Report criticises pension fund oversight

BVK, based in Zurich, is Switzerland's largest pension fund Keystone

The money in Switzerland’s largest pension fund, BVK, was mismanaged through high-risk investments and bad decisions, according to a report released by a cantonal investigating committee on Tuesday following a two-year investigation.

This content was published on October 2, 2012 minutes and agencies

The conclusion contradicts that of canton Zurich’s public prosecutor, who found in June that a corruption scandal involving the pension fund was not due to lack of regulatory oversight but to the “exceptionally influential position” held by the former head of asset management, Daniel Gloor.

Gloor was charged in 2011 with embezzlement, bribe-taking, breach of confidentiality and money laundering. His July trial was described by the Tages-Anzeiger newspaper as “the biggest corruption process Zurich has ever seen”.

At his trial, Gloor admitted to taking SFr1.2m ($1.28 million) in bribes while he was head of asset management at BVK, but said the bribes were not linked to investment decisions he made for the BVK. A court ruling is expected in his case at the end of November.

Bad decisions

The report by the Zurich canton parliamentary investigating committee found that the annual and long-term investment strategies pursued by BVK lacked a solid basis, and that the directors did not have the knowledge needed to make the decisions, yet failed to create a committee to provide knowledgeable support for strategic planning.

The report specifically criticised the current finance director, Ursula Gut of the centre-right Radical party, and three previous finance directors: Eric Honegger of the Radicals, Christian Huber of the rightwing Swiss People’s Party and Hans Hollenstein of the Christian Democratic Party.

The committee estimated that bad decisions and overly high costs paid to external contractors have cost BVK somewhere between several hundred million and one and a half billion francs.

The report charged that the Zurich cantonal government, in managing its employees’ pension fund, failed to take appropriate measures to bolster the fund in spite of signs in 2002 that it was undercapitalised. In 2008, the pension fund’s coverage ratio dropped to 81 per cent and it has not risen above 90 per cent since.


The canton Zurich branch of the Radical Party stated that findings of the report were “significant” and “shocking”, and noted that it was impossible to understand how Gloor’s “power games” remained hidden for so long. The party claimed that finance director Gut, a Radical, was responsible for helping bringing the excesses to light.


The Swiss People’s Party said that the report “shows the complete failure of the cantonal government as the highest organ of the BVK”. It said its representatives in the cantonal parliament and in the commissions had been warning about the dangers of insufficient supervisory structures “for years”.

Gloor trial

In July, the Zurich public prosecutor asked that Daniel Gloor be sentenced to six years in prison and repay more than SFr1.1 million to the BVK.

Gloor’s lawyers proposed a six-month unconditional prison sentence and an additional two years if he were to be found guilty of any additional offence in the two years following the verdict.

Gloor spent six months in jail while awaiting his trial. A court ruling is expected in his case at the end of November.

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Credit Suisse role

In September, Credit Suisse agreed to pay the canton of Zurich SFr19 million in an out-of-court settlement over miscalculations it made for the share prices of the canton’s pension fund (BVK) between 1999 and 2003. The errors were uncovered by the canton's public prosecutor during the investigation into the corruption scandal surrounding BVK’s former head of asset management, Daniel Gloor.

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