Federal government scrapes close to disaster

Auditors must always look closely. (Image: Tumisu / pixabay)

During the Corona crisis the Swiss government supported the airlines Swiss and Edelweiss. However, an analysis shows that it often did not act correctly at all.

All’s well that ends well? Not at all: The Swiss Federal Audit Office (SFAO) has investigated the Confederation’s rescue operation for the airlines Swiss and Edelweiss during the coronavirus pandemic. “In total, the Confederation generated revenues of around 32 million francs from the signing of the contract until the end of August 2021,” it said.

The support of Swiss and Edelweiss has proven its worth, the auditors continue. Due to the early repayment of the loan and because of early termination of the contracts, the federal government was able to terminate the guarantee without loss.

Completely lacking in concept

But until it came to this conclusion, the SFAO found numerous problems that should not have happened. One of the biggest lessons learned from the Corona rescue operation for Swiss aviation is that the Federal Office of Civil Aviation (FOCA) is actually responsible for overseeing aviation support.

However, a standardized, risk-based supervision concept is not even available there, the auditors warned. In addition, there was a lack of quality assurance.

Bern may only pay

The Federal Council established the Swiss Aviation Foundation in 2020 to oversee airlines’ location policy requirements. However, the FOCA has no direct rights of inspection with Swiss or the Lufthansa Group regarding location policy requirements, the auditors noted.

On top of that, the foundation had submitted its report on compliance with the contractual conditions for the first time at the end of November 2021 – well over a year later.

But the auditors’ analysis reads even further – like a detective story. “The financial clauses defined in the loan agreements are checked by the FOCA, but not other clauses, such as the ban on dividend payments,” it said.

Vague goals

In addition, the auditors warned on several occasions that the requirements for the companies concerned were in-part imprecise and difficult to measure. “There is no sanction and escalation concept,” the report continued.

Due to the composition and organization of the foundation its independence as a supervisory body was not given and its usefulness was questionable. This applied in terms of personnel and organization.

Swiss controlled itself

Indeed, there were two representatives of the subsidy recipient on the Council, as well as the CEO and CFO as permanent guests. Swiss ran the secretariat. Thus, the independence of the foundation as a supervisory body was not given. A mere reliance on the reporting of the supervised companies is insufficient. 

The auditors even doubt the usefulness of the aviation foundation.

Criticism rebounds

However, this is not the end of the most exciting part of the report. The institutions concerned can submit a statement on the auditors’ findings. And the reactions of those affected – i.e. the FOCA and the Federal Finance Administration (FFA) – are more than disappointing.

The officials simply “cannot comprehend” points of criticism. As reasons they give, for example, the lack of in-depth legal audits.

One example is the fact that a consulting firm was simply hired by private treaty for the rescue operation a second time later. However, this contradicts procurement law because the urgency was no longer given. The people concerned do not accept such criticism.

Wasting taxpayers’ money

The officials also refuse to accept that the Aviation Foundation is not independent due to its composition and organization. The officials countered that the reprimand was based on assumptions and was not substantiated by concrete evidence.

Actually, all this is a pity. It is to be welcomed that the federal government, despite all of the deficiencies, has come out of the matter unscathed. The outcome could have been quite different. But the constructive criticism of the financial auditors should not simply bounce off their civil servant colleagues. Rather, they should take the advice on board in order to be better prepared for the next crisis.

Then the conclusion would also be good, because this would assure that no opportunities for better use of taxpayers’ money would be wasted in the future. The disaster surrounding the guarantees for the Swiss offshore shipping industry is a timely reminder of this.


Federal government scrapes close to disaster

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