Swatch Group: Comments on media articles published today regarding the employment conflict with two former employees and their allegations about tax evasion

The two persons had 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 were employed by The Swatch Group Management Services SA, Switzerland. They have never been employed in the USA.

The Swatch Group is of the opinion that it does not fall under the jurisdiction of the Sarbanes-Oxley act as its shares are not listed on 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 severance pay than agreed in his contract. The case was submitted to the US Department of Labor when Swatch Group refused 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 its business in such a way as 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 not only depends on enormous currency fluctuations, but also on the different VAT’s, the cost situation, the distribution structure, etc. None of the Swatch Group companies are calculating transfer prices just for tax purposes, but with a view to harmonizing the international price structure for the consumer and in order to avoid the very harmful parallel market which causes great damage and far more costs than taxes.

Contact:
Béatrice Howald, Head of PR/Press, Swatch Group
+41 32 343 68 33, Fax +41 32 343 69 22
E-mail: press@swatchgroup.com

For financial analysts:
Edgar Geiser, Thomas Dürr, Swatch Group
+41 32 343 68 11, Fax +41 32 343 69 16
E-Mail: investor.relations@swatchgroup.com

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Swatch Group: Comments on media articles published today regarding the employment conflict with two former employees and their allegations about tax evasion