulates that PMCs should be subject to the criminal laws of the country contracting them and the country on whose territory they are registered and operate. It stipulates that when hiring a PMC, the state employer should ensure that the PMC has not been involved in organised crime, bribery, and corruption, and that its staff are properly trained, which includes anti-corruption training. The Document further encourages employing states to ensure that PMCs have policies against corruption. (3)However, the provisions of the Document are not legally binding, although the International Code of Conduct Association assesses PMCs' suitability to join the Code and audits their performance. (4) It is, however, unclear to what extent this is effective, particularly as standards are still being formulated. (5)

Score 2 has been selected as there does not appear to be a legal prohibition on the use of PMCs.

Researcher4182: The law on public tender and procurement initially did not apply to defence-related procurement; this exemption was seen as necessary to ensure flexibility in Swiss military acquisition policy. An interviewee suggested that, following internal pressure by some parliamentarians, the government changed its policy and since 2012, the provisions of the law do apply to defence-related materials.

The DDPS Principles for armament policy (6) do state that the law is one of the key foundations of the policy and that its principles of competition and economic efficiency apply to defence procurement, with any exemptions needing a sound justification. However, Article 3(e) of the law itself (valid as of April 2015) still states that arms and munitions are exempt from its provisions; the Ordnance on Public Procurement (5) lists specific defence-related items to which the law on procurement applies, implying that others may not be covered.

Both the Ordnance and the Law contain some clauses which can be construed to prevent corruption, such as anonymity of offerents and collective assessment of bids.

ArmaSuisse is in charge of the acquisition policy of the DDPS; acquisitions are carried out following a sets of DDPS internal policies in line with international standards. The Ordnance on federal procurement mandates internal audit bodies to ensure compliance with its rules. Parliamentary oversight is provided by the Control Committee and the Defence Policy Committee; the SFAO carries out procurement audits in all branches of the defence department, assessing, among other issues, compliance with laws and policies.

RESPONSE TO GOVERNMENT REVIEWER: Score 3 maintained as score 4 would require comprehensive anti-corruption clauses and evidence of extensive oversight over exemptions to general procedures. We note that Members of Parliament have access to classified information and are overall very active in overseeing the federal government, thus it is likely that they also control classified procurement.

Researcher4182: Armasuisse, the agency responsible for defence procurement, has a clearly defined concept and policy for the acquisition of new materials encompassing procurement (including needs assessment and the process of contracting), maintenance and disposal of assets, and detailing responsibilities of particular bodies. (5)

Government documents and policies show that the Federal Council initiates the procurement cycle by proposing a special budget to Parliament based on the needs of the Ministry of Defence. It also discloses which relevant assets it needs to dispose of. Once parliament approves the project (after an open debate), ArmaSuisse openly publishes the tender on the official tender website of the Swiss government and in the government gazette. SIMPAP invitations to tender includes documentation regarding all specifications of a proposed project. Without a registration, a user can access general information about the topic of an invitation to tender (e.g., deadline for submitting offers and the basic item or service being requested, but not details about quantity or technical specifications for the project). The website also provides information about contracts awarded.Once suppliers have been selected, the government goes ahead with the purchase. It has to be noted that not all the purchases are disclosed to the public, only those of significant importance.

Researcher4182: Parliamentary oversight over defence procurement processes is carried out by the Control Committee, which is seen as independent and whose reports are public. The Committee comprehensively audited defence procurement in 2007. Key findings of the audit were that acquisition processes are too long, their organization is too complex, acquisition plans sometimes lack coherence, the quality of items is sometimes too preponderant and the procurement cycle has room for improvement. Since that audit, the government has included more defence-related items in its law on procurements by formulating the &quoute;Ordonnance Federal sur les marchés publics&quoute; in October 2012 (the 4-year reaction period is considered standard under the political system in Switzerland).

As MPs have access to classified information, it is likely that they also provide oversight of classified procurement.

The Swiss Federal Audit Office also oversees defence procurement. In 2012, the SFAO audited a procurement platform, and its 2014 annual report shows that it carried out 3 audits of procurement in the DDPS in that year. SFAO reports are publicly available and there is no basis to question its independence from the government.

Internal DDPS auditing is carried out by the DDPS Inspectorate. The 2014 SFAO report announced an intention to make more use of internal audit, suggesting that it is active and of good quality.

Researcher4182: Forward plans are disclosed only for the year to come, except for large strategic acquisitions and general armament trends (such as fighter jets). For latest Gripen fighter jet, for example, the process started in 2008 and 2009 when the Ministry of defence initially tested the available models. The contract was in negotiation until November 2011, when the government took the decision to acquire the Gripen and to fund it not via the regular acquisition budget, but with a special law (the 'Gripen law').

