Claims of two private bankers regarding state liability passed to the Federal Criminal Court

Two private bankers are demanding compensation running into millions of francs from the Swiss government. They are accusing both the Office of the Attorney General of Switzerland and the banking supervisor of unlawful conduct. The Federal Administrative Court is passing some of the demands for compensation to the Federal Criminal Court and is dismissing the rest.

Symbolbild Privatbankiers
Photo: Keystone

The first appellant established a private bank in Zurich in 1998. In 2001, this was placed under special observation by what was then the Swiss Federal Banking Commission (SFBC). In 2003, the Office of the Attorney General also launched investigation proceedings against the first appellant, CEO of the private bank, and against an unknown party on suspicion of money laundering. The first appellant was arrested in December 2003. At the same time, the SFBC took action against the private bank under supervisory law, delegating an auditing firm to the bank as its observer. In 2010, the Office of the Attorney General brought charges against the first appellant who was subsequently acquitted by the Federal Criminal Court the following year.

Claims for compensation

The appellants are claiming that the investigation proceedings initiated against the first appellant were unjust and had been based on surveillance measures that had been instigated unlawfully. This in turn had led the SFBC to initiate measures under supervisory law and delegate an observer to the bank, they claimed. They are also asserting that the actions of the Office of the Attorney General, together with those of the SFBC and the observer, caused a loss of trust, high direct costs and ultimately the forced sale of the private bank for a price below its actual value and that they should be compensated for the damage and loss this incurred. The first appellant, who is the former main shareholder, is demanding compensation of CHF 16.17 million and the second appellant, a former shareholder, is seeking CHF 1.1 million.

Unlawful conduct not constituted
The first instance, the Swiss Federal Department of Finance (FDF) did not intervene in some of the appeals and dismissed the rest. It felt that the compensation proceedings under the Swiss Government Liability Act (GLA) were subsidiary to the special compensation provisions in accordance with the Swiss Criminal Procedure Code. The first appellant should therefore have asserted his claim for compensation as part of the criminal proceedings brought against him, assuming he was substantiating this claim with the unlawful actions of the Office of the Attorney General. Otherwise, the lower court deemed the liability conditions unfulfilled and thus dismissed the compensation appeals of both appellants.

Passing to the Federal Criminal Court
Both private bankers then appealed to the Federal Administrative Court which has now backed the decision taken by the first instance and is dismissing the appeals, referencing the fact that claims for compensation against the Office of the Attorney General on accountability grounds are to be assessed in accordance with the Criminal Procedure Code, which falls within the jurisdiction of the Federal Criminal Court. For this reason, the Federal Administrative Court is passing the claim for compensation made by the first appellant to the Federal Criminal Court for assessment. In all other respects, says the Federal Administrative Court, the assets of the two appellants were only affected indirectly by the measures taken against the private bank by the SFBC and the observer. The appellants are not entitled to any claims against the Swiss government on accountability grounds for such damage, the court continues, which is why the first instance was right to dismiss the claims for compensation in this respect.

This judgment may be appealed to the Federal Supreme Court.

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