Vincenz and Stocker driven by financial motives

Around nine months after the verdict, the Zurich District Court sent the written justification to the parties on Wednesday. On 1,200 pages, it explains why it sentenced former Raiffeisen CEO Pierin Vincenz to three years and nine months and partner Beat Stocker to four years in prison. Absolutely, as the judgment says. The judges see clear evidence of fraud and unfair business management. The two secretly and previously participated in companies that were later bought by Raiffeisen and Aduno. According to the verdict, Vincenz and Stocker were driven by “purely financial motives”.

In principle, the court follows the main line of argument of the prosecution, that Stocker and his business partner Vincenz should have informed the credit card company Aduno and the Raiffeisen group about their hidden holdings (“assessment disposal relevant to fraud”). This was the only way Aduno and Raiffeisen could have exercised their right to demand that the accused hand over these shares.

The court also argues why the transactions are based on what is known as “complicatary action”. In other words: why Stocker’s actions can also be blamed on Vincenz and vice versa. This is a problem for Vincenz in particular: the Raiffeisen boss often only had a direct influence on the company deals at a few crucial moments, while Stocker conducted the negotiations on a day-to-day basis.

Fraudulent deception – and clear damage

But how does the court decide that it was fraud? For this, a criterion is required fraudulent misrepresentation and damage – both had been questioned by the main accused’s defense attorneys in relation to all cases.

How the court disheveled the arguments of the defense attorneys and mostly followed the point of view of the prosecutors can be seen particularly well in the oldest of the cases dealt with: the purchase of the credit card service provider Commtrain in 2006.

The court found that Vincenz and Stocker were guilty of fraud in this deal. Above all, it confirms that in this case a passage in company law (Article 400 paragraph 1 in the Code of Obligations) applies, according to which contractors must give their clients an account of everything that affects their order. And that they have to report and, if necessary, hand over any proceeds that have come to them.

Some legal experts doubted whether a comparison with the case law of the federal court on the question of how far wealth managers have to deliver kickbacks to their clients really applies. The prosecution relied heavily on this comparison. The court does not fully follow the prosecutors here. But the bottom line is that Vincenz and Stocker are convicted of fraud.

deception through concealment

Vincenz and Stocker fraudulently deceived Aduno (respectively the other board members) in the Commtrain case, according to the verdict. The fact that the two secretly interposed an investment company is relevant to this assessment. The court argued that Aduno did carry out a company audit (due diligence) before the purchase – that was all the company could do to track down the secret involvement of Stocker and Vincenz.

However, Stocker worked to ensure that the lawyer who built the secret investment structure with him and Vincenz took over the due diligence. Stocker and Vincenz also sat on the board of directors and approved the transaction. The court therefore finds “that in the specific case, the actual shareholdings in the target company on the part of Viseca and Aduno could not be determined in practice”.

Deal damaged the company

In addition to fraudulent intent, there must also be damage; Some observers of the trial – including criminal lawyers – had doubted whether this could be proven. The district court also sees the damage in the Commtrain case as given: The other Aduno board members did not know that part of the Commtrain purchase price went to Stocker and Vincenz, namely CHF 2.66 million. So they couldn’t claim back the proceeds that Aduno was entitled to.

Whether the purchase price for the Commtrain was fair or excessive; whether a purchase of the Commtrain at a later date would have cost even more, and whether Stocker and Vincenz could have served the Aduno in this respect, is not decisive for the court: they would have reported the 2.66 million francs in any case and, if necessary, handed them over must. Thus, in the Commtrain case, an important element of Vincenz and Stocker’s line of defense broke away: namely that the deals between Aduno and Raiffeisen would not have harmed the bottom line at all.

Statute of limitations does not apply

The statute of limitations did not save the accused in the Commtrain case either. According to the Zurich District Court, the 15-year period only began after the last tranche of the proceeds from the sale had been transferred to the investment company von Vincenz und Stocker, i.e. in September 2008.

Each case is classified separately

The Genève Credit & Leasing (GCL) case shows that the Zurich District Court did not lump the individual cases together despite a similar starting point: Vincenz and Stocker were only convicted of dishonest business management and private bribery by GCL shareholder Stéphane Barbier-Mueller, but not for fraud.

As in the Commtrain case, Vincenz and Stocker had acquired a stake in the company to be bought on extremely good terms and had done nothing to draw Aduno’s attention to their rights to the proceeds. Here, too, the court explicitly confirms the analogy with the Federal Supreme Court ruling on the kickbacks of asset managers – the analogy which the prosecution, as a novelty, transferred to the secret holdings and which the defense had vigorously rejected.

And again, in the GCL case, the question arises as to whether Stocker and Vincenz acted fraudulently. Should the Aduno board of directors have exercised more care? Yes, says the court. In any case, Aduno did not carry out an in-depth company audit in the GCL case, “a fundamental breach of duty” in view of the planned deal worth millions, the judges complain. Even later, Aduno did not consult the GCL share register – where Stocker’s fiduciary participation had been registered since the end of 2012 at the latest. Therefore, bad faith is missing in the GCL case – and the two main suspects avoid a conviction for fraud in this financially significant case.

Lack of control at Raiffeisen

In connection with the largest case (Investnet), the court again clearly points out the problems at the Raiffeisen Group at the time: Insufficient structures at the bank to enforce corporate governance rules (good management) would have been the cause for Vincenz and Stocker made particularly easy.