Sicpa - the hidden cost of selling trust

Sicpa is neither a printer nor a publisher. It manufactures a top-of-the-range ink that is impossible to reproduce. In its nearly 100 years of existence, the company has conquered the world with its magic formula, first applied to banknotes, and then to stamps used in many countries to track alcohol and cigarettes. Sicpa has built its reputation on trust. 

For almost a century, this trust has relied on secrecy. Owned by its founding family, Sicpa is not listed on the stock exchange. With no external investors, it is accountable to no one. It has been largely ignored by the business press. The information that has seeped out about the company so far has been drip-fed by its press office. 

Throughout our investigation, we noticed the same phenomenon: the more familiar our sources were with the company, the more likely they were to request anonymity. Whether former or current employees or competitors, they all set that same condition in the approximately 20 interviews we conducted. Those who know Sicpa and its sphere of operations know that secrecy is the rule. And to anyone outside a circle of insiders, nothing, or almost nothing, leaks out. 

Lausanne, 1927. Every morning, in the freezing dawn, thousands of Swiss men and women sit on a single-legged stool to milk their cows. After centuries of abject poverty, the country is growing and becoming known for its sweet milk and creamy chocolate. In the cowsheds, farmers spread milking grease on their hands to protect their skin from cracking and to avoid damaging the cows' udders. In canton Vaud, one of their main suppliers is Maurice Amon.  

The years passed and an era of prosperity began. First for Switzerland, which took advantage of its neutrality to welcome capital during the Second World War and develop high-quality industries. Then for Sicpa, which gained renown.  

But this was not enough for Maurice Amon. Grease was all well and good, but he had grander plans. Together with Albert, his ambitious eldest son, he realised that his product was a key ingredient in the manufacture of another: ink. At the beginning of the 20th century, the offset printing technique was flourishing. The pigment, mixed with fat, was applied to the plates, while water flowed over the areas to remain blank. The world's press took advantage of this innovation to increase circulation and earn profits. The industrial revolution was underway and the economy was undergoing a transformation.  

After the Second World War, governments had to print money and demand for quality ink soared. This was a stroke of luck: Sicpa, which, like other companies spared in the conflict had stayed afloat, benefited from Swiss industry’s good reputation for rigorous standards and high quality. Its unique product and devoted staff led governments to commission the company to illustrate their banknotes with as much fine detail as possible in order to make counterfeiting extremely difficult, if not impossible. Spain was the first to commission Sicpa to supply security inks for its 100 pesetas note in 1943; the United States then approached the Lausanne-based company to make dollar bills. Fortune smiled on Sicpa.

There is nothing remarkable about the yellowed letters that we studied in the archives in Bern. They reveal Sicpa’s modesty and respect for rules. This is when its ascent began. With modern formulas for durable inks, the company was ahead of the game and had no competition. In the 1950s, Maurice Amon was getting old: it was Albert who gradually took over the reins of the company with the same dedication as his father.

"He was an extraordinary person with a real sense of industry," recalls a Lausanne lawyer whose parents were friends with the Amons. "He was a shrewd businessman and became successful because of his enormous capacity for work and his reputation as a gentleman. He was rigorous, a man of his word, strong, fair and very generous. He also had a great sense of family."

In 1952, Albert Amon convinced his friend Gualtiero Giori, an Italian printer, to move to Lausanne. The collaboration between the two factories was close. Sicpa took advantage of these years to boost its brand, find new customers and increase the number of laboratory tests to improve its product. Maurice Amon -- and especially Albert – took pains to register a patent for each invention, and even, in partnership with the University of Lausanne, created an industry norm for inks applied to banknotes. Today, the company says it owns more than 5,000 patents. 

In 1969, Interpol decided that Sicpa’s norm would be the global benchmark for banknote printing - a huge achievement for what was then still a small business in canton Vaud. In the late 1980s, the company's engineers developed variable inks that change colour depending on the angle of the paper or the light. This invention made it possible to produce a unique, tailor-made ink for each customer that is impossible to reproduce, like a signature.  

The tax stamps market has grown over the years although it is not particularly well known. It provides an important source of revenue for developing countries. The company does not say what proportion of sales its digital tax stamp management system – called SICPATRACE – represents today.  

