So the verdict is in: being invited by a Sheikh to watch the F1 race will land you in hot waters in Switzerland. A former Geneva minister has been found guilty of accepting an undue benefit linked to his luxury trip to Abu Dhabi.
Following my earlier coverage of this story in November 2020, a court in Geneva ordered Pierre Maudet this week to pay a fine of CHF120,000 ($133,000) and to refund the estimated costs of the trip CHF50,000. The sentence was suspended over two years.
Pierre Maudet, the former Geneva Minister for business promotion, faced trial for allegedly accepting unauthorized “financial perks” linked to a visit to AD-contrary to the Swiss Criminal Code.
Maudet had been under investigation since 2018 for accepting undue financial benefits, notably, a luxury trip to attend the AD F1 in 2015- without being particularly a fan.
The hospitality package included business class tickets, a stay at the Emirates Palace and access to the event for himself, his family, a friend active in real estate, and his chief of staff amounting to tens of thousands of Swiss francs.
The costs were reportedly paid for by the AD Crown Prince, who had invited him.
He initially claimed it was a private visit paid by his friend. Later he admitted having “hidden part of the truth” as the royal family of the emirate funded it.
Maudet denied the charges and pleaded innocent. The prosecution called for a suspended 14-month prison term for the former minister.
The president of the court Sabina Mascotto, stressed that the misconduct of Pierre Maudet was important. The politician considered, accepted and accommodated his personal needs to the risk of being influenced in the performance of his duties by accepting a gift of such importance, half official and half private, including tickets to attend at a Formula 1 Grand Prix.
The State Councilor acted out of personal convenience and ease, noted Sabina Mascotto. His personal situation allowed him to finance this trip. He could also have given up on this stay, without harming Geneva. Nothing prevented him, thus, to find a pretext to refuse the invitation of the royal family of Abu Dhabi.
The court stressed that Pierre Maudet’s collaboration in the procedure was poor. The state councilor tried to cover up evidence and lied. Sabina Mascotto stressed that the magistrate was well aware of the problem that this trip to the Gulf could pose, with her family and her former right-hand man.
Patrick Baud-Lavigne, the former chief of staff of Pierre Maudet, was also found guilty of accepting undue advantage. He was also convicted of breach of official secrecy, having provided information to the two entrepreneurs who organized the trip to the Emirates. His sentence was set at a suspended 360 day fine.
Magid Khoury and Antoine Daher, the two businessmen who set up the stay in Abu Dhabi, for their part received a 240-day fine and a 180-day suspended fine respectively for having granted an advantage. Their objective was to secure the benevolence of a State Councilor in the future.
This condemnation risks dealing a fatal blow to Pierre Maudet’s political career. The magistrate, who resigned after having had his last prerogatives withdrawn due to personnel management problems in his department, is a candidate for his own succession to the Geneva Council of State. The former mayor of the city of Geneva was elected to the Geneva cantonal government in 2012. He was also a candidate for a seat in the Swiss government in 2017.
Although this example concerns a government official receiving undue advantage from a foreign head of State, it is an excellent reminder to companies, that the Gulf culture of hospitality and Western anticorruption laws may conflict in practice. Something to continue considering while conducting business in Middle Eastern countries in particular.
Gifts, hospitality and expenses are susceptible to being used for bribery. Bribes may be used on their own or may also be used for entrapping a person. They may be used to build or maintain relationships during a bribery scheme.
Gifts and hospitality and travel expenses are a high-risk area for bribery and have figured in a large number of FCPA cases, and are clearly prohibited as well under other extraterritorial laws that punish foreign bribery such as the UKBA and Sapin II.
They are complex for companies to manage as most laws do not properly define the limits while in many societies (such as the Gulf countries) there are deeply embedded in local customs of gift-giving and hospitality.
Best practice would be to permit “promotional expenses” as long as they are transparent, proportionate, reasonable and bona fide. Following such approach for expenditures will mitigate the risk of being criticized by stakeholders or be seen as an offence by authorities. With that said, companies must ensure that they implement adequate policies and procedures as well as test their anticorruption framework against stakeholder expectations and applicable laws.