Anti-Corruption in Austria

By Georg Krakow* and Elisabeth Götz* (Baker McKenzie Vienna)

1.      Domestic bribery (private to public)

1.1     Legal framework

Bribery of public officials is regulated by law, specifically under Section 304 to Section 308 of the Austrian Criminal Law Code (Strafgesetzbuch or StGB).

1.2     Definition of bribery

Under Austrian Law, both the party granting a benefit (active bribery) and the party accepting such a benefit (passive bribery) may be liable.

“Bribery” is defined as offering, promising or granting a benefit to a public official or a third party for the purpose of influencing the public functions of the public official. The law is clear on the fact that granting of benefits as compensation for an action or omission that thwarts official duties is bribery. If benefits are granted for an action or omission in line with official duties or with an intent to gradually influence a public official in the future, then the granting of “improper” benefits (see definition below) is considered bribery.

Austrian Law distinguishes between: (a) active/passive bribery (Sections 304, 307 StGB); (b) accepting/granting of benefits (Sections 305, 307a StGB); (c) accepting/granting of benefits to influence (Sections 306, 307b StGB); and (d) forbidden intervention (Section 308 StGB) (see Chapter 1.4 for more detailed discussion).

1.3     Definition of public official

The definition of “public official” is set out in Section 74 Paragraph 1 item 4 of the StGB:

  • A public official is any legislative, administrative or judicial public official or person who has been appointed or elected with official duties in any other way (for instance, a park sheriff), including body corporates instituted by public law (for instance, a university), for the Republic of Austria or for any other state or for an international organization.
  • With the latest amendment to the StGB that became effective at the beginning of 2013, the definition of public official was substantially broadened; delegates to the National Assembly and the Federal Assembly as well as the Municipal Council are now fully included.
  • Further, since the beginning of 2013, organs or employees of government-owned or -controlled companies are now public officials (for instance, national railway company ÖBB, the public road maintenance company ASFINAG, or the national post Post AG). An institution or company is regarded as government-owned or -controlled if it is: (i) at least 50% (directly or indirectly) owned; or (ii) otherwise factually dominated by domestic or foreign Furthermore, organs or employees of companies subject to auditing by a Court of Auditors are considered public officials.

Note: The definition of public officials as set out in the StGB encompasses many individuals who would not be considered public officials in other jurisdictions. A careful case-by-case analysis is therefore required.

1.4     Consequences of bribery

(a) For the public official involved

Section 304 of the StGB (passive bribery, Bestechlichkeit) provides that a public official who demands, takes or accepts another person’s promise of any benefit for himself or a third party as compensation for the undutiful performance or omission of his official duties shall be punished with:

  • imprisonment for up to three years;
  • imprisonment for up to five years if the value of the benefit exceeds EUR 3,000; orr
  • imprisonment for up to 10 years if the value of the benefit exceeds EUR 50,000.

Section 305 of the StGB (acceptance of a benefit, Vorteilsannahme) provides that a public official who for himself or a third party demands any kind of benefit or who takes or accepts another person’s promise of an undue benefit as compensation for an action or omission that is in line with his official duties shall be punished with

  • imprisonment for up to two years;
  • imprisonment for up to three years if the value of the benefit exceeds EUR 3,000; or
  • imprisonment for up to five years if the value of the benefit exceeds EUR 50,000.

The same punishment is applicable for Section 306 of the StGB (acceptance of a benefit to be influenced, Vorteilsannahme zur Beeinflussung), which provides that a public official who (for himself or a third party) demands any benefit or who takes or accepts another’s person promise of an undue benefit with the intent to let himself be influenced without a connection to a concrete official act shall be held criminally liable.

(b) For the private individual involved

Section 307 of the StGB (active bribery, Bestechung) provides that a person who offers, promises or grants any benefit to a public official for himself or for a third party for the undutiful performance or omission of the public official’s duties, shall be punished with:

  • imprisonment for up to three years;
  • Imprisonment for up to five years if the value of the benefit exceeds EUR 3,000; or
  • Imprisonment for up to 10 years if the value of the benefit exceeds EUR 50,000.

