Hospital faces nepotism allegations over IT contracts

SRF Investigativ reports that an IT department head at Kantonsspital Baden, a hospital, repeatedly awarded contracts to a company run by her daughter’s partner. The hospital has paid MDS Digital AG at least 1.7 million Swiss francs since summer 2023.

The contracts covered services and procurement for digitally controlled systems, including fire protection, video surveillance and access control. SRF says it has reviewed numerous documents, including offers, contracts and invoices.

The chief executive of MDS Digital AG is closely connected to the hospital employee: he is her daughter’s partner. The IT department head awarded him and his company contracts for existing systems and new IT applications, according to the report.

The first contract was signed at the end of June 2023, when the entrepreneur was 18. The IT department head and the daughter’s partner signed a cooperation agreement with a daily rate of 1,800 Swiss francs. Three days later, he registered his first company, MDS Manser Digital Solutions, in the commercial register. The company was newly established and had no references, according to SRF. He founded MDS Digital AG around six months later.

Rika Koch, a professor of procurement law at the Bern University of Applied Sciences, described the arrangement as “clearly nepotism”. Depending on its severity, she said, it could even constitute corruption. She said awarding contracts in such circumstances was “clearly illegal” under procurement law and could expose the IT department head to criminal penalties, including a fine or prison sentence.

Koch said officials who know someone in their family or circle of friends who could submit an offer must withdraw from the decision-making process. The IT department head should therefore have recused herself, she said. Documents reviewed by SRF show that she signed the contracts.

Public procurement law is intended to ensure that public contracts are awarded transparently, fairly, competitively and sustainably. Koch said officials must apply the principles of value for money and quality in both direct awards and procedures requiring a public tender.

Kantonsspital Baden rejects the allegations in full. In a statement to SRF, it said there were no indications of “nepotism” or “corruption” based on the facts available to it. The hospital said its cooperation with MDS Digital AG arose from a specific operational need.

The entrepreneur’s partner, who is the IT department head’s daughter, also works for MDS Digital AG. According to her LinkedIn profile, she is employed part time at Kantonsspital Baden as well, where she reports directly to her mother. The hospital said these activities had been reported in writing on time and that it had examined the arrangement without finding an impermissible conflict of interest.