Armament companies – Due to defects: The Federal Council wants to change the legal form of Ruag – News

• It is likely that Ruag will not be organized as a private‌ company under private law in the future. ​According to⁢ the Federal Council, ⁤this legal form is no longer suitable for the ‍defense company to carry out its⁣ tasks.
• In​ addition to other options, the reintegration of Ruag into the Federal Department of Defence, Civil Protection and Sports‌ (DDPS) is ​also being examined.

The Federal Council has decided‌ to ⁢review the legal form of Ruag MRO⁣ AG, as it announced.⁣ The federally owned arms company, which generates eighty percent of ⁣its ⁤sales through orders from the Swiss ⁣Army, is now ⁢to obtain a form of public law ‌- which is still open.

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‌ ​ Ruag generates ​eighty⁢ percent of its sales through orders from the Swiss Army.
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⁤ ​ ​ ⁤ Keystone/URS ⁢FLUEELER
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According to expert opinion,⁤ the public law institution or the special public corporation under public law, which can be designed according ⁤to the⁤ needs of the federal government, are eligible. In addition,‍ the option of reintegration‌ into the DDPS is being examined.

The Department of Defense should submit a consultation proposal to‌ the ​Federal Council to⁣ change the legal basis by the ​end of May 2025.

Failure to enforce rules

At the media conference, Minister of Defense Viola Amherd mentioned⁣ the shortcomings in Ruag’s compliance system, ie ‍in the enforcement ‍of ​rules⁤ and guidelines within the company. In February ‍2024, an‌ audit report from the Federal Audit Office (SFAO) showed discrepancies in Ruag’s deal with Leopard 1 ‍tanks. When‍ the 96 tanks were ​purchased from the Italian army in 2016, the competence and signature ‌regulations were not complied⁢ with. Furthermore, the federal government found out about the sale of the⁣ tank too late.

This investigation by the‌ SFAO ​was the reason⁤ to check if the current legal form was still suitable. A report by​ Martin Dumermuth, former director of the Federal Office of Justice, concluded that the private law ⁣ACC as a legal form Ruag ⁣MRO no longer meets ⁣today’s requirements.

The current ‌geopolitical situation requires “a more dynamic ​political control than‌ a private company is capable of,” says ‌the Federal Council’s statement. If Ruag receives a new ‍legal form under public law, ‌these legal uncertainties would be clarified, Amherd said at ‍the conference. In addition,⁢ the flow of information and the responsibilities ⁣of who decides what is then clear.

Jürg Rötheli will be the ⁤new Chairman‌ of the Board of Directors

Jürg Rötheli will be the new Chairman of the‌ Board of Directors of the ‌federally owned defense company Ruag MRO. ⁢The lawyer has been appointed by the Federal⁣ Council⁢ as successor to Nicolas Perrin.⁣ Perrins announced his resignation in⁢ February following the publication of the ‌SFAO report.‍

Defense ⁢Minister Viola Amherd ‌explained that‌ Jürg Rötheli, 61 years old, fully⁣ meets the profile of the requirements. In its ⁣message, the Federal Council⁢ specifically referred to Rötheli’s experience in managing various ⁤companies, including​ state-affiliated companies.

Rötheli was previously​ chairman of the board of ORS AG, which operates refugee accommodation on behalf of the federal government. He also operated the company ‌until last July. The doctor of law previously ⁤worked,⁣ among other things, on the executive‌ board of ⁢Swisscom.

How might compliance challenges impact the future operations of Ruag MRO AG under a new legal status?

Interview Transcript:⁢ Time.news with Defense Expert Dr. Johan Weber

Time.news Editor: Good afternoon, Dr. Weber. Thank you for joining us today to discuss the recent developments regarding Ruag MRO AG and​ its potential transition from ‌a⁣ private company to a public law​ institution. What do you make ⁢of the Federal Council’s decision to review Ruag’s legal status?

Dr. Johan Weber: Good afternoon! It’s a pleasure to be here. The ⁣Federal Council’s decision‌ is significant given Ruag’s pivotal⁤ role in ‍Switzerland’s defense ecosystem, especially considering it derives ‍80% of its sales from the Swiss Army. Transitioning to⁢ a public law framework seems to ⁣be a‍ necessary evolution reflecting ‌the needs of‌ a ⁢modern defense environment that ⁢prioritizes compliance and accountability.

Time.news Editor: You mentioned compliance and accountability. Could you‍ elaborate on how Ruag’s current​ compliance challenges influenced‌ this decision?

Dr. Johan Weber: Certainly. As highlighted in⁢ the recent audit report from the Federal Audit Office, there were serious shortcomings in Ruag’s ⁤compliance system. Issues such as ⁢improper enforcement of rules⁣ and ‍discrepancies related to the Leopard‌ 1 tank acquisition illustrate the vulnerabilities in their operational oversight. Changing to a⁢ public law ‌structure‌ could, ideally, mandate⁤ stricter governance protocols and enhance transparency in their dealings.

Time.news Editor: That leads us to the discussion about potential legal⁢ forms for Ruag. The scrutiny on whether to ‍reintegrate it into the Federal Department of Defence, Civil Protection ⁢and Sports (DDPS) seems to be ‌on the table. Would that be a wise move?

Dr. Johan Weber: It’s an ⁤interesting​ proposition. Reintegration into ‌the⁤ DDPS could realign Ruag’s operations with national defense priorities more closely. It could also facilitate better oversight from the government, ensuring adherence to defense policies and⁢ regulations. However, it’s essential ⁤for this transition ‍to​ be strategic—merely changing the legal format won’t ‍solve existing compliance issues unless there’s a commitment to implementing ⁣comprehensive reforms.

Time.news Editor: Some critics​ argue that moving from a private company to ⁣a public law institution could ⁤stifle innovation and operational flexibility. How would you address that concern?

Dr. Johan‍ Weber: That is a valid concern​ in defense contracting, where⁢ agility and responsiveness ⁣can be crucial. However, I ⁢believe that with the right framework and governance structure, a public law institution can ⁣maintain flexibility. The focus should be on establishing a culture that encourages innovation within a⁤ compliance-heavy environment. There ‌are examples in other countries where ‍state-owned⁤ companies remain innovative while operating ​under stringent regulations.

Time.news Editor: Looking⁣ forward, what steps⁢ do you think ‍the DOD should take by May​ 2025 to ensure a smooth transition, should they choose to change ‍Ruag’s legal status?

Dr. Johan Weber: The Department of Defense ⁤will ⁢need to engage⁤ in ‌a thorough consultation process with stakeholders, including internal ‍audits and ​legal experts. ‍They must define a clear regulatory framework that addresses previous ‍compliance failures while promoting operational ⁢efficiency. Furthermore, stakeholder ‍education will be crucial, as ⁣the employees must understand the new compliance‍ expectations and their ‍roles within it. Engaging with industry experts ⁢could also provide valuable insights into best practices and innovative​ solutions for ‍a compliant yet‌ agile operational structure.

Time.news Editor: Thank you, Dr. Weber, for providing your insights into this complex yet crucial topic. It seems the road ahead for Ruag is ⁢both necessary and challenging.

Dr. Johan Weber: Thank you for having me. It’ll certainly be interesting to see ‌how⁤ Ruag navigates ​these changes and whether it ‍sets a‌ new standard for compliance and operational integrity in the defense sector.