Large arms acquisitions are debated and authorised by Parliament and these debates are public. There is also a formal policy from the Ministry of defence to release defence-related purchase (5), and the procurement law (article 24) states that tendering and contracting shall be published (some defence articles, however, may be exempt). (7) For example, the DDPS organises briefings and 'orientation days' for industry with a view to disseminate armament plans (4); information is also available through the tender portal and DDPS publications.

The details of new acquisitions are audited and approved by the Control Committee on a yearly basis; most of the reports are published. Purchase archives are available online and as of November 2014, they go back to 1990.

Researcher4182: ArmaSuisse follows the general procurement rules of the Swiss governments. There is an integrity clause in the general conditions and every company that does business with the government is required to accept this as part of its terms of service. The government does not require companies to have full compliance programs in place, however.

There is also no evidence that the government has distinguished between companies based on integrity: neither the procurement law nor ordnance mention integrity as a criterium for decision making.

RESPONSE TO GOVERNMENT REVIEWER: Score 2 maintained. It could not be confirmed that the standards applicable to the DDPS amount to a requirement that companies have compliance programmes, or that they require the same of their supply chain.

Researcher4182: Procurement processes are based on the government's Security and Defence Policy (SIPOL), which is publicly available and debated in Parliament (see Q3), as well as modernisation plans of the army. In the latest defence and Security Policy, section 5.2.2.5 of the report discuss the materials to be used for the strategic vision of the army. In the report, the Ministry of defence shows that the Swiss IT infrastructure might be vulnerable to cyber-attacks, for example. In response to this strategic threat, the Ministry of defence decided to acquire an entirely new IT infrastructure in 2014 that would be better suited to protect the army's IT infrastructure.

The Control Committee is in charge of overseeing these purchase processes on an annual basis (4). The DDPS defines its armament policy at the beginning of the year based on available budget and the needs of the army; this policy is openly published on the Ministry of Defence website.

RESPONSE TO PEER REVIEWER 1: The focus of the question is on whether flow from requirements identified in the strategy to procurement decisions can be shown, and on whether the strategy is public and has been robustly debated. This has been demonstrated. However, agreed that it is not clear whether audit verification of this process is regular and robust. The score was lowered to 3.

Researcher4182: Strategic requirement are defined as part of the security and defence policy (SIPOL). The various branches of the army also have an 8-year planning horizon regarding materiel that they will need in order to successfully conduct their activities. The process of setting and quantifying requirements is scheduled prior to parliamentary authorisation and tendering in the acquisition process. (7)

The armament policy of the Ministry of Defence includes the reasoning as to why particular purchases are necessary and evidence that it is based on a coherent strategy and policy. For example, following an identified higher threat of cyber-attacks, the government is now in the process of acquiring a new calculus center to provide a more powerful and secure IT infrastructure to the Swiss army (5). Commentators have been focusing their criticism on the strategic development of the army rather than the armament purchase that follows. (3)

Researcher4182: Procurement conducted by ArmaSuisse is ruled by the federal Law on Public Procurement, and the Law states that competition is one of the key principles of state procurement. Official documents (the Law and the Ordnance on procurement) identify four types of acquisition processes: Open procedure, Selective procedure, Invitation procedure and Negotiated procedure. Only the negotiated procedure is not open to competition, and this procedure is only held valid for small scale purchases of less than CHF 50'000. There are no statistics as to how many procurements are single-sourced, but due to the relatively large numbers normally being at issue in military procurement, the value of single-sourced deals is estimated to be less than 10%. A 2012 analysis of single-source procurement in the press has pegged the average proportion on single-sourcing at 7-8% of purchases above the threshold of CHF 230,000 across the federal government.

The latest criticisms in the press about the procurement scandal concern the acquisition of new push-bikes by the Swiss army. The army expressed its preference for a company before the parliament approved the acquisition and without formulating a proper call for tender. The Ministry of defence denied the accusation and the processed resumed to normal at the end.(3)

RESPONSE TO PEER REVIEWER 2: Agree. Score 3 selected to reflect uncertainty over the value of single-source procurement.

Researcher4182: The Ordnance on procurement (article 50) states that those evaluating tender bids cannot be connected to bidders. The members of the boards who are federal employees need to abide by the laws and Code of conduct pertaining to all federal employees; however, it is not clear that all members of the boards are federal employees. The Code regulates issues of conflict of interest, bribery, and gifts and hospitality.

The tendering and evaluation process is conducted by an adjudicator within the DDPS, whose role it is to ensure that the process is fair and transparent. (7) This constitutes a layer of oversight over the board.The Swiss Federal Audit Office and the Parliamentary Control Committee provide overall oversight over defence procurement. In 2012, the SFAO audited a procurement platform, and its 2014 annual report shows that it carried out 3 audits of procurement in the DDPS in that year.

RESPONSE TO GOVERNMENT REVIEWER: Agree. Score changed to 3.

