Audit slams Swiss military contractor for suspected fraud

Fraud or mistrust: Ruag is once again under fire for its management Keystone-SDA

Swiss military technology firm RUAG MRO is supected of fraud, insufficient climate of trust, lack of transparency and a culture of error by federal auditors.

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The Swiss Federal Audit Office (SFAO) has calling for improvements in three audits published on Monday.

The SFAO examined the management and steering of RUAG MRO, possible fraud within the Swiss armaments company, particularly in relation to Leopards 1 tanks, and inventory management. The conclusions are overwhelming.

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Since the unbundling of RUAG in 2020, five managing directors have succeeded one another at the head of the armaments company. These numerous changes have hampered the establishment of stable management processes and steering.

The lack of continuity has also prevented the creation of a relationship of trust with the board of firectors. This weakness is also acknowledged by RUAG MRO.

The SFAO also criticises the Federal Department of Defense in its role as owner. The SFAO recommends that the defence ministry be more proactive once again, and that it resumes keeping minutes of meetings between the Confederation, RUAG and armasuisse. Furthermore, the objectives are assessed too optimistically.

Possible fraud

The Swiss Federal Audit Office also examined the Leopard 1 and 2 tanks. Irregularities were found in their purchase, and RUAG commissioned an external investigation from the firm NFK. This is still underway.

According to the SFAO report, there is sufficient evidence to suspect fraud. At least one former executive is believed to be involved. In particular, the Swiss government’s financial watchdog found that equipment was sold at prices well below market levels.

Transactions that were not economically justified were carried out to the detriment of the company.

In addition, there were fines and VAT arrears on business activities in Italy. The financial damage amounts to several tens of millions of francs.

Insufficient control

Inventory control is also inadequate. RUAG, which is responsible for managing the army’s stock of equipment, is said to have withdrawn equipment without authorisation in order to sell it to third parties.

Although authorised to do so, neither the army nor its logistics base carried out inspections or audits of RUAG. The SFAO recommends that they step up their monitoring of consignment stocks.

An external investigation is still in progress, so the results presented by the SFAO are interim. The SFAO points out that the presumption of innocence prevails. RUAG MRO says it is doing everything in its power to continue the cultural change.

Translated from French with DeepL/mga

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