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Report weighs on Ruag – Financial controls uncover inconsistencies in tank deals – News

21 February 2024

Contents

A test report shows inconsistencies and deficiencies in the business of the federally owned arms company Ruag with Leopard 1 tanks. Administration President Nicolas Perrin draws the conclusions and resigns.

The news about the resignation of Ruag board chairman Nicolas Perrin had already leaked a few hours earlier. However, Perrin only provided the reason late on Tuesday evening: The 65-year-old drew the conclusions from an audit report by the Federal Audit Office on the controversial Ruag transactions with old Leopard 1 tanks, which was published at the same time.

Legend:

The financial control report reveals a number of inconsistencies.

Keystone/Anthony Anex

Decision to resign after discussion with Amherd

“The report does not reveal any compelling reasons for resignation,” says Perrin. However, the business with the tanks had reached such an extent that it was becoming a burden for the Ruag. “After a conversation with Federal President Viola Amherd, I came to the conclusion: It is in the best interest of the company that a new personality can further develop Ruag,” says Perrin.

Regardless of the inconsistencies in the deal with the Leopard 1 tanks, there are also allegations of corruption against a former Ruag manager. The public prosecutor’s office in Verden, Germany, is investigating him and four other people on suspicion of corruption in the trade in spare parts for tanks. An internal Ruag file note shows that the ex-employee is accused of suspicious transactions with tank engines. These allegations were not part of the current financial control investigation. In addition to the investigations in Germany, a separate financial control investigation is underway in Switzerland, together with a law firm.

Inconsistencies, discrepancies, defects

In fact, the financial control report documents a whole chain of inconsistencies. It began with the purchase of 100 Italian Leopard 1 tanks almost eight years ago: contrary to what was required, the purchase was not presented to the company management at the time. The financial control lists deficiencies in the accounting and criticizes “incomprehensible” cost increases in storing the tanks in Italy. “The investigation has shown that there were discrepancies in internal regulations and guidelines,” says the Director of Financial Control, Pascal Stirnimann.

There were also inconsistencies in the business relationship with the German company GLS. This was involved in certain sales, which financial control considered unnecessary. Ruag later became involved in a legal dispute with GLS: Ruag had bought 25 Leopard 1 tanks from them, not picked them up, but later claimed them as their own. According to financial control, it remains unclear who is in the right.

Ruag president admits mistakes

Your test report also sheds light on the role of the Ruag Board of Directors President, who is now resigning: Contrary to an internal announcement, Nicolas Perrin allowed over a year to pass before he informed the Defense Department VBS about the existence of the Ruag tanks. “I would certainly say today that we should have provided information more quickly,” says Perrin to SRF. The outgoing Ruag president has been in office for less than four years. He describes the Leopard 1 tanks as a legacy from before his term in office. A lot has been cleaned up in recent years. “Mistakes also happened.”

Criticism also of the VBS

The Defense Department VBS represents the federal government as owner towards Ruag. Defense Minister Viola Amherd’s people take the position that they have only had conscious knowledge of the tanks for around a year. However, financial control documents that the DDPS was informed more than a year earlier.

At the beginning of last year, Ruag wanted to sell the Leopard 1 to Germany, with its final destination being Ukraine. The DDPS allowed the export application to proceed, but in the end the Federal Council refused the permit. Financial control is “surprised” that the politically sensitive sales plans were only discussed in the official owner discussions between Ruag and VBS after this Federal Council decision.

The Defense Department DDPS demands that the identified deficiencies in organization, processes and business activities at Ruag be remedied immediately. In a statement it also announced a fundamental review of the Ruag company structure. The former director of the Federal Office of Justice, Martin Dumermuth, is supposed to review the legal framework of Ruag MRO Holding AG.

Regarding the accusation that the DDPS only discussed the planned tank sale with the final destination in Ukraine after the Federal Council’s no vote in the owner discussion with Ruag, the DDPS writes: It did not want to anticipate the Federal Council’s decision by dealing with the pending export application in advance.