Swiss fear role as haven for secretive resource traders will cost the country

There are no oil rigs on Lake Geneva but each year enough oil to meet Swiss needs 75 times over is traded electronically in the nondescript offices that hug the shore of the largest lake in the Alps.

There aren't any coffee plantations in Switzerland either, but more than 60% of the world's coffee beans pass – electronically – through the country. And it has some of the finest pastures in western Europe, but only enough to grow a tiny fraction of the 80m tonnes of grains and oil seeds that are bought and sold by its traders every year.

The traders behind these deals make the country SFr20bn (£13bn) a year – more than the GDP of Zambia – but the locals are beginning to ask if the easy money is really worth it.

Switzerland's famously low taxes and light regulation have transformed the country into the world's leading wheeler-dealer in everything from oil, copper and zinc to coffee, sugar, wheat and the other staples of daily life.

Now, concerned at the country's global reputation for tax avoidance and speculation in basic commodities, Swiss public and politicians are considering action against the secretive trading companies that have given it a starring role at the heart of scandals stretching from the Congo to Colombia.

Carlo Sommaruga, a Swiss MP and member of the national council, the lower house of the federal assembly, says a series of controversies – Trafigura's dumping of toxic waste in Ivory Coast, Swiss traders' role in the Iraq oil-for-food scandal and, most recently, a boss at the world's biggest commodity trader, Glencore, telling investors that droughts were good for business – are dragging Switzerland's reputation through the mud. "Resource-trading companies' activities will not only result in a bad reputation for them," he said. "We are afraid the whole of Switzerland will suffer from a loss of reputation."

Sommaruga says the Swiss government needs urgently to introduce laws to tighten regulation on traders or there is a "great risk" that the country will be branded as "the new haven for vultures", extracting the world's resources and "propagating hunger".

He wants the Swiss government, which is preparing to report the findings of a six-month inquiry into the secretive industry, to legislate to make Swiss parent companies "civilly and criminally liable" for human rights violations and environmental crimes abroad.

The investigation, which is being carried out jointly by the finance, economy and foreign ministries, was launched after Josef Zisyadis, a former MP for the Alternative Left party, stood before parliament to deliver a blistering attack on the industry. "These companies are characterised by a complete lack of transparency, human rights infringements and damage to the environment," he said last year. "They are masters of tax evasion that inflicts massive damage on resource-rich countries."

Special tax breaks for traders and companies that operate largely offshore have helped make Switzerland the perfect home for the commodity groups, and have helped them grow tenfold over the past decade. They now represent more than 3.5% of the country's GDP.

Sommaruga's focus is on companies that trade in food and "rejoice in drought". His demands come after a Glencore boss said the worst drought to hit the US since the 1930s would be "good for Glencore".

"In terms of the outlook for the balance of the year, the environment is a good one," Chris Mahoney, head of Glencore's agricultural division, told investors this summer. "High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities [exploiting price differences in different markets]."

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