Group: Comments on media articles published today regarding the employment
conflict with two former employees and their allegations about tax evasion
August 13, 2004 - The Swatch Group Ltd. is aware that Messrs. Joe Ede
and M. Phanthala filed a complaint with the US Department of Labor alleging
discriminatory employment practices under the Sarbanes-Oxley act.
The two persons have been working for the Swatch Group as regional controllers
(not Senior Executives) in the Far East, one located in Hong Kong, and
one in Singapore. Both persons have been employed by The Swatch Group
Management Services SA, Switzerland. They have never been employed in
The Swatch Group is of the opinion that it is not falling under the jurisdiction
of the Sarbanes-Oxley act as its shares are not listed at a US stock exchange.
Nevertheless, the Swatch Group takes the allegations very seriously and
the Top Management ordered and started an internal investigation as soon
as it was informed of the complaint.
The actual case reported by the Wall Street Journal and the Financial
Times concerns a pure employment dispute between the Company and former
employees, of whom one at least wishes to receive higher separation compensation
than agreed in his contract. The case has been submitted to the US Department
of Labor when Swatch Group refused to find a settlement, as proposed by
the lawyer of the two employees. According to the first results of our
investigation, it is confirmed that Swatch Group did not violate laws.
It is the strict policy of Swatch Group to vigorously respect all national
and international laws, including tax laws.
Nevertheless, it is normal practice for every company to structure the
business in a way to pay all due taxes without exception but not more
than required by the law, and always within the rules given by existing
laws and regulations.
Transfer price policy is a very complex matter. It is not only depending
on enormous currency fluctuation but also on the different VAT’s, the
cost situation, the distribution structure, etc. None of the Swatch Group
companies is calculating transfer prices just for tax purposes, but with
a view to harmonize the international price structure for the consumer,
to avoid the very harmful parallel market which is causing great damage
and much more cost than taxes.
Béatrice Howald, Head of PR/Press, Swatch Group
+41 32 343 68 33, Fax +41 32 343 69 22
financial analysts: Edgar Geiser, Thomas Dürr Swatch Group
+41 32 343 68 11, Fax +41 32 343 69 16