Ruag report reveals plans to bypass Swiss arms rules

A new internal report on the Ruag fraud case says the state-owned arms company intended to circumvent Swiss neutrality and weapons-export rules, deepening concerns about trust in defence spending, according to an analysis by Swiss broadcaster SRF.

The report says the case goes beyond the actions of a former senior employee who defrauded Ruag of around 50 million Swiss francs. Ruag had set up a company in South Africa for its gunpowder factory in Wimmis. Although the intended transactions did not take place, the South African company remained in operation for years, even though Ruag’s board at the time knew the proposed business would violate Swiss law.

SRF analyst Andy Müller writes that the findings point to a lack of political sensitivity at Ruag and a focus on profit. That culture may also have enabled the fraud by the former employee and other suspects.

Trust under pressure

Ruag’s current leadership has invested heavily in investigating the case, while Defence Minister Martin Pfister promised full transparency. Those responsible at the time are no longer in office. But the affair could further undermine confidence in the army and the defence ministry.

The findings come as Pfister seeks parliamentary and potentially public support for spending many additional billions of francs on the army. Some lawmakers who support the armed forces have publicly questioned whether the money would be spent responsibly. Trust had already been shaken by the fixed-price dispute over the F-35 fighter jet, Müller writes, and the Ruag case could deepen that crisis.

The revelations could also benefit opponents of easing arms-export rules ahead of a referendum on the changes scheduled for the end of November. They argue the case shows that arms exports are not scrutinised closely enough, although Ruag’s board has since stopped the planned transactions.

Ruag faces possible limits

Ruag may face tighter controls. Pfister wants to review the company’s future, including whether the state-owned arms manufacturer should continue as a joint-stock company. He has also raised the question of whether Ruag needs to do business with foreign armed forces, or whether its work could be limited to maintenance for the Swiss army.

Müller says the company could be kept on a shorter leash in future.