Switzerland’s Supreme Court Dismisses Demand for Transparency in Gold Import Supply Chains

Gold supply chain transparency has been a hot topic lately as organizations around the globe attempt to crack down on irresponsible mining practices. Just a few weeks ago, Switzerland’s Federal Court denied a request from a Swiss NGO for enhanced data on the origin of gold coming into Switzerland. This decision, favoring refineries and their secretive practices, ultimately ruled that the Federal Office of Customs and Border Security does not need to provide information regarding gold imports by Swiss companies, as per the previous Federal ruling.

The Federal Court’s primary reasoning behind this decision surrounded tax secrecy laws and other red tape, ultimately protecting refineries from divulging their information.

“The disputed information is covered by the tax secrecy imposed by the VAT law and is therefore excluded from the right to obtain information under the Transparency Act,” Switzerland’s Federal Court stated during a press release following the hearing.

Christoph Wiedmer, the managing director of the NGO that filed the demand, was not pleased with this response, as most can imagine. Wiedmer believes that the gold sector’s economic interests should supersede any reputational risks that Switzerland’s refineries face.

Beyond economic interests, if this demand for transparency had succeeded, we might have seen rippling effects that reduced global instances of illegal mining, child labor, environmental harm, money laundering, terrorism financing, and all the harmful practices involved in illicit gold trade. With Switzerland being one of the world’s top gold importers, refining around 70% of the world’s gold, any move to eliminate non-transparent gold imports could have substantially affected the illegal gold mining market, eventually closing down some of those harmful operations.

Despite the potential here to make a powerful impact, Wiedmer was not surprised by the court’s ruling, given the four-to-one decision. Even though Wiedmer’s organization only requested that gold importers provide quantity information and origin names, the court argued seemingly unrelated topics on taxes, monetary values, etc.

“It was hard to understand,” Wiedmer explained to SWI swissinfo.ch. “They argued this on tax secrecy. We never asked for any money or transfer values. It was just quantities of gold and the name of the commerce… We are very disappointed even though we expected it because the pressure of the economic sector was very high. They did not want to have any transparency.”

Despite the clear lack of effort on the Supreme Court’s end, Wiedmer’s NGO plans to continue pressuring refineries in Switzerland to increase transparency by voting for the passing of corporate due diligence laws, which recently failed when the Responsible Business Initiative lost in 2020.

“[I]t is high time that refineries took responsibility for their supplies and the conditions under which this gold was extracted by disclosing the names of their suppliers,” Marc Ummel, the head of raw materials at the NGO in Switzerland, explained.

Without enhanced transparency, many of these refineries are accepting illicit gold, melting it down, and essentially scrubbing it of its illegal origins so it can be sold out to the world. Ignoring transparency practices directly supports irresponsible gold mining, which means supporting child labor, high fatality rates, mercury exposure into local water sources, etc.

Given Switzerland’s long-held status as a neutral peace-maker nation, it’s surprising to many that it allows such poor transparency practices, but this issue has been going on for quite some time now.

In 2018, STP, another Swiss NGO demanding greater transparency needs in Switzerland, requested figures on gold imports from seven different companies from the Federal Office of Customs and Border Security. STP cited federal law and public interest when demanding the gold import quantities and exporter names. While Customs and Border Security agreed, a few of Switzerland’s major refineries, including Argor-Heraeus, Metalor Technologies, MKS Pamp, and Valcambi, appealed the request, elevating it to the Federal Administrative Court for similar tax secrecy purposes.

At the time, STP dropped the request but brought it back up to Federal Court in an appeal in 2022. Once again, the court denied the request based on tax secrecy laws.

“This decision shows just how far we still have to go to achieve greater transparency in the supply of gold to refineries,” Ummel stated after the recent decision.

While Switzerland’s Federal Court may not be ready to improve transparency in its gold supply chain quite yet, numerous other organizations have already made monumental strides to improve the process. World Gold Council members have pledged to release partner names following the Gold Bar Integrity Programme, and the Dubai Multi Commodities Centre joined a global effort to develop universal policies on traveling with gold in carry-on luggage.

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