Financial loss caused by granting highly jeopardized loans to employer as breach of fiduciary duty

Facts

The respondent C. was chairman of the board of trustees of two occupational pension funds established for employees of his group of companies. Between early 1989 and March 1991, he granted unsecured loans to the companies, which amounted to significantly more than 20% of the pension fund assets. The group of companies went bankrupt in March 1991, resulting in a loss of CHF 1,148,200.-- for the pension funds. C. was convicted by the Zurich District Court of breach of fiduciary duty and sentenced to 7 months and 10 days imprisonment. The Zurich Cantonal High Court acquitted him on appeal. The Zurich Cantonal Prosecutor's Office filed a federal nullity appeal seeking to have the High Court's judgment set aside and the matter remitted to the lower court for a new decision.

Considerations

1. Elements of breach of fiduciary duty The Federal Supreme Court confirms that the offence of breach of fiduciary duty under Art. 159 para. 1 old SCC (now Art. 158 no. 1 new SCC) is an offence of injury requiring proof of financial loss. Such loss exists not only in the case of an actual reduction in assets but also where there is a significant jeopardy to assets that must be accounted for in the balance sheet through value adjustments or provisions. Granting highly jeopardized loans to the employer constitutes such jeopardy, as the recoverability of the loans is uncertain and leads to write-downs in the accounts.

2. Breach of investment regulations Pursuant to Art. 57 para. 2 OPO 2, unsecured investments in the employer may not exceed 20% of the assets of the pension institution. Even if this limit is complied with, the investments must meet the general security requirements. The respondent breached these provisions by granting the loans, as the loans were from the outset exposed to a significant risk given the financial situation of the group of companies.

3. Intent The offence of breach of fiduciary duty requires intent, which may be conditional. The decisive factor is whether the offender knew of the significant jeopardy to the loans or at least accepted it. The High Court denied intent because it could not prove that the respondent had seriously anticipated the bankruptcy of the group of companies. The Federal Supreme Court,…