In two decades, Sicpa has signed more than 33 contracts in 22 countries. The system is currently operating in 17 countries, including six in Africa, according to the company.  

The system is simple: to eradicate smuggling in sensitive products such as alcohol and tobacco, some states opt to mark bottles and packets of cigarettes with unique tax stamps, which guarantee their legality and certify that taxes have been paid.

 If a hotel in Casablanca wants to serve whisky to its guests, it will have to buy it from an official shop or break the law. A tobacco shop in Los Angeles, California, will only sell stamped Marlboro or Camel cigarettes, and if they are not stamped, then it is selling illicit cigarettes.  

On November 19, 2021, we a small presentation room, where machines and examples of stamped products are displayed. In a departure from company custom, Ruggero Milanese, Sicpa’s director of marking and traceability solutions, told us all about his job. He had plenty of figures to trumpet the success of SICPATRACE. In the first year of the system's implementation in Kenya, the state received 45% more tax on alcohol and tobacco, he said. In Brazil, tax revenue rose by 30% in 2009. In Malaysia, an extra $100 million was collected in the first year of implementation (2004). And in Albania, 50% more beer production was reported in 2010.  

“It's a virtuous circle,” Milanese said. “Because locally, manufacturers quickly understand they will no longer be able to sell illicit products. So the market grows healthier, and the black market shrinks, which automatically increases tax revenues and GDP [gross domestic product].”  

Smugglers everywhere are unhappy. And so are competitors. Over the years, Sicpa’s successes have provoked the ire of the tobacco companies, especially the two giants of the sector: Philip Morris International and British American Tobacco. According to industry experts who spoke on condition of anonymity, a fierce commercial war is underway between Sicpa and the tobacco giants.

The American multinational, whose European headquarters are only a few kilometres from Sicpa's in Lausanne, does not like sharing. Since 2007, Philip Morris International has been promoting “Codentify”, its programme for authenticating and tracing packs of cigarettes.   

In this increasingly tense market, Sicpa began taking a harder approach to convince heads of state to trust it at all costs. It was inspired by the practices of companies active in commodities, which rely on well-placed intermediaries in each country to penetrate the corridors of power and obtain access to an oilfield or a public works construction site. Sicpa has come a long way from milking grease and the innocence of its origins. It is now playing in the big league, in a market where it is sometimes important to take risks.

"Thank you, Mr. Amon," the president said in a brief speech before the starters were served. "Thank you for the wonderful dinner you are hosting and for your kind words. Even though we haven't started eating yet, I am told that in terms of the guest list and attendance, among the business meals in this forum, this is the best night. Thank you very much!" 

The problem was that this miracle solution – SICPATRACE – was still in the making. The Prilly-based firm invested considerable sums in developing this technology as its best chance of securing a future, given that sales of the banknote inks that made its fortune were set to decline. But after four years of trying, Sicpa had not yet signed a single contract. 

The first attempt to sell SICPATRACE came in 2002. The first customer Sicpa courted was Philip Morris. The plan was to help the tobacco company clamp down on imitations and comply with measures taken by many governments to combat smuggling.   

Sicpa had spent millions of dollars studying how its invisible barcodes could be applied to every packet of cigarettes and developing readers to be located at the end of the production line and at customs booths at ports of entry – all for a cost of one cent per packet.  

But Sicpa was knocking at the wrong door. Philip Morris considered the SICPATRACE solution to be too slow for a production line that can manufacture up to 700 packets of cigarette per minute. In the end, the American multinational developed its own rival technology, Codentify.

Sicpa then turned to southeast Asia, where economies were booming. 

This attempt to trace tobacco collapsed quickly. As the authors of the 2015 report explain, the tobacco industry "consistently opposed" the implementation of the system in Malaysia. When it was introduced in 2004, there was a temporary drop in contraband cigarette consumption. But the following year, when the tracing trial ended, trafficking resumed. 

In January 2007, in Davos, the heirs Philippe and Maurice Amon had a clear objective. The negotiations with the Philippines absolutely had to succeed. A new contract in this huge market would be an opportunity to bounce back after the failure in Malaysia.  

 A document obtained by SWI under transparency of justice regulations reveals the background to the famous January 2007 dinner at the World Economic Forum in Davos. It comes from an investigation by the Swiss Attorney General’s office into Sicpa on suspicion of corruption of foreign public officials. This inquiry targeting the company's activities in several countries opened in 2014 and is still ongoing.   

