Anti-Corruption in Luxembourg

By Andrea Schmid*, (Baker McKenzie Luxembourg)

1. Domestic bribery (private to public)

1.1       Legal framework

Articles 240 et seq. of the Luxembourg Criminal Code provide the legal framework relating to bribery.

1.2       Definition of bribery

This criminal offense can be committed both by public officials and by private individuals or legal entities trying to corrupt a public official.

Bribery is broadly understood as the fact of offering, promising, giving or granting advantages either to accomplish or to not accomplish an act linked to a public function, duties, mission or mandate or facilitated by such function, duties, mission or mandate, or to abuse a true or assumed influence in order to obtain from a public authority or public administration rewards, employment, business or any other favourable decision.

Both natural and legal person are subject to criminal liability. When a criminal offense is committed in the name of, or in the interest of a natural person by its bodies or by one or several of its legal or de facto managers, the legal person may be held liable, in addition to the criminal liability of the individuals who committed the offenses. The maximum fine a legal person can be condemned to is EUR 750,000. However, for certain particular offenses such as money laundering or bribery (either public or private), the amount can be multiplied by five times.

1.3      Definition of public official

The definition of “public official” refers to any natural person that exercises public function, duties, mission or mandate. This definition includes civil servants, judges, members of parliament, employees of public bodies (not being civil servants), as well as employees of public companies or companies vested with public concessions.

1.4      Consequences of bribery

(a)        For the natural persons involved

The Luxembourg Criminal Code establishes the same penalties for public officials as for individuals who corrupt public officials. The penalties are as follows:

  • Imprisonment between five and 10 years
  • Fine between EUR 500 and EUR 187,500
  • Destitution (for life, under certain conditions) of certain political rights or from exercising public functions
  • Destitution of certain civil rights for a term between five and 10 years.

(b)        For the legal persons involved

  • Fine up to 3.75 million
  • Exclusion from any public bid
  • Under certain conditions, dissolution of the legal person

1.5       Political contributions

Contributions to political parties are regulated by the law of
21 December 2007. In general terms, contributions to political parties are allowed provided that they are not anonymous and are not made by legal persons or by charities or associations or any groups not having a legal personality. Any donation that exceeds EUR 250 must be reflected in the annual accounts of the political party that received it.

1.6       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

The Luxembourg Criminal Code does not establish quantitative or qualitative limitations on such expenses. The analysis regarding a qualification as bribery shall be made on a case-by-case basis.

Under the applicable code of conduct, members of the Luxembourg government can accept gifts and offers of hospitality originating from persons, private entities or public entities active in a competitive sector according to private law regulations that are consistent with the general rules of courtesy and are not likely to influence them, if the approximate value does not exceed EUR 150.

The code of conduct of the State Council sets out a prohibition on accepting any gift or hospitality of an approximate value exceeding EUR 150, when representing the State Council.

2. Domestic bribery (private to private)

2.1       Legal framework

Articles 310 et seq. of the Luxembourg Criminal Code provide the legal framework relating to private bribery.

2.2       Definition of private bribery

Bribery is broadly understood as proposing to a person who is a director or a manager or having representative powers on behalf of a legal or natural person or by the fact of such director or manager or representative of soliciting or accepting to receive, directly or through another person, an offer, promise or advantage of whatever nature, for himself or herself or for a third person, in order to perform or to not perform his or her duties or to perform or to not perform an act facilitated by the position, without the approval and knowledge of the board of directors or of the general meeting or the employer or the principal.

2.3       Consequences of private bribery

(a)        For the individuals involved

  • Imprisonment between one month and five years
  • Fine between EUR 251 and EUR 30,000
  • Destitution of certain political rights or from exercising public
  • Destitution of certain civil rights for a term between five and 10 years.

(b)        For the legal persons involved

  • Fine up to EUR300,000
  • Exclusion from any public bid
  • Under certain conditions, dissolution of the legal person

2.4       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

The Luxembourg Criminal Code does not establish quantitative or qualitative limitations on such expenses. The analysis regarding a qualification as bribery shall be made on a case-by-case basis.

3. Corruption of foreign public officials

3.1       Legal framework

Article 252 of the Luxembourg Criminal Code provides the framework for bribery of foreign public officials.

3.2       Definition of corruption of foreign public officials

The legal provisions applicable to Luxembourg public officials also apply to foreign public officials.

3.3       Definition of foreign public official

Considered as foreign public officials are civil servants of a foreign state; foreign judges or arbitral judges; European civil servants and members of the European Commission, the European Parliament, the European Court of Justice and the European Accounting Court, subject to the provisions of European law; civil servants and employees of public or judicial international organizations; and members of foreign parliaments or international courts.

3.4       Consequences of corruption of foreign public officials

(a)        For the natural persons involved

The Luxembourg Criminal Code establishes the same penalties for public officials as for individuals who corrupt public officials. The penalties are as follows:

  • Imprisonment between five and 10 years
  • Fine between EUR500 to EUR187,500
  • Destitution (for life, under certain conditions) of certain political rights or from exercising public functions
  • Destitution of certain civil rights between five and 10 years

(b)       For the legal persons involved

  • Fine up to EUR3.75 million
  • Exclusion from any public bid
  • Under certain conditions, dissolution of the legal person

3.5       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

The Luxembourg Criminal Code does not establish quantitative or qualitative limitations on such expenses. The analysis regarding a qualification as bribery shall be made on a case-by-case basis.

4. Facilitation payments

The Luxembourg Criminal Code does not establish quantitative or qualitative limitations on such payments. The analysis regarding a qualification as bribery shall be made on a case-by-case basis.

5. Compliance programs

5.1       Value of a compliance program in mitigating/eliminating the criminal liability of legal

Compliance programs are not foreseen by the Luxembourg Criminal Code and cannot be understood as such as being an element for mitigating or eliminating risks of liability for legal persons. However, such programs may help in practice to limit such risk by informing employees and agents of good practices.

5.2       Absence of a compliance program as a crime

The Luxembourg Criminal Code does not view the absence of compliance program as a crime.

5.3       Elements of a compliance program

(a)            Legal framework

The Luxembourg Criminal Code does not recognize nor regulate the elements of a compliance program.

(b)            Recommended practice

In the absence of case law and relevant doctrine, it is generally understood that legal persons shall have such compliance program and inform their employees of the risks related to corruption.

6. Regulator with jurisdiction to prosecute corruption

The Luxembourg legal framework does not have a specific regulator with exclusive jurisdiction to prosecute corruption cases. Any public prosecutor could request that a judge start a corruption investigation. However, the Luxembourg system has a group of public prosecutors who specialize in these cases.

 


Baker McKenzie
10 – 12 Boulevard Roosevelt
2450 Luxembourg
Luxembourg

Andrea Schmid

Andrea Sabine Schmid has 14 years of international work experience. She has significant experience in insurance law, notably on cross-border business of insurers and insurance intermediaries, on contractual matters (review of life and group insurance policies to comply with the applicable law) and regulatory matters (license, passporting, prudential rules), as well as in drafting of investment management and intermediation agreement, run-off operations and outsourcing.

andrea.schmid@bakermckenzie.com

Tel: +352 26 18 44 262