German Compliance Guide
The German Penal Code applies to individuals – not companies – and makes it illegal to offer, pay or accept a bribe. Companies can be held civilly liable under the Administrative Offences Act (OWiG) with fines up to EUR 10 million and unlimited confiscation of all economic advantages obtained through bribery.
Companies can expect tough enforcement of German anti-corruption laws, and German authorities cooperate with foreign counterparts, including in the US, which has contributed to one of the largest corruption enforcement actions against a single company. However, companies can take steps to mitigate their exposure to compliance risks under German law.
Companies are not criminally liable for corruption offenses under the Penal Code, but individuals can be held criminally liable. With the Law on Fighting Corruption, the scope of active and passive bribery in commercial practice has been extended to acts beyond competition. Undue advantages to an agent of a company are punishable if they occur without the consent of the company and in return for a breach of duty to that company. This protects the interests of employers against potentially biased performance of their employees, but it also means that the policies of companies have a determining influence on the culpability of their employees. Breaches of duty by employees shall primarily be prosecuted upon demand by the company unless the public prosecution authorities deem the offense to be of public interest.
The Administrative Offences Act (OWiG) holds companies civilly liable for corruption offenses committed by their representatives. Implementing effective compliance systems makes good business sense as doing so helps ensure companies avoid breaching German law.
A compliance system can mitigate risks even when a corruption offense is committed. If the prerequisites of the OWiG are met, a fine can be imposed against a company. Discretion to impose fines must not be arbitrary and must take into account the significance and dimensions of the offense, including whether the offense reflects a general ‘criminal attitude’ in the company, which can be reflected in the company’s compliance system – or lack thereof.
Companies doing business outside Germany risk criminal and civil company liability for the corrupt acts of persons acting on their behalf. The US FCPA Compliance Guide and UK Bribery Act Compliance Guide provide compliance guidance for extraterritorial legislation containing criminal company liability. Modern anti-corruption legislation demands common compliance program characteristics that companies should consider:
Company procedures should be proportionate to the size and risks of the organization.
Tone at the Top
Responsibility for compliance starts with top-level management, who should actively promote company stance on corruption.
A company must identify the particular risks it might face in the markets and sectors where it does business.
Know who performs services on behalf of your company and who represents your company.
Communicate anti-corruption policies throughout the company, including adequate training to ensure company representatives understand those policies and applicable laws.
Monitoring & Review
A good compliance programme keeps pace with changes to risks and the effectiveness of procedures.