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Defence Spending Ahead of an audit, RUAG denies 'overbilling' army

Jets flying over Alps

Are RUAG's profit margins too high? 

(© KEYSTONE )

Switzerland's arms manufacturer RUAG will report all aviation sector figures to the Federal Audit Officeexternal link in the first half of 2019, the company's chief executive said Saturday. He rejected allegations that the weapons-maker had overbilled the Swiss government.

The audit will focus on the profits made under agreements concluded between RUAG and the Swiss army, Urs Breitmeier explained Saturday to public broadcaster SRF.

In mid-December, the newspapers "Ostschweiz am Sonntag" and "Zentralschweiz am Sonntag" estimated that RUAG had overcharged the military by approximately CH40 million ($41 million) annually.

The newspapers said that the profit margins for the units dealing with the maintenance, repair and combat enhancement of jets and army helicopters were in the 30 to 35% range – a higher amount than the maximum of 8 to 10% allowed by the federal government.

Breitmeier rejected any criticism of high profit margins and comparisons to the PostBus subsidy scandal, noting that no accounting tricks had been used and no grants had been received.

  + Learn more about the PostBus subsidy scandal

There is "no profit limit for RUAG,"emphasised Breitmeier.

Swiss fighter jets and helicopters are serviced on the basis of five-year contracts with Armasuisse, the Federal Office for Defence Procurement,

Armasuisse experts who know market prices, he noted, took part in the contract negotiations.

RUAG is a technology group established from the defence companies owned by the Swiss government and has been a private stock corporation since 1999. However, the federal government is still its sole shareholder. The holding company is based in Bern.

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Big profit margins Swiss weapons maker RUAG accused of overbilling government

Swiss arms manufacture RUAG reportedly overcharged Switzerland's defence ministry tens of millions of francs over the years.

This content was published on December 16, 2018 11:47 AM


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