The document is dated September 2020. In summarising the origin of the federal investigation, it recounts that Maurice Amon and Hans Schwab made a secret agreement with people close to Macapagal-Arroyo just a few months before her visit to the World Economic Forum in 2007.  

The office of the Attorney General reports on a meeting Hans Schwab and Maurice Amon held with Anthony Arroyo, the nephew of Jose Miguel Arroyo, the president’s husband. Anthony Arroyo was particularly well connected in Manila. In addition to his special relationship with the "first gentleman" of the Philippines, he could count on the support of another uncle, Iggy Arroyo, an influential congressman. 

Hans Schwab, Sicpa’s man in Manila, left the company in 2009. His connections to the presidency were no longer worth much. The "first gentleman" José Miguel Arroyo was beset by accusations of corruption to the extent that he had to leave the country. His wife Gloria Macapagal-Arroyo did not hold out much longer and left office in 2010. She was arrested the following year, accused of electoral fraud and embezzlement. 

It is not clear whether the "success fees" agreed between Sicpa and President Gloria Arroyo's relatives were ever paid out or not. The Office of the Attorney General, like the firm, declined to comment on the matter.  

In 2008, Sicpa's Brazilian subsidiary signed the SICOBE contract with Casa da Moeda, the state company in charge of printing money and tax stamps. For Sicpa, this was the contract of the century: 3.3 billion reals, or nearly CHF2 billion, to improve the traceability of all fizzy drinks and beer bottles sold in Brazil.

The system Sicpa sold was expensive and complex. Instead of applying labels by hand at the factory, beverage manufacturers had to install machines on their production lines that automatically label each bottle. There was no room for improvisation. According to a study funded by the beverage lobby, tax revenues in Brazil increased by 20% after the SICOBE system was installed.

When questioned by SWI, Sicpa maintained its version of events. According to the company: "the irregular payments were made by third parties without Sicpa’s involvement, knowledge or intention”. The company says that these payments “do not call into question the validity of the contracts signed in Brazil and do not constitute grounds for criminal liability for the company or its managers”. 

In 2016, the SICOBE contract was not renewed. The machines Sicpa installed in factories were deactivated, and the beverage manufacturers had to revert quickly to the old manual system. For the company, this was a disaster. In June 2017, Sicpa announced 150 redundancies at its Prilly headquarters and 850 in Brazil.

In 2019, Finkel was sentenced to 11.5 years in prison for corruption by a Brazilian court. He appealed and was eventually acquitted.

On June 7, 2021, Sicpa signed a "clemency agreement" with the office of the Comptroller General of the Union, an anti-corruption administrative agency, agreeing to pay CHF135 million as "restitutions." In Switzerland, the maximum fine for corruption for a company is CHF5 million.

In a statement issued the same day, Sicpa acknowledged its "objective responsibility" for "irregularities relating to certain payments," while denying that "the contracts in question were obtained fraudulently." According to the Prilly-based company, "no involvement, knowledge or intention on the part of Sicpa concerning these payments made in Brazil has been established." Thanks to this agreement, Sicpa regained the right to bid for contracts in Brazil.

In May 2022, the Brazilian justice system finally acquitted Finkel, as well as the former tax official, Marcelo Fisch. Both had appealed against their 2019 convictions. The judges of the Court of Appeal of Rio de Janeiro considered that the former official had been wrongly convicted, because the acts of corruption concerned Casa da Moeda. Fisch was an independent expert, not an employee. 

Charles Finkel's lawyer, Marcelo Bessa, immediately spoke in the Brazilian press to welcome the judgment, which, in his opinion, confirmed that there was "no crime of any kind in the concrete case".

In a dissenting opinion published alongside the decision, one of the three appeal judges considered that “the materiality and criminal authorship” remained “abundantly demonstrated: Marcelo Fisch played a decisive role in the choice of the company Sicpa by Casa da Moeda [...] in exchange for improper remuneration worth several million.”

The American missive, the existence of which is reported in the previously mentioned September 2020 document issued by the Office of the Attorney General, was a bombshell. The department of Justice reveals the meeting Maurice Amon and Hans Schwab held with Anthony Arroyo a few months before the Davos World Economic Forum of 2007. It describes all the details: names, dates, places and the size of the "commissions" agreed between Sicpa and President Gloria Arroyo’s representatives.

