The Swiss Commodity Market Supervisory Authority (ROHMA) is an institution under public law with its own legal personality. It is responsible for implementing the Commodities Act. As an independent supervisory authority, ROHMA, through the supervision and regulation of commodity production and trading companies, contributes to the reduction of the resource-curse and enables the mobilization of resources for development and poverty reduction in commodity-rich developing countries. This preserves ROHMA’s reputation as well as the reputation of the Swiss commodity trading hub and thus ensures the maintenance of competitive framework conditions.
ROHMA has statutory authority over commodity extractive companies, traders and gold refineries. It grants authorization to commodity companies to exercise activities.. It ensures that supervised institutions comply with the relevant laws, ordinances, instructions and regulations and continue to meet their licensing requirements. ROHMA’s central tasks are: to prevent the entry of illegal commodities, those derived from crime or acquired through criminal practices, on the legitimate commodity market ("commodity laundering"); to ensure the transparency of payments made by all companies in the commodities sector (including commodity traders) to governments of producing countries; to enforce the due diligence obligations, thereby ensuring that commodity traders carry out no damaging business with politically exposed persons (PEP) in producing countries; and to fight aggressive tax avoidance in the commodity sector. ROHMA provides administrative assistance, enforces international sanctions, punishes bad behavior and withdraws licenses where necessary.
ROHMA's strategic goals
ROHMA's responsibilities are set out in CMSAA and CA. The legal framework gives ROHMA a degree of flexibility in the way that it operates. ROHMA's strategic goals explain how it uses this flexibility and specify the key areas that it focuses on in fulfilling its mandate. ROHMA's board of directors defines the strategic goals and submits them to the Federal Council for approval.
Corporate Governance, Code of Conduct and Protection of Whistleblowers
ROHMA has functional, institutional and financial independence. Its management structure is modern: it has a board of directors, an executive board and an external auditor under the remit of the Federal Audit Office (FAO). As a counterbalance to ROHMA's independence, it has been made accountable to and is subject to the overall political supervision of the Confederation.
It is of vital importance to ROHMA that the people who work on its behalf conduct themselves with integrity and refrain from any activity that could jeopardise its good name. The code of conduct published by ROHMA sets out strict guidelines, particularly with regard to conflicts of interest that may arise in connection with activities carried out on ROHMA's behalf. Everyone who acts for ROHMA, namely the Board of Directors and all staff members, whether employed on a permanent or temporary basis, must comply with this code of conduct.
The commodity sector, its companies and their employees are not immune to illegal or unethical behavior. In order to safeguard the sector and ROHMA’s integrity, ROHMA depends to a great extent on insider information from whistleblowers, and as such, requires the implementation of whistleblowing policies. Whistleblowers need to be protected in order to facilitate the flow of information regarding illegal and unethical behavior. In order to fulfill its mandate successfully, ROHMA has established a confidential and protected contact point for whistleblowers (data protected). In addition, the Commodities Act requires companies subject to its provisions themselves to have processes in place to protect whistleblowers, and to report suspicious transactions carried out by third parties also subjected to ROHMA.
The development of ROHMA and its legal framework
The Federal Council acknowledged the problems with the commodity sector in its "Background Report on Commodities”, and called for immediate action: “As the industry increases in size, it brings with it additional challenges that must be taken seriously, among others, in the domain of human rights and environmental protection in resource exporting countries, in the fight against corruption, and in connection with the phenomenon of the “resource curse” in developing countries. These challenges can also involve reputational risks for individual companies, and for Switzerland as a country, in particular, where the conduct of companies domiciled in Switzerland should run contrary to positions taken and supported by Switzerland in the domains of development policy, and the promotion of peace, human rights, and social and environmental standards.” The publication of this analysis was followed by an intensive public and parliamentary debate that led, in the spring session of 2013, to the conclusion of an ambitious legislative double package consisting of the Commodities Act and the Commodity Market Supervisory Authority Act. Both laws on came into force on April 1, 2014. At the same time ROHMA, which had already started being set up in January 2014, began its work.
The Commodities Act CA
The Commodities Act (CA) is the key piece of legislation that regulates actors in the commodity sector. The Act sets out the type of activities that commodity companies are prohibited from carrying out, as well as those activities which require a license or prior consent from ROHMA. The prohibitions include dealing in any way with commodities that are:
• illegal (e.g. stolen);
• obtained illegally (e.g. through corruption);
• obtained in violation of human rights or environmental norms;
• obtained contrary to internationally applicable trade sanctions; or
• obtained without due compensation being made to the country from which the commodities derive.
Companies caught by this act are also prohibited from using aggressive tax avoidance practices in any part of their business structures, and may not conduct business with politically exposed persons or trade in commodities that have been obtained from conflict zones, failed states or occupied territories without explicit authorization from ROHMA.
The Act describes the procedure for obtaining a license for commodity-related activities and sets out the duties to be met in terms of adequate organization, due diligence procedures and transparency. Supervision of companies is achieved through industry-specific audits, and further investigations are carried out by ROHMA where necessary. Also established are the criminal and civil sanctions applicable to companies or individuals who breach the provisions of the Act.
The Commodity Market Supervisory Authority Act CMSAA
The Commodity Market Supervisory Authority Act (CMSAA) regulates ROHMA’s organizational and supervisory instruments. It sets out the aims and objectives of the supervision of companies in the commodities sector, ROHMA’s procedure and powers, its structure and instruments. The law also sets out how ROHMA is financed, as well as the extent of its autonomy and cooperation with the Federal Administration and the Federal Council. In addition, the CMSAA regulates ROHMA’s public disclosure requirements in respect of the commodity sector in general as well as of its supervisory activities. The various audit mechanisms which enable ROHMA to fulfil its tasks are also set out in the Act, as are the requirements for audit firms regarding their professional qualifications and independence.
The CMSAA also regulates the investigation and sanction processes, including the operation of the watch list, the powers and procedures of ROHMA in sanctioning breaches of the Commodities Act and the withdrawal of licenses. The law deals with issues concerning cooperation, as well as with administrative assistance with Swiss and foreign authorities. Finally, the options for dealing with appeals against decisions of ROHMA are also set out in the CMSAA.