In recent years, a move towards transparency in the international commodities industry is becoming increasingly accepted, as is the understanding that transparency promotes good governance in developing countries and reduces risks for companies and investors.
A broad international dynamic has been created, particularly with respect to resource revenues, which exposes the cash flows between commodity companies and resource-rich countries, thereby making it much harder for individuals to embezzle state revenues in resource-rich developing countries. In its 2013 background report on commodities, the Federal Council noted that Switzerland will support greater transparency in resource revenues consistently and with additional measures.
The international context
Efforts from international civil society networks (Publish What You Pay) and the British government led to the creation of the Extractive Industries Transparency Initiative (EITI) in 2002, which today has 44 country members. The core of the EITI is the two-sided disclosure of payments by governments and businesses. EITI countries commit themselves to disclosing, in detail, the payments received from commodity companies, while ensuring that companies operating in their countries also disclose their payments. This allows the public to identify discrepancies where state resource revenues have been embezzled, and to demand the correct use of those resource revenues.
However, not all commodity-rich countries are members of EITI, and not all members are able to implement the standards. Consequently, over the past three years both the U.S. and the E.U. states, being States in which the world's main commodity production companies are headquartered, have adopted transparency laws to complement the EITI. Thus, they require resident companies to disclose all payments made to governments, regardless of whether these payments were made to an EITI country or not. Switzerland is the most important country of domicile for commodity trading companies and is well aware of its particular responsibility. The Federal Council and Parliament see the importance of Switzerland’s contribution and have therefore enacted similar provisions via the new Commodities Act (CA).
What transparency of payments means for Switzerland
The Commodities Act (CA) stipulates that any company caught by the Act must publish all payments made to governments or public companies of CHF 100,000 or more using the form TRA. Payments are understood to be the acquisitions of licenses, concessions, production sharing agreements, signature bonuses, royalties, taxes, loans, purchases, sales and any other form of transaction.
In addition to the amount of the payment, in the case of a purchase, companies must also disclose the date of the transaction, the volume and quality of the commodity or product exchanged, and must specify the exact recipient of the payment, by providing data to enable the identification of its destination (account number, bank, beneficial owner, etc.).
What transparency of contracts means for Switzerland
Companies must also provide specific information about how the contract was obtained (e.g. whether there was a public call for tenders or other), publish all contracts (licenses, off-take, swap, etc.) related to state or public entities, and link each transaction to a specific contract.
Finally, companies must specifically provide details on the identity of any intermediaries and paid lobbyists used to obtain a contract linking them to a state or public entity.
Enforcement
In this context, ROHMA ensures compliance of the transparency provisions within the Commodities Act by companies subject to its supervision. In cases of suspected violation, ROHMA may conduct an investigation to determine whether any breaches have been committed. Where ROHMA receives knowledge of breaches of the transparency regime that may have criminal implications, such information shall be forwarded to the criminal authorities.
Access to Information
ROHMA centralizes and organizes all TRA forms so as to make them accessible to the public through its database. Furthermore, ROHMA encourages academic work related to this database.