A Swiss state-owned arms company, RUAG, may have suffered a financial loss in the tens of millions of francs due to corruption, according to an investigation by the Federal Financial Control Authority. The authority discovered evidence of falsified documents, breaches of business and production secrecy, fraud, economic espionage and money laundering.
The problems at RUAG are not new. In 2016, the Financial Control Authority identified weaknesses and recommended that the company strengthen its internal regulations, as it was vulnerable to corruption. However, instead of improving, the situation deteriorated. A severe cyberattack in the same year, which stole sensitive data from the army, led to the company being split into two: the space division was separated, while the rest, RUAG Switzerland, took over maintenance and production tasks for the Swiss army.
The separation did not bring stability, as the company had five different CEOs and three finance directors in the following four years, causing unrest and disorganization. It is possible that the criminal activity of a former manager went undetected for a long time, suggesting systemic problems.
The Defense Ministry (VBS) is also under criticism. In 2019, a whistleblower warned both the Minister of Defense, Viola Amherd and the then CEO of RUAG about the fraud, but the company assured the VBS that everything was in order, a fatal miscalculation. The Financial Control Authority criticizes the VBS for not adequately reviewing RUAG’s goals and not sufficiently monitoring the company.
After suspicious deals with spare parts for tanks became public, Amherd ordered a comprehensive investigation. However, the responsibility for the missteps now partly falls on her, as she had been informed by the whistleblower and had documented the conversations with RUAG correctly. Despite this, the scandal is a setback for Amherd, who will soon leave the VBS, particularly after criticism of other expensive VBS projects.
In parliament, outrage is growing, with politicians speaking of a total failure and demanding personal consequences. The company is accused of having gone unchecked for years.
One idea from the government is to integrate RUAG completely into the VBS, as the current structure as a joint-stock company is no longer modern. Whether this concept will find a majority is open. The federal government must strengthen its control over its arms company.
The investigations reveal a dark picture: a suspected corrupt employee allegedly embezzled millions, while chaos in the inventory and unapproved disposal of federal property further problems are exposed. The company has filed a criminal complaint against the former employee, but the question remains: how could all this have gone undetected for so long?
The answer likely lies in a mix of leadership problems, inadequate oversight and a control system that has failed. The scandal will also concern Amherd’s successor. The trust in RUAG has been shaken and it will require deep-seated reforms to get the company back on track.