Swiss reject contract bid by UK-owned internet firm over spy fears

June 9, 2015 by Joseph Fitsanakis

The Swiss federal government has rejected a multi-million dollar contract bid by one of the world’s largest broadband Internet service providers, saying it is foreign-owned and could serve as “a gateway for foreign spies”. The company, UPC Cablecom, is headquartered in Zurich, is subject to Swiss law, and is currently the largest broadband cable operator in Switzerland. However, in 2005 it became a subsidiary of the UPC Broadband division of Liberty Global Europe, an international telecommunications and television company based in London, England. It is therefore technically considered a foreign company according to Swiss law. In 2013, UPC Cablecom submitted a bid for a competitive contract to provide broadband Internet services to Swiss government agencies. But in January 2014, the company was informed by Swiss officials that such a contract could not be awarded to a foreign-owned telecommunications service provider such as UPC Cablecom.

Until last week, it had been generally assumed that the decision to exclude UPC Cablecom’s bid on the basis of the company’s foreign ownership had been taken by the officials in charge of evaluating the contract. However, on Friday of last week, the Swiss daily Berner Zeitung reported that the decision to drop UPC Cablecom’s bid had been taken by no other than the Swiss Federal Council. Consisting of seven members representing various cantons and political parties, the Federal Council serves as Switzerland’s collective head of government and effectively operates as the country’s head of state. It was the Federal Council, said Berner Zeitung, that intervened in the contract evaluation proceedings and instructed the Swiss Federal Department of Finance to exclude bids by foreign-owned companies. The argument was that such companies could serve as “potential gateways for foreign intelligence constituencies”, said the paper. It added that the decision had been taken in light of information revealed by American former intelligence operative Edward Snowden, who is currently living in Russia.

The ruling by the Federal Council meant that Swisscom became the sole bidder for the government contract, which is worth 230 million Swiss francs (US $378 million). Meanwhile, UPC Cablecom has filed a complaint with Switzerland’s Federal Administrative Court, claiming that the Federal Council abused its power by intervening in the service contract. The Court’s decision is not expected for several months.

► Author: Joseph Fitsanakis | Date: 9 June 2015 | Permalink: https://intelnews.org/2015/06/09/01-1711/