On the basis of information received from the United States, the Office of the Attorney General opened an investigation against Sicpa in early 2015 for "corruption of foreign public officials." The inquiry also targeted Hans Schwab.

Unusually, however, the "draft" request for mutual assistance from the United States was never followed up with a formal request, according to our research. Nor was it possible to establish the context in which the American authorities were interested in Sicpa and its activities in the Philippines. Asked about this, the Office of the Attorney General would only confirm that the investigation into Sicpa was initiated "on the basis of information from a request for judicial assistance."

"Where are the women?" This question arises when reading the names of those who have led Sicpa over the years. It seems that nothing has disrupted the male lineage since it began with the founder, Maurice Amon. With each new generation, just one of the heirs was chosen, invariably a man. This male-to-male passing of the torch started after the Second World War, when Albert joined his father at the head of the company. His brother Salvador never took the helm of the company. Despite being a family member, he just had a seat on the board of directors.

No one responded to our questions as to why he was sidelined. After all, Sicpa is not listed on the stock exchange, and its owners have complete freedom to make decisions as they see fit.

Albert ran the company for a long time, and it prospered under his leadership. With his wife Claudie, who devoted herself to running the household as her mother-in-law had done before her, he had three children: Maurice, Philippe and Monique. In 1996, after working for half a century, Albert retired. He died in 2010.

Monique appeared to have no career ambitions, so her male siblings competed for the top job. Maurice and Philippe managed the company together for five years. But the relationship between the two brothers was complicated, as a source close to the family explained. Maurice was a big-hearted man who loved to travel and party with friends. He was married three times and travelled the world on Sicpa’s behalf, preferring the glamour of Monaco to the shores of Lake Geneva.

On New Year's Eve 2007, while still in the process of divorcing for a second time, Maurice met Tracey Hejailan in the lobby of a Gstaad hotel. The 30-year-old Californian was also emerging from a complicated divorce with a Saudi businessman. It was love at first sight. Maurice Amon and Tracey Hejailan got married in Hong Kong.

What followed was a mad dash from one palace to the next in between shopping trips for masterpieces and extravagant jewellery. The couple's antics made headlines in celebrity magazines. 

In 2015, the two brothers officially parted ways in their business affairs. Philippe was to keep the family business, while Maurice would take the cash. The company’s summary of events was that Maurice Amon "gradually exited the family empire, and finally left the company's board of directors in March 2015," harmoniously handing control to Philippe and pocketing a staggering amount estimated at more than CHF1 billion.

But this story of the separation between the two heirs could conceal another reality. In 2019, a Supreme Court judgment revealed that Philippe Amon had fired his brother Maurice in early 2015. The former accused the latter of developing business activities in competition with Sicpa without informing the board of directors. Even worse, Maurice Amon had invested in a contactless payment company called GoSwiff. This digital solution competed with the family business's cash cow: printing banknotes.

"You cannot pretend to be unaware that the ‘security inks’ division is one of the pillars of the group and that ‘cashless’ modes of payment present a serious threat to it," Philippe Amon wrote to his brother Maurice in a letter of dismissal, widely quoted in the Supreme Court ruling of August 29, 2019.

“The Sicpa group lives from and depends on the maintenance and development of the stock of banknotes in circulation," he continued. “All cashless solutions are therefore to our direct disadvantage, especially when they are adopted by Sicpa’s customers. There is therefore a serious and undeniable conflict of interest with your position within Sicpa as an employee and director."

In 2018, a court in Vaud ruled in Maurice's favour, ordering Sicpa to pay him CHF10.6 million in compensation.

The court determined that Maurice Amon's parallel activities certainly constituted a breach of his duty of loyalty to the company and justified his dismissal. However, Philippe Amon, who had been aware of the situation since 2014, only denounced Maurice in 2015. By delaying its response, Sicpa had lost the right to dismiss its "employee" with immediate effect, the court ruled.

Sicpa challenged the ruling at the Supreme Court. However, the final ruling on the matter came too late. On July 26, 2019 Maurice Amon died of a heart attack in St. Tropez at the age of 68. The Supreme Court ruled in his favour a month later.