According to the complaint filed with the US Labor Department under the auspices of the Sarbanes-Oxley Act (which provides protection for whistle-blowers), Swatch's Asian unit, registered in the British Virgin Islands, was at the heart of the transfer pricing activity.

However, in a statement the watch manufacturer explained that:

"Transfer price policy is a very complex matter. It is not only depending on enormous currency fluctuation but also on the different VATs, the cost situation, the distribution structure, etc. None of the Swatch Group companies is calculating transfer prices just for tax purposes, but with a view to harmonize the international price structure for the consumer, to avoid the very harmful parallel market which is causing great damage and much more cost than taxes."

Swatch went on to add that the case with the two former employees, both regional controllers in the Far East, "concerns a pure employment dispute between the company and former employees, of whom one at least wishes to receive higher separation compensation than agreed in his contract."

Additionally, the firm suggested that as its shares are not listed in the United States, and are merely traded over the counter, it does not come under the remit of the Sarbanes-Oxley Act.

Although it admitted that the allegations made by the two former employees had sparked an internal investigation, it reiterated that the preliminary results of the probe show that Swatch "did not violate laws".