Lex Mundi Global Anti-Corruption Compliance Guide |
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Germany |
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(Europe)
Firm
Noerr
Contributors
Christian Pelz |
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| What is the key anti-bribery and corruption legislation in your jurisdiction? | Introduction The vast majority of anti-bribery provisions is contained in the Criminal Code [StGB-Strafgesetzbuch]. German law, in general, distinguishes between anti-bribery provisions relating to government officials, employees or agents of a (private) business and members of the legislative assembly. For active corruption, the criminal activity consists of the offer, promise or granting of a benefit to the bribed person or a third person in consideration for any activity expected from the bribed person. Enrichment of the bribed person or a direct personal advantage is not required; also contributions for the governmental institution, the employer or principal can constitute bribery. A benefit can be anything of material value (e.g. cash, cheques, entertainment, travel, hospitality) or immaterial value (e.g. enhancement in reputation or working conditions) for which the recipient has no legal claim. Thus also the offer of side-employment, consultancy contracts or similar profit gaining opportunities will be considered a benefit. German law does not provide any monetary thresholds for legitimate contributions. As a rule of thumb contributions exceeding EUR 25 to EUR 30 with respect to government officials or EUR 50 to EUR 100 with respect to employees or agents of a business or members of a legislative assembly can hardly be regarded as generally admitted. Restrictions under applicable anti-bribery rules of government authorities shall be taken into account. Payment of bribes or the creation of slush funds can also be punished as embezzlement (Untreue-Sec. 266 StGB). Deduction of bribes from tax burden constitutes tax fraud (Steuerhinterziehung-Sec. 370 AO (Fiscal Code)). In addition to that, granting members of a workers council more favorable employment conditions compared to equally qualified personnel due to their function does also constitute a criminal offense. Bribery of Government Officials Commercial Bribery According to Sec. 299 StGB, it is a criminal offense to offer, promise or grant a benefit to an employee or an agent of a business or a third person:
An employee is everyone who is employed under an employment contract. The term agent is broadly understood as everyone who, without being employed, is able to exert influence in decision-making processes irrespective of whether he is an internal or external person. For example, consultants, architects, advisors are regarded as agents. Private end-consumers, self-employed entrepreneurs or sole shareholder-managing directors do not qualify as agents. The first alternative of the offense is intended to protect the interest of competitors and to ensure free and fair trade practices. Thus, neither damage to the employer or principal, nor covertness, are required. An unlawful preferential treatment is deemed to happen if the benefit is regarded as an inappropriate decision-making criterion. In particular, sales-related commissions paid to employees of customers are generally prohibited. However, contributions with the mere purpose of maintaining good business relations are admitted, but not if they are intended to influence business decisions. The second alternative prohibits to incentivize or reward an employee or agent for the violation of duties entrusted upon him by the general public, the employer or principal. Bribery of Health Care Professionals Recently, Secs. 299a, 299b StGB were enacted forbidding the offer, promise or granting of a benefit to a healthcare professional for the prescription of drugs or medical devices, their purchase for immediate application, or referrals for treatment or examination. Bribery of members of legislative assemblies Sec. 108e StGB prohibits the buying or selling of a vote of a member of a legislative assembly in an election or ballot. A member of a legislative assembly is anybody who is elected to lawmaking bodies on the federal, state or municipal level, including members of parliament or city councils. In addition to that, it is also illegal to offer, promise or grant a benefit for the commission or omission of any activity falling within the mandate of a member of a legislative assembly. However, political donations are explicitly exempt unless they are given with the intent to exert influence in lawmaking decisions. Usual lobbying activities are still admissible. |
| Has there been a specific anti-bribery and corruption law enacted in your jurisdiction in the last ten years? | Anti-bribery and corruption laws have been modernized and their scope expanded in recent years. In 2014, anti-bribery provisions on members of legislative assemblies were amended in order to cover also bribes intended to exert influence on any activity within the mandate of an elected member of the legislative assembly beyond voting decisions. In 2016, bribery of healthcare professionals was newly introduced in the Criminal Code to overcome a loophole on bribery of self-employed doctors. Further anti-bribery laws on foreign public officials were modified and included in the Criminal Code. Officials of the European Union and its organizations became fully equivalent to bribery of domestic government officials. |
