Rich Clan's Geneva Gag Order Shows Swiss Secrecy at Work

(Bloomberg) -- Early one morning last April, police drove up to Cologny, the lakeside neighborhood in Geneva where homes sell for tens of millions of francs, to make a surprise visit to the villa of a wealthy foreign-born family.

The police seized documents and four family members were taken into custody and held overnight on suspicion of profiteering and human trafficking over the alleged mistreatment of household staff, according to the Geneva Prosecutor’s office. Their names, however, remain unpublished after the family secured an injunction against the newspaper Le Temps, which first reported the allegations last month.

A Geneva court was scheduled to hear arguments Monday on whether that injunction should be lifted, which if the judge agrees, would expose the family to accusations they confiscated their staff’s passports upon arrival in Switzerland and made them routinely work as much as 18 hours a day, seven days a week, for as little as $200 a month. The hearing at the Court of First Instance has been postponed, lawyers said, with a date now likely in December.

The case puts the spotlight on the disparities between Switzerland’s foreign-born elite and the treatment of staff, and also highlights a facet of Swiss law giving wide discretion in a country that already favors secrecy, even for those suspected of wrongdoing.

“These injunctions are quite easy to obtain as you don’t have to prove there is damage against you, but rather persuade the judge there is the likelihood of damage,” said Alice Bertholon, a Geneva labor and privacy lawyer not involved in the case. “There is a Swiss culture of anonymity and this is definitely the primary way to protect it.”

Lawyers for all four defendants either had no immediate comment when reached by phone and email, or did not return messages seeking a statement. Daniel Pillard, director of Le Temps publisher Ringier, declined to comment.

A reputation for discretion has attracted wealthy foreigners to Switzerland for decades, helping turn it into one of the world’s richest countries, home to $1.8 trillion in foreign assets. Despite a decade-long assault on Swiss banking secrecy, the country’s privacy laws remain strict, meaning even those sanctioned by domestic regulators and prosecutors often remain anonymous.

Russian billionaire Roman Abramovich secured an injunction earlier this year that prevented a Swiss newspaper from reporting the reasons why he withdrew his application for Swiss residency. The case went to the Swiss Supreme court where judges in October lifted the injunction, allowing the paper to cite police concerns that the Russian’s residency would constitute a public safety threat and a “reputational risk for Switzerland.”

Other European countries offer such protections too. British courts frequently issue injunctions in disputes involving allegations about extramarital affairs, sexual assault and harassment. But there are also checks on the power of such gag orders. Lawyers for billionaire retailer Philip Green had secured an injunction against the reporting of allegations he sexually harassed his staff, which he denies. But the plan backfired when a member of the British House of Lords exempt from the ban said he felt compelled it his “duty” to identify Green.

In the Geneva case, the family’s home in an upmarket Swiss ski resort has been ordered sequestered as collateral to pay any fine or damages that may be eventually awarded to the plaintiffs. The family owe each of their staff 20,000 Swiss francs ($19,860) a month in backpay and social security contributions over the course of their employment, say their lawyers, which adds up to millions of francs in unpaid dues.

To contact the reporter on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Jan Dahinten

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