* Voluntary approach seen as best - government officials
* Government due to publish inquiry on sector by March
* NGOs warn of policy gaps in Switzerland
By Emma Farge
BERNE, Jan 18 Swiss officials said commodities
companies should voluntarily police themselves, rather than face
legally binding rules, as the government ponders its first set
of national transparency measures for the $20 billion sector.
Switzerland has come under pressure by other western
countries to close regulatory gaps, but many fear that strict
rules could harm the traditionally secretive business that now
accounts for nearly 4 percent of Swiss gross domestic product.
Geneva-based firms such as Vitol and Trafigura handle around
a third of global trade in crude oil by volume, and Swiss firms
also play a major role in the grains and metals markets. Canny
traders want to avoid revealing their strategies in highly
"I think the most effective way is to work with companies
and come up with voluntary principles," Yves Rossier, the
secretary of state at the Swiss foreign ministry, said on
Rossier's comments come ahead of the outcome of a government
probe, nine months in the making, after politicians raised
questions about transparency and risks of corruption in the
Switzerland, keen to avoid being stigmatised as a tax and
secrecy haven after U.S. criticism of its banks, launched the
inquiry last May and is set to provide guidance for legislators.
The Swiss cabinet in December rejected a motion, backed by
30 politicians, that would have forced mining companies and
private commodity trading houses to declare any payments made to
Marie-Gabrielle Ineichen-Fleisch, a director of the Swiss
Economics Ministry (SECO) which is working on the report, also
favoured non-binding rules.
"If we can show that voluntary measures lead to a solution,
then that is better," she said in a debate in Berne on Thursday
organised by non-governmental organisation (NGO) SwissAid.
MIND THE GAP
The voluntary approach is likely to disappoint the European
Union, which in September voted through a draft anti-corruption
law. A U.S. regulator in August set demanding rules for
European Parliament member Arlene McCarthy, who led the
discussions in Brussels ahead of the September vote, has urged
Switzerland to pass similar measures.
In a letter addressed to former Swiss President Eveline
Widmer-Schlumpf on Nov. 20 and seen by Reuters, McCarthy said
there was a need for a "level playing field" in the sector and
called Swiss legislation an "essential step towards a global
NGOs such as Switzerland's the Berne Declaration said the
voluntary approach would not be sufficient.
"As a state you always have regulation to govern every
industry, and with this complex business I don't see how you can
say it's unnecessary. The voluntary approach is what companies
have done for decades and it hasn't worked," said Urs Rybi of
the Berne Declaration.
Switzerland last July launched an investigation into a
former employee of Gunvor for suspected money laundering in the
Republic of Congo's oil sector. Gunvor said it was not itself
subject to investigation.
Rossier said that voluntary rules could prove to be more
"When you adopt regulation there is a tendency to think the
job is done and then to sit on your hands and move onto
something else," he said.
Stephane Graber, secretary general of the Geneva Trading and
Shipping Association, urged legislators to avoid putting the
Swiss trading hub at a competitive disadvantage to other major
hubs such as Singapore and London.
"Let's not forget that this is about competitive
transactions. This needs to be international, because otherwise
Switzerland will be the only one applying the rules," he said.
Another concern is cost, he said, adding that small trading
houses could struggle with additional charges involved with
complying with new Swiss legislation.
Switzerland, which is not an EU member, does not always
follow EU guidance on regulating the sector, such as last year
when it voted not to pass an embargo on Iranian oil.
(Editing by Jane Baird)