| Is a bribe payment to domestic government officials prohibited by the legislation? | Pursuant to Sec. 333 StGB, it is a criminal offense to offer, promise or grant a benefit to a public official, a person entrusted with special public service function or a soldier of the Armed Forces for the discharge of a duty. It is irrelevant whether such benefit is given in order to incentivize or reward a governmental official for an activity or whether the governmental official acted in accordance with duties entrusted upon him. Thus, even facilitation payments are forbidden. It is also prohibited to make contributions for the purpose of maintaining good relations. If the bribe was intended to incentivize or reward a government official for the violation of his duties or to influence discretionary decisions the punishment will be higher (Sec. 334 StGB). A contribution is not deemed a bribe if the superior authority of the government official in advance or immediately retroactively is informed and consents to such contribution, always provided that all understandings between the parties are fully disclosed. Governmental official as defined under Sec. 11(1) StGB, are German civil servants on a federal, state or municipal level, judges or soldiers, employees of governmental institutions. Also, persons entrusted with public functions, irrespective of the organizational form of the employer, can be regarded as a government official. This, in particular, applies to employees of fully or partially state-owned or state-controlled companies, even if erected under private law, e.g. employees of municipal companies in the utilities sector, public hospitals or other public companies. |
| Is a bribe payment to foreign government officials prohibited by the legislation? | According to Sec. 11(1) No. 2 StGB, officials of the European Commission, the European Central Bank, other European institutions or persons assigned to the European Union are considered European government officials and are treated equally as German government officials (see "Is a bribe payment to domestic government officials prohibited by the legislation?"). Apart from that, bribery of other foreign government officials is a criminal offense if the benefit is offered, promised or granted for the fact that the public official violated or will violate his duties. With respect to foreign government officials, benefits contributions in consideration for any activity which is fully compliant with the recipient's duties cannot be punished. Please note that the exercise of discretionary power is deemed a violation of duties if the contribution shall influence the decision-making process. |
| Is requesting or accepting a bribe prohibited by the legislation? | There is a mirror-like criminal liability for passive bribery. Thus, demanding, accepting to be promised or accepting a bribe is also a punishable offense under the same requirements as described in more detail above. |
| Who is subject to the legislation? | Subject to German criminal law is anybody who:
Pursuant to Sec. 5 No. 15 StGB German criminal law applies if:
Further, German criminal law applies to conduct abroad if the perpetrator is a German national or a foreign national, found to be staying in Germany and not extradited to his home country. However, double jeopardy is required. |
| Is there criminal liability for corporate entities who have either paid or accepted a bribe payment? | German law does not yet acknowledge the concept of criminal liability of corporations. Notwithstanding this, Sec. 30 of the Administrative Offences Act [OWiG-Ordnungswidrigkeitengesetz] provides that a fine can be imposed upon a company if a board member, authorized representatives, procura-holder or representatives with the commercial power of attorney or a person responsible on behalf of the management for the operations or enterprise committed a crime. This offense will be attributed to the company. Please, note that law enforcement agencies do have discretion whether or not to fine the corporation. However, in practice in almost all cases of corruption will a corporate fine be imposed. |
| What is the penalty for individuals violating the law? | The penalty differs on the particular offense being committed. For bribery in the commercial sector, (Sec. 299 StGB), for bribery of health care professionals or for bribing a government official (Sec. 333 StGB) the usual penalty is imprisonment of up to three years or a fine. In severe cases, in particular, if the bribe exceeds EUR 50,000, the penalty is imprisonment not less than three months up to five years. For giving a bribe to a government official in violation of his duties (Sec. 334 StGB) or for bribing members of a legislative assembly (Sec. 108e StGB) the punishment is imprisonment of up to five years or a fine. In severe cases, in particular, if the bribe exceeds EUR 50 thousand, the penalty is imprisonment between one and ten years. |
| Assuming corporate entities are liable for violating the legislation, what is the penalty for corporate entities violating the law? | The penalty on the corporation is a fine of up to EUR 10 million per incident. Besides a fine, any profits derived from the corruptive activity is subject to confiscation. |
| Assuming corporate entities are liable for violating the legislation, does having a compliance program designed to prevent bribery constitute a defense? | Whether or not the company is fined for bribery offenses committed by board members or employees is subject to the discretion of the prosecutor. The existence of an effective compliance programme will be a decisive factor in the decision whether to fine a company or not. Even if a fine is imposed an effective compliance program will be an important mitigation factor. |
| Assuming corporate entities are liable for violating the anticorruption law, is it possible for a corporate entity to reach a deferred prosecution agreement or leniency agreement with the enforcement authorities? | Deferred prosecution agreements or leniency agreements do not exist under German law. However, the imposition of a corporate fine is discretionary and full cooperation of the company will help reducing or even avoiding corporate sanctions. |
Lex Mundi Global Anti-Corruption Compliance Guide
Introduction
The vast majority of anti-bribery provisions is contained in the Criminal Code [StGB-Strafgesetzbuch]. German law, in general, distinguishes between anti-bribery provisions relating to government officials, employees or agents of a (private) business and members of the legislative assembly.
