An investigation by the Swiss Federal Audit Office (SFAO), ordered by the head of the DDPS, has confirmed suspicions of irregularities in connection with RUAG MRO’s purchase of Leopard-1 main battle tanks. As a result, the DDPS decided to review whether the current legal form of RUAG MRO was still appropriate, and charged Martin Dumermuth, the former head of the Federal Office of Justice, with preparing an expert report.

The report concludes that RUAG MRO’s current legal form as a limited company under private law is no longer appropriate for today’s requirements. RUAG MRO’s activities are characterised by their close proximity to the Swiss Armed Forces. As envisaged when the former RUAG Holding AG was split into RUAG MRO and RUAG International, orders from the Armed Forces now account for over 80% of RUAG MRO’s turnover.

In addition, the geopolitical climate calls for a more flexible political control than is possible with a limited company under private law. The current situation is fundamentally different from the situation 30 years ago when a private-law company was chosen as the legal form. The decision was based on the desire to allow private investment and to limit the Confederation’s influence to its rights as a shareholder. The participation of private individuals that had been envisaged never materialised. In addition, management has been strengthened by strategic objectives, which is contrary to the principles of a private-law company. This tension leads to legal uncertainty and is unsatisfactory from both from the point of view of control and from the perspective of RUAG MRO itself.

Greater freedom for the Confederation under public law

The Federal Council has decided to evaluate the possibility of converting RUAG MRO into a public-law entity. Under public law, the Confederation has more freedom to shape the company structure because, unlike under private law, there is no obligation to adhere to a fixed number of strictly predefined types of company. The legal forms of public-law institution or special-purpose public-law corporation are being considered in particular, as these can be shaped according to the Confederation’s needs. The possibility of reintegrating RUAG MRO into the DDPS is also under consideration.

The Federal Council has charged the DDPS with preparing a bill for consultation on the revision of the relevant legislation for the Federal Council by end of May 2025. The Federal Council’s aim is to ensure that RUAG MRO has a sound legal basis to equip it for the future.

RUAG MRO emerged from the unbundling of the former RUAG Holding AG, which was decided by the Swiss Federal Council in 2018. The RUAG units working for the Swiss Armed Forces became RUAG MRO, while the other elements were combined to form RUAG International, with the aim of selling off the business units and then liquidating the company.

Federal Council to evaluate legal form of RUAG MRO