Researcher4182: Collusion is prohibited in Switzerland through the Law on cartels, which applies to defence procurement as it does to any other procurement procedures.

The Law on cartels foresees administrative sanctions (a fine of up to 10 per cent of the turnover that the offending entity achieved in Switzerland in the preceding three financial year) and criminal sanctions (fine of up to CHF 100,000) for companies that enter into voluntary collusion. Criminal sanctions could be taken place and in this case the disposition of the Swiss Criminal Code can also be used.

Should a bidder believe that they were a victim of collusion by other bidders, they can file a complaint at the Competition Commission, the relevant investigative authority. The last instance of such an investigation was in 2006 but was quickly dismissed due to lack of evidence. The Competition Commission, which was judged as independent and effective by the press, has never convicted any defence-related companies for collusion (3,4).

Researcher4182: Defence procurement staff are organised into a single professional department - Armasuisse, which is responsible for all defence procurement procedures. Armasuisse employs about 700 staff who are divided into 4 'competence sectors', which suggests that staff possess the knowledge they need to manage procurement processes effectively. (3, 4) No reports of staff shortages were found.

An ArmaSuisse representative has indicated that procurement staff are subject to ISO 9001 regulations (which establish standards of corporate governance and audit), meaning they are properly trained and empowered to ensure that suppliers meet their obligation; however, no concrete evidence of training was found. The General Terms of Service for goods and services contracts (applicable to defence procurement as well) give procurement staff the authority to perform inspections of goods and services, impose pre-determined fines and terminate contracts if the supplier does not fulfil their obligations.

Researcher4182: The Law on public procurement states that procurement decisions can be appealed to the Federal Administrative Court; decisions of the Court can in turn be appealed to the Federal Supreme Court. For complaints related to collusion, companies can resort to the Competition Commission. The Comco will then open a preliminary investigation and if there are grounds to go further, they will open a formal investigation that will then presented to the Federal Administrative Tribunal.

The press has reported on cases where complaints have been made, although in non-defence related matters - the most recent case concerned the acquisition of new trains by the state-owned train company CFF. There is no evidence that companies are unhappy about the current process, the actions of the COMCO, or that they faced discrimination due to having used the procedure. However, as no specific clauses protecting companies against discrimination following complains are in place, score 3 has been selected.

Researcher4182: Both individuals and companies can be punished for corrupt practices. Heavy fines and imprisonment (5 years maximum) are options available to the judiciary under the Swiss penal code, Art 322. If a company can be shown to not have introduced reasonable measures that could have prevented corruption, it can receive a fine of up to CHF 5 million.

When proven guilty, perpetrators of corruption have been properly punished with the appropriate sanctions; however the cases of corruption are rare. In 2011, there were 11 cases of proven corruption in Switzerland. (3) There is no recent evidence of application of sanctions in the defence sector . However, the SECO's corruption case saw the arrest of individuals both at the supplier of IT services and at the SECO itself. The individuals will remain in custody until the conclusion of the investigation. (4)

Researcher4182: Offsets contracts are generally provided to Swiss companies by Armasuisse. The government, via ArmaSuisse, is in charge of overseeing and controlling the offset contracts.

Companies wishing to bid have to abide by the integrity clause of the Swiss Confederation. The Industrial Strategy governing offsets calls for standardised procedures to be established in order to enhance transparency, and calls for 'timely and transparent' information on offsets to be released to stakeholder groups. However, there are no direct references to anti-corruption due diligence or contract monitoring with the aim of preventing corruption.

The Armasuisse Factsheet on offsets places 'operative control' of offsets and auditing of contract fulfilment with the Offset Office in Bern, established in cooperation with suppliers. The establishment of the Office followed a 2007 report from the audit office, which questioned the soundness and efficacy of offset deals.

The defence Committee can also investigate whether the process is conducted properly. In the case of the Gripen fighter jet, the defence Committee conducted an investigation into allegation of corruption by Saab, the maker of the Gripen, via offset contracts. The commission concluded that there was no corruption in Switzerland with regards to this special armament purchase. However, the Gripen acquisition process also prompted more critique of the offset process, with stakeholders including parliamentarians and the former director of the Offset Office criticising lack of transparency in the process (including lack of clarity as to what conditions contracts had to fulfil to count as offsets) and pointing to low efficacy of the Offset Office, some of whose senior employees work only part-time.

RESPONSE TO PEER REVIEWER 2: Score changed to 1 to reflect lack of corruption-related due diligence and doubts regarding effectiveness of oversight.

RESPONSE TO GOVERNMENT REVIEWER: Score 4 cannot be awarded on the basis of possible future improvements in performance. Score 4 would also require concrete due diligence processes which could minimise corruption risks in offset contracts. Score 1 selected.

