War in Ukraine - Solidarity must lead to Action

Our demands to the Federal Council and Swiss Parliament:

1. No support for the Russian war in Ukraine 

As the largest commodity trading hub, Switzerland must strictly, and in close coordination with the EU, implement the sanctions on the import and trade of Russian oil and coal.

2. Comprehensive regulation of the commodity trading sector 

As the world's largest trading hub for Russian oil, coal and grains, Switzerland must finally establish a supervisory authority for this high-risk sector. In doing so, Switzerland would be able to ensure transparency, for example, in relation to beneficial owners, i.e., the actual owners of commodity traders as well as that the commodities traded do not originate from conflict zones or countries subject to international sanctions. 

Furthermore, Switzerland must ensure that Swiss-based traders live up to their responsibility and carry out appropriate due diligence to ensure they respect human rights and the environmental standards wherever they operate. 

3. Taxing the excess profits of commodity traders

While millions of people are under threat from acute food and supply insecurity caused by rising food and energy prices, commodity traders are making record profits. Therefore, a special tax must be levied on crisis-related excess profits, such as the tax that has already been introduced in the EU and various other countries. This would make it possible for windfall profits to be redistributed to the most affected people in Ukraine and in the Global South.

4. Commitment to global food security  

Together with other countries, Switzerland must strive to ease any food insecurity in the Global South intensified by the Covid pandemic and  the Russian invasion of Ukraine. This should include providing significant contributions to internationally coordinated initiatives such as the UN "Global Crisis Response Group on Food, Energy and Finance", as well as ensuring that Swiss-based financial institutions and commodity traders do not contribute to increased volatility of commodity prices through excessive speculation.

5. Parameters for human rights-compliant foreign trade policies 

The current situation demonstrates once again the lack of clear legal guidelines in Switzerland regarding foreign trade with totalitarian regimes. Switzerland urgently needs to establish a legal basis which allows for the creation of such guidelines on foreign trade. This is another reason why, for some time now, Public Eye has been calling for a comprehensive foreign trade law (Aussenwirtschaftsgesetz). 

6. Active implementation of financial sanctions in Switzerland 

Switzerland is a particularly attractive destination for Russian oligarchs, many of whom have now been sanctioned. Therefore, the Swiss authorities, like their partners abroad, must actively and jointly with their partners, search for the assets of these sanctioned persons. Moreover, Switzerland still needs to create a task force of experts from the Federal Department of Finance, the Financial Market Supervisory Authority FINMA, the Money Laundering Reporting Office MROS, the State Secretariat for Economic Affairs SECO, the Federal Prosecutor's Office as well as the cantonal authorities, aimed at actively identifying and blocking the oligarchs' assets. The networks of sanctioned persons, such as their family members and business partners, must be included in these efforts. Otherwise, Switzerland cannot credibly engage in the international discussions on ways to confiscate assets of sanctioned individuals in accordance with the rule of law, and to use those to rebuild Ukraine.

7. Strengthening anti-money laundering  

It is well known that the same networks are often used to launder assets of illicit origin and to evade sanctions. So-called shell companies and other legal instruments play a central role in concealing such funds and their actual ownership structure. There are major shortcomings in the instruments available to Switzerland to combat money laundering and financial crime. Concretely, Switzerland needs to introduce: 

• A public register of "Beneficial Owners" (i.e., the true owners) of companies, so as to create transparency regarding the ownership structure of shell companies. This is another area in which Switzerland is lagging behind: in 2018, the EU introduced the obligation for its member states to establish such a register and the Financial Action Task Force (FATF) reviewed its corresponding Recommendation 24 in March 2022. 

• Extend due diligence requirements in the Anti Money Laundering Act (AMLA) to consulting activities related to the establishment and management of shell companies, including for lawyers. This would finally introduce obligations to ensure they cease helping oligarchs hide their assets in Switzerland. 

Our demands with respect to commodity traders: 

1. Transparency 

Commodity traders must  

• disclose their relationships with governments and state-owned businesses. This involves transparency about any business relations with Russian companies and the extent of any current business activity in Russia.  

• disclose their payments to governments and state-owned businesses as part of their trading activities.  

• position themselves publicly and clearly against the Russian invasion of Ukraine. 

2. Enhanced and comprehensive due diligence 

Commodity traders must carry out comprehensive human rights and environmental due diligence in accordance with the United Nations Guiding Principles on Business and Human Rights. The sector-specific implementation is set out in the Swiss Commodity Trading Sector Guidance as well as in the OECD-FAO Guidance for Responsible Agricultural Supply Chains.

Enhanced due diligence is imperative for business activities in, and with, countries affected by conflicts. Companies must continuously analyse the human rights impact of their business activities by means of clear and transparent processes. With regard to the current conflict, for most companies this is likely to result in a drastic reduction of their business activities or even a complete withdrawal. In this regard, companies must ensure they do not infringe on the labour rights of their employees. At the same time, they must prevent playing into the hands of the belligerent regime (e.g., by trading in grain smuggled from Ukraine), both economically and politically, as well as undermining the effect of the sanctions.  

Commodity traders must be aware of the consequences of any (business) relationship with authoritarian regimes and act accordingly. Russia profits directly from the export of fossil fuels. At the latest since the invasion of Ukraine by the Russian army on 24 February 2022, which represents a blatant violation of international law, this business contributes financially to Russia’s war effort.

3. Contributing to global food security 

Commodity traders must also contribute to ensuring global food security. This includes, mainly, avoiding the exploitation of volatile commodity prices, so as not to contribute to speculation which can drive up food prices even higher.