The «Suisse Secrets» leaks have shaken Swiss finance to its very core. It is time to set things straight on whistleblowing, experts warn finews.com.

The «Soporific Debtor» has it in for Swiss banking secrecy, saying that it is simply a way to evade taxes. «I think that Swiss banking secrecy is immoral», is a quote attributed to him even though no-one knows who he is.

That same can't be said about his actions. The anonymous whistleblower leaked detailed information on 18,000 Credit Suisse accounts to the Organized Crime and Corruption Reporting Project (OCCRP). Since then, the international media has been reporting extensively on the data, accusing Switzerland's second-largest bank of maintaining client relationships with criminals and corrupt government heads for decades.

Severe Blow

It is a severe blow for Credit Suisse in that authorities, stakeholders and NGOs are examining the significant release of information very closely. It should also be a lesson for Swiss finance, not least about how to deal with internal whistleblowers.

«In the digital era, banks can be victims to employees with access to massive amounts of data that they can then go public with,» Thomas Wittkopf told finews.com. He is the head of Swiss Telag, which has been providing the industry with solutions that protect whistleblowers since 2004.

Patrick Krauskopf, Head of the Center for Competition Law and compliance at the Zurich University of Applied Sciences (ZHAW), has compiled a study together with Telag that will be released today at a ZHAW compliance conference in Winterthur.

Swept Under the Rug

Both experts said the issue is a hot topic. «The number of disclosures has risen by 60 percent since the start of the pandemic», Wittkopf says, relaying figures from Telag's anonymous services. Now disclosures are frequently about abuse and mobbing when they used to be about price agreements, expenses, and salary fraud - or individuals and companies providing undue advantages to suppliers. The probability of an embarrassing public leak has increased dramatically even though, officially, Switzerland has swept the whole issue under a government rug.

In 2020, an initiative to create a whistleblowing standard failed in the lower house of parliament. Swiss courts continue to decide whether it constitutes a form of violation of a company's internal statutes. A high risk for any whistleblower.

Government Steps On Way

«The issue of whistleblowing was buried by Swiss lawmakers a year and a half ago», accuses compliance expert Krauskopf. But the country won't always be able to go it alone. In the medium term, internationally active Swiss companies won't be able avoid the EU's whistleblowing guidelines implemented at the end of 2021 in all member countries.

«A form of EU acquis for cross-border business would solve the issue of legal uncertainty», Krauskopf says. In the meantime, parliament has again expressed interest in the matter, he noted, after a parliament member filed another motion on it in December.

System Abuse

Krauskopf said that companies need standardized regulation for whistleblowing. «We advise building a compliance platform for all international subsidiaries» he added. Both experts see a strong increase in interest for consulting services related to whistleblowing. Investors have little patience for white-collar crime and tolerating it clearly falls foul of governance requirements. «But there is a deep-seated fear that a whistleblowing system could be abused by employees.»
 
Public institutions give whistleblowers a direct channel to the board of directors at the same time that the finance sector looks at the whole thing like some book with seven seals, Wittkopf observes.

«Even finance is now acknowledging that they have to have structures in place to protect themselves and deal with whistleblowing securely and safely.»

Offenders No Longer Safe

The experts say two questions come up when discussing the issue of «Suisse Secrets»: «Is finance legally compliant and how can matters be strengthened for whistleblowers to act legally?»

The whistleblowing issue could be avoided if there were structures and effective mechanisms to protect them and these were internally available and publicized. Clear standards as to how companies should be effectively managed have recently come into force.

This all could have a positive effect if one were to follow Krauskopf's thinking. It would raise the threshold for criminal acts and a company's culture would become more open and transparent as a result. «Offenders would no longer be safe from being discovered. That is something meaningful for companies in that infractions are usually conducted by several people.»

And, at the end of the day, who knows whether you are sitting at the same table as the «Soporific Debtor» in the canteen.