Researcher4182: In Switzerland, the amount of business that is generated by offset contracts is protected - companies are not obliged to disclose their revenue to the public (2). It is up to the concerned companies to publish the figures. The government makes public the overall amount of the offset contracts on their website and provides some information on selected contracts on the Armasuisse website. (4) However, no specific details are available (3). There is no legal basis for the disclosure of such information.

In the 2014 armament program, the total value of offset contracts is estimated to have been CHF 461 million. The total armament program was budgeted for CHF 771 million (3).

RESPONSE TO PEER REVIEWER 2 AND GOVERNMENT REVIEWER: Agree. The score appears to sit between 1 and 2; 2 was selected as information on offset contracts is available in annual reports.

Researcher4182: Offset contracts are mostly subject to the same level of competition as the main contract. While offset contracts in Switzerland are not subject to the EU rules on competition, the Federal Council has issued a set of policies that have to be followed and which stipulate free competition between the different companies wishing to participate in those contracts and not structural or regional policy should influence the decision process. The Industrial Participation Strategy states that Swiss companies participating in offsets need to be able to compete internationally.

However, coverage of the offset agreement on the potential acquisition of the Gripen fighter jet suggests the distribution of offset contracts between particular Swiss areas. The foreign providers of the fighter jet, Saab, were responsible for selecting the companies for the offset contracts related to the production of the jet. The Federal Council was informed of the selected companies but neither Saab nor the Federal Council released the names of the selected companies, making it difficult to assess the selection criteria. (3, 5, 6)

Researcher4182: No publicly available evidence re. this issue could be found. An ArmaSuisse representative has indicated that the agency does not normally deal with agents, but directly with the relevant company when they are Swiss-based. Foreign companies who wish to sell materials to Switzerland have to declare their use of agents to ArmaSuisse before the procedure starts. Little information is available regarding the use of agents however, and there has been no evidence that agents have been used in Switzerland. There has been also no known audit of the use of agents by the Ministry of Defence.

RESPONSE TO PEER REVIEWER 2: Agree. Score changed to 2 due to lack of direct control and lack of publicly available information.

Researcher4182: Major arms deals such as the procurement of a new fighter jet are heavily scrutinised by the Parliament. Every political party took part in the debate surrounding the necessity of the acquisition, and there have been more than 80 press releases from political parties on the fighter jet since the Ministry of defence decided to acquire them in 2011. (2)

In order to conduct such special purchases, the parliament usually adopts a special budget. The Ministry of Defence is required to submit detailed information on the technical and financial aspects of the deal as part of the budget process. (1, 2). However, such complex scrutiny does not happen for every large purchase. The circumstances surrounding this particular purchase was triggered by the Swiss Parliament elaborating a new law to allow for a special financing of those fighter jets. When purchases happen within the regular budget of the army, the level of scrutiny is the same as for other purchased items.Therefore, score 3 has been selected.

Researcher4182: The government encourages companies to adopt strict codes of conduct and ethics against corruption, following recommendation by GRECO, however it does not formally require such policies to be expanded to the sub-contractors and subsidiaries. The General Terms and Conditions, applicable also to defence procurement contracts, stipulate the main contractors' duty to ensure subcontractors' compliance with employment law, but there is no similar clause for corruption issues.

Sub-contractors have been required to sign an integrity clause since April 2014. Failure to comply with this policy will generate a fine equal to 10% of the amount of the contract but to CHF 3'000 minimum. There is no evidence that contracts have been enforced on the subcontractor of the main contractor or on the subsidiaries however.

RESPONSE TO GOVERNMENT REVIEWER: The evidence doesn't show that the government requires contractors to ensure that sub-contractors have anti-corruption programmes. It is also unclear to what extent the law applies to non-Swiss subsidiaries. However, the score has been raised to 2 due to the inclusion of 'integrity clauses' in the contracts.

Researcher4182: Switzerland's purchase are derived from various strategical decision, including the security and defence policy (SIPOL) as well as by the needs of the troops. (5, 6)

However, Switzerland shows a tendency to purchase from politically similar countries: the neutrality of the country supplying the material can be considered important, for example. Media coverage indicates that during the recent fighter-jet acquisition process, several parliamentarians and officials from the Ministry of Defence favoured the Gripen fighter jet over the Rafale because of Sweden's strong neutrality tradition in comparison to France, even though it was initially unclear that the Gripen fulfilled all requirements (3, 7). Although it is a factor, this does not appear to have been the decisive one as the Ministry of defence argued that the Gripen presented best value for money compared to other candidates, such as the Eurofighter jet (4) - and the Gripen purchase was eventually cancelled due to a referendum.

It has to be noted that Sweden exerted some pressure on the Swiss administration in order for the jet fighter to be accepted. Documents released in the press shows that the Ambassador of Sweden was personally involved in lobbying for the Gripen fighter jet deal (1, 3).