Section 3307a of the StGB (granting of a benefit, Vorteilszuwendung) provides that a person who offers, promises or grants an undue benefit to a public official for himself or a third party as compensation for an action or omission in line with the public official’s duties (dutiful performance or omission) shall be punished with:

  • imprisonment for up to two years;
  • imprisonment for up to three years if the value of the benefit exceeds EUR3,000; or
  • imprisonment for up to five years if the value of the benefit exceeds EUR50,000.

The same punishment is applicable for Section 307b of the StGB (granting of a benefit to influence, Vorteilszuwendung zur Beeinflussung), which provides that a person who offers, promises or grants an undue benefit to a public official (for himself or a third party) in order to influence the exercise of public office without a connection to a concrete official act shall be held criminally liable.

Furthermore, Section 308 of the StGB (forbidden intervention, Verbotene Intervention) sets out that it is a criminal offense to demand, accept or allow oneself to be promised a benefit for oneself or a third party in return for undue exercise of influence on the decision-making of a public official. Also, the person offering, promising or granting the benefit is criminally liable. Both shall be punished with

  • imprisonment for up to two years;
  • imprisonment for up to three years if the value of the benefit exceeds EUR3,000; or
  • imprisonment for up to five years if the value of the benefit exceeds EUR50,000.

(c) For the company/legal entity involved

The liability of legal entities and other business associations is regulated under the Act on the Criminal Liability of Associations (Verbandsverantwortlichkeitsgesetz or VbVG), specifically in Sections 3 and 4. Section 3 provides that the association shall be held responsible for a criminal offense if the offense was committed for its benefit, or if the commission of the offense violated legal obligations of the association

  • Association fines (Section 4 of the VbVG) will be determined based on a conversion key translating the sentences for natural persons as foreseen in the StGB into daily rates for legal entities.
  • The maximum fine for bribery is 130 daily rates. The judge will determine the daily penalty, taking into account the financial strength of the legal entity, from EUR 50 per day to a maximum of EUR 10,000 per day, and will multiply it by the number of days imposed as penalty.
  • The maximum penalty for bribery, therefore, is EUR 1.3 million.

Excursus: Leniency program regulations

On 1 January 2017, the newly amended leniency program regulations entered into force. The amendment prolonged the leniency program until 31 December 2021.

Under specific circumstances, the perpetrators of crimes with a certain severity are entitled to request a withdrawal from prosecution. It is necessary that the perpetrator approaches the prosecution proactively and makes a full confession about his own contribution to the crime. Furthermore he has to provide information not yet known to the prosecution /police and to cooperate with those authorities to the full extent. The information provided has to be essential for the clearance of the overall crime.

1.5      Political contributions

Contributions to political parties are allowed under certain conditions and are regulated under Section 6 of the Austrian Act of Parties (Parteiengesetz, PartG).

Parties have to disclose the name and address of a donor whose contributions exceed EUR 3,500 within a year. Singular contributions that are higher than EUR 50,000 should be reported promptly to the Austrian Court of Audit, which has the obligation to publish on its website the amount of the contribution under the name and address of the contributor.

Moreover, political parties are not allowed to accept political contributions from companies that are at least 25% owned by the state. Furthermore, Section 6 Paragraph 6 n 8 and 9 of the Austrian Act of Parties governs the proscription of anonymous political contributions that are higher than EUR 1,000 and political contributions higher than EUR 2,500, when paid in cash

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

Austrian criminal law only allows benefit if NOT granted to unduly influence the public official.

Three criteria are used to determine if a hospitality expense could be considered as a sign of corruption on the part of a public official:

(a) If the public official demands actively a certain hospitality expense, it is punishable as such any time.

(b) However, the exception rule of “hospitality expenses of low value and in accordance with local customs” has been established recently. Expenses are not construed as an improper or not-insignificant benefit if they are below a certain value (case law considers benefits of a value of up to EUR 100 to be insignificant for public officials) and in accordance with local customs.

Examples of such expenses are for Christmas presents, flowers for birthdays and meals after lectures. This rule is never applicable to money, because of its value per se.