For active corruption, the criminal activity consists of the offer, promise or granting of a benefit to the bribed person or a third person in consideration for any activity expected from the bribed person. Enrichment of the bribed person or a direct personal advantage is not required; also contributions for the governmental institution, the employer or principal can constitute bribery.
A benefit can be anything of material value (e.g. cash, cheques, entertainment, travel, hospitality) or immaterial value (e.g. enhancement in reputation or working conditions) for which the recipient has no legal claim. Thus also the offer of side-employment, consultancy contracts or similar profit gaining opportunities will be considered a benefit. German law does not provide any monetary thresholds for legitimate contributions. As a rule of thumb contributions exceeding EUR 25 to EUR 30 with respect to government officials or EUR 50 to EUR 100 with respect to employees or agents of a business or members of a legislative assembly can hardly be regarded as generally admitted. Restrictions under applicable anti-bribery rules of government authorities shall be taken into account.
Payment of bribes or the creation of slush funds can also be punished as embezzlement (Untreue-Sec. 266 StGB). Deduction of bribes from tax burden constitutes tax fraud (Steuerhinterziehung-Sec. 370 AO (Fiscal Code)).
In addition to that, granting members of a workers council more favorable employment conditions compared to equally qualified personnel due to their function does also constitute a criminal offense.
Bribery of Government Officials
See answer to "Is a bribe payment to domestic government officials prohibited by the legislation?".
Commercial Bribery
According to Sec. 299 StGB, it is a criminal offense to offer, promise or grant a benefit to an employee or an agent of a business or a third person:
- in consideration for an unfair preference in the purchase of goods or commercial services in domestic or foreign markets; or
- without the consent of the company in consideration for the violation of a duty in the competitive purchase of goods or commercial services.
An employee is everyone who is employed under an employment contract. The term agent is broadly understood as everyone who, without being employed, is able to exert influence in decision-making processes irrespective of whether he is an internal or external person. For example, consultants, architects, advisors are regarded as agents. Private end-consumers, self-employed entrepreneurs or sole shareholder-managing directors do not qualify as agents.
The first alternative of the offense is intended to protect the interest of competitors and to ensure free and fair trade practices. Thus, neither damage to the employer or principal, nor covertness, are required. An unlawful preferential treatment is deemed to happen if the benefit is regarded as an inappropriate decision-making criterion. In particular, sales-related commissions paid to employees of customers are generally prohibited. However, contributions with the mere purpose of maintaining good business relations are admitted, but not if they are intended to influence business decisions.
The second alternative prohibits to incentivize or reward an employee or agent for the violation of duties entrusted upon him by the general public, the employer or principal.
Bribery of Health Care Professionals
Recently, Secs. 299a, 299b StGB were enacted forbidding the offer, promise or granting of a benefit to a healthcare professional for the prescription of drugs or medical devices, their purchase for immediate application, or referrals for treatment or examination.
Bribery of members of legislative assemblies
Sec. 108e StGB prohibits the buying or selling of a vote of a member of a legislative assembly in an election or ballot. A member of a legislative assembly is anybody who is elected to lawmaking bodies on the federal, state or municipal level, including members of parliament or city councils. In addition to that, it is also illegal to offer, promise or grant a benefit for the commission or omission of any activity falling within the mandate of a member of a legislative assembly. However, political donations are explicitly exempt unless they are given with the intent to exert influence in lawmaking decisions. Usual lobbying activities are still admissible.
Anti-bribery and corruption laws have been modernized and their scope expanded in recent years. In 2014, anti-bribery provisions on members of legislative assemblies were amended in order to cover also bribes intended to exert influence on any activity within the mandate of an elected member of the legislative assembly beyond voting decisions.
In 2016, bribery of healthcare professionals was newly introduced in the Criminal Code to overcome a loophole on bribery of self-employed doctors.
