The federal government wants to put its own arms company under a tighter leash

The Federal Council wants to end the experiment of the federally owned arms company Ruag MRO as a private stock corporation, as Defense Minister Viola Amherd (center) said in front of the Meiden on Wednesday. The Federal Council has decided to examine legal forms under public law for the company.

By the end of May 2025, the DDPS is expected to develop a consultation template on the future legal form of Ruag MRO. The Federal Council’s decision is based on a report by Martin Dumermuth, the former director of the Federal Office of Justice. This report comes to the conclusion that the current legal form no longer meets today’s requirements.

Amherd commissioned the report in response to the so-called tank affair. In spring 2023 it became known that Ruag was stockpiling 96 Leopard 1 main battle tanks in Italy. Ruag wanted to sell some of these to the German Rheinmetall, which was supposed to float them for use in Ukraine. The Federal Council banned the sale.

To this day, there is a dispute in court about whether the tanks actually belong entirely to the Swiss arms company. In a report, the Federal Audit Office came to the conclusion that responsibilities in this highly sensitive area are very unclear.

“It’s clear who decides what”

Expert Martin Dumermuth examined these defects in more detail. He recommends “more dynamic political control” of Ruag than is possible with a private corporation. This is supported not only by the close proximity to the army, whose orders make up over 80 percent of Ruag’s sales, but also by the changed geopolitical situation. For Dumermuth, an institution under public law, a special stock corporation under public law or a hybrid of the two are suitable. As a third option, the Federal Council wants to examine reintegration as an administrative department in the Defense Department DDPS.

In the case of a private stock corporation, the possibilities for the federal government to exert influence as the owner are not clearly regulated, Federal Councilor Amherd told the media. This leads to legal uncertainty and an insufficient flow of information. A new legal form allows for a tailor-made solution: “It will then be clear how the information should flow and who decides what.”

According to Amherd, the adjustment of the legal form “excellently” complements the Federal Council’s decision, also made on Wednesday, to develop an armaments policy strategy for the first time by summer 2025. In view of the sustained deterioration in the security situation, the state government also wants to strengthen strategic control by the Federal Council here. Ruag, as the army’s technology partner, plays a central role here, said Amherd.

When Ogi wanted to sell the Ruag

The history of Ruag as the most recently scandal-ridden pillar of the Swiss arms industry is also a history of geopolitics. After the fall of the Berlin Wall, army stocks and budgets shrank as part of the Army Reform 95. War changed from an imminent horror scenario to an international business model with prospects of profit.

Consequently, the then VBS boss Adolf Ogi decided to privatize the industrial companies of the “Armament Group”: This was intended to attract shareholders. On October 10, 1997, Parliament said yes to the establishment of an “armament company stock corporation” – the birth of Ruag.

But Ruag was never able to fulfill its high hopes despite expansion into space and other areas. No private investors were found. An espionage hacker attack that became known in 2016 shook up the company.

The Federal Council identified numerous IT interfaces between Ruag and the federal government and recognized: Ruag’s international business activities represent a security risk for Switzerland.

Scandal, unbundling and new scandals

The arms company was divided into two. The Ruag MRO should concentrate on its job as a technology partner for the Swiss Army: patching aircraft, repairing tanks, maintaining weapon systems. The federal government bundled all the parts of the company that it wanted to get rid of in Ruag International Holding.

While the ammunition subsidiary Ammotec has already been sold to the Italian Beretta Group, the Federal Council is still looking for buyers for Beyond Gravity, the former Ruag space division, and other subsidiaries. But recently there has been political resistance to sales abroad. In the winter session starting next week, Parliament also wants to have a say.

Ruag’s top staff also regularly made headlines. Brigitte Beck, who was hired as CEO in 2022, had to leave the company after just a few months. Two public appearances discussed by this newspaper, in which she dismissed neutrality policy concerns about arms deliveries to Ukraine, cost her her job. At the beginning of 2024, Chairman of the Board of Directors Nicolas Perrin resigned after the publication of the financial control report on the tank affair.

Last but not least, this affair increased the desire in parliament for a shorter leash for the Ruag. The Federal Council obviously shares it.