Further anti-bribery laws on foreign public officials were modified and included in the Criminal Code. Officials of the European Union and its organizations became fully equivalent to bribery of domestic government officials.
Pursuant to Sec. 333 StGB, it is a criminal offense to offer, promise or grant a benefit to a public official, a person entrusted with special public service function or a soldier of the Armed Forces for the discharge of a duty. It is irrelevant whether such benefit is given in order to incentivize or reward a governmental official for an activity or whether the governmental official acted in accordance with duties entrusted upon him. Thus, even facilitation payments are forbidden. It is also prohibited to make contributions for the purpose of maintaining good relations. If the bribe was intended to incentivize or reward a government official for the violation of his duties or to influence discretionary decisions the punishment will be higher (Sec. 334 StGB).
A contribution is not deemed a bribe if the superior authority of the government official in advance or immediately retroactively is informed and consents to such contribution, always provided that all understandings between the parties are fully disclosed.
Governmental official as defined under Sec. 11(1) StGB, are German civil servants on a federal, state or municipal level, judges or soldiers, employees of governmental institutions. Also, persons entrusted with public functions, irrespective of the organizational form of the employer, can be regarded as a government official. This, in particular, applies to employees of fully or partially state-owned or state-controlled companies, even if erected under private law, e.g. employees of municipal companies in the utilities sector, public hospitals or other public companies.
According to Sec. 11(1) No. 2 StGB, officials of the European Commission, the European Central Bank, other European institutions or persons assigned to the European Union are considered European government officials and are treated equally as German government officials (see "Is a bribe payment to domestic government officials prohibited by the legislation?").
Apart from that, bribery of other foreign government officials is a criminal offense if the benefit is offered, promised or granted for the fact that the public official violated or will violate his duties. With respect to foreign government officials, benefits contributions in consideration for any activity which is fully compliant with the recipient's duties cannot be punished. Please note that the exercise of discretionary power is deemed a violation of duties if the contribution shall influence the decision-making process.
There is a mirror-like criminal liability for passive bribery. Thus, demanding, accepting to be promised or accepting a bribe is also a punishable offense under the same requirements as described in more detail above.
Subject to German criminal law is anybody who:
- commits the criminal offense in Germany, fully or in part; or
- is participating in any activity being committed fully or in part in Germany.
Pursuant to Sec. 5 No. 15 StGB German criminal law applies if:
- the offense is directed against a German government official or a European government official with German citizenship; or
- the perpetrator is a German citizen.
Further, German criminal law applies to conduct abroad if the perpetrator is a German national or a foreign national, found to be staying in Germany and not extradited to his home country. However, double jeopardy is required.
German law does not yet acknowledge the concept of criminal liability of corporations. Notwithstanding this, Sec. 30 of the Administrative Offences Act [OWiG-Ordnungswidrigkeitengesetz] provides that a fine can be imposed upon a company if a board member, authorized representatives, procura-holder or representatives with the commercial power of attorney or a person responsible on behalf of the management for the operations or enterprise committed a crime. This offense will be attributed to the company.
Please, note that law enforcement agencies do have discretion whether or not to fine the corporation. However, in practice in almost all cases of corruption will a corporate fine be imposed.
The penalty differs on the particular offense being committed. For bribery in the commercial sector, (Sec. 299 StGB), for bribery of health care professionals or for bribing a government official (Sec. 333 StGB) the usual penalty is imprisonment of up to three years or a fine. In severe cases, in particular, if the bribe exceeds EUR 50,000, the penalty is imprisonment not less than three months up to five years. For giving a bribe to a government official in violation of his duties (Sec. 334 StGB) or for bribing members of a legislative assembly (Sec. 108e StGB) the punishment is imprisonment of up to five years or a fine. In severe cases, in particular, if the bribe exceeds EUR 50 thousand, the penalty is imprisonment between one and ten years.
The penalty on the corporation is a fine of up to EUR 10 million per incident. Besides a fine, any profits derived from the corruptive activity is subject to confiscation.
Whether or not the company is fined for bribery offenses committed by board members or employees is subject to the discretion of the prosecutor. The existence of an effective compliance programme will be a decisive factor in the decision whether to fine a company or not. Even if a fine is imposed an effective compliance program will be an important mitigation factor.
Deferred prosecution agreements or leniency agreements do not exist under German law. However, the imposition of a corporate fine is discretionary and full cooperation of the company will help reducing or even avoiding corporate sanctions.