(c) Finally, a further limitation on hospitality expenses is applicable to benefits that are granted within the scope of a professional event, where there is an official and objective justifiable interest for the participation (see also Section 305 Paragraph 4 n 1 StGB). Whether an official and objective interest can be justified will be assessed on a case-by-case examination. Case law on the matter is non-existent so far. For instance, an invitation to a white collar crime symposium – even if the ticket price is EUR 500 – including lunch and dinner may be justifiable for a public official working at the Department of Criminal Law at the Ministry of Justice. In practice, a key point of distinction is whether personal interest might outweigh professional interest, which can be the case if entertainment or accommodation is excessive or luxurious.

2. Domestic bribery (private to private)

2.1       Legal framework

Private bribery is regulated by law in Sections 309 and 153a of the StGB.

2.2       Definition of private bribery

“Private bribery” may be defined as offering, promising or granting any benefit to an employee or agent of a legal entity, for the employee or agent himself or for a third party, within the course of business as compensation for the undutiful performance or omission of a legal act (Section 309 para 2 of the StGB).

Pursuant to Section 309 Paragraph 1 of the StGB, employees or agents of a business face criminal responsibility if they demand, allow themselves to be promised, or accept (for themselves or a third party) any benefit for the undutiful performance or omission of a legal act within the course of business.

Furthermore, persons with legal power to bind their company or to dispose over their company’s assets are liable if they accept a not- insignificant benefit (valued at more than EUR 100) and contrary to their duties fail to hand it over to the employer (acceptance of gifts by agents, Geschenkannahme durch Machthaber, Section 153a of the StGB). If acceptance is permitted by the employer, in advance or retrospect, there is no liability.

Under Austrian Law, both the party granting the benefit and the party accepting such a benefit may be liable.

2.3       Consequences of private bribery

(a) For the individuals involved

In the case of Section 309 of the StGB, the employee or agent of a legal entity or the individual may be punished with:

  • imprisonment for up to two years;
  • imprisonment for up to three years if the value of the benefit exceeds EUR3,000; or
  • imprisonment for up to five years if the value of the benefit exceeds EUR 50,000.

In the case of Section 153a of the StGB (acceptance of gifts by agents, Geschenkannahme durch Machthaber), the person who accepts a not- insignificant benefit and fails to pay it over may be punished with imprisonment for up to a year.

(b) For the company/legal entity

  • Association fines (Section 4 of the VbVG) must be determined accordingly, to be calculated based on a conversion key of penalties for natural persons in line with the StGB to daily rates for legal entities.
  • Bribery fines, according to Section 309 of the StGB, range within 100 daily rates (per diem), from wherein the judge will determine the daily penalty, taking into account the financial strength of the legal entity, from EUR 50 to EUR 10,000 per day, and which will be multiplied by the number of days imposed.
  • The maximum penalty for private bribery, therefore, is EUR 1 million.

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

Private corruption is only punishable in the event of action or omission thwarting professional duties. There are no limitations applicable to private corruption. However, the type and the value of the invitation or hospitality expense may be considered an indication of whether or not there is an intent for the undutiful performance.

For the provision in Section 153a of the StGB regarding acceptance of gifts by agents, Austrian jurisprudence limits criminal liability to gifts of a not-insignificant value. Generally the limit will be considered at EUR 100; however, depending on the specific circumstances, it can be lower.

3. Corruption of foreign public officials

3.1       Legal framework

The provisions governing corruption of Austrian public officials are also applicable in cases involving foreign public officials.

3.2       Definition of corruption of foreign public officials

See Chapter 1.2; no special regulations for foreign public officials apply.

3.3       Definition of foreign public official

See Chapter 1.3; no special regulations apply.

3.4       Consequences of corruption of foreign public officials

See Chapter 1.4; no special regulations apply.

Note: The provisions governing corruption of public officials are also applicable in cases involving foreign public officials. Austrian citizens and Austrian businesses may be prosecuted in Austria even though the act may not be punishable in a foreign country, according to the foreign law. A corruption offense is furthermore punishable in Austria when committed at least in part in Austria or by or against an Austrian citizen.

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

See Chapter 1.6; no special regulations apply.

4. Facilitation payments

The exception rule of “hospitality expenses of low value and customary in a certain place” does not apply to facilitation payments. Thus, these are illegal, regardless of the amount of money or action “facilitated.”

In addition, facilitation payments will likely lead to embezzlement proceedings based on Section 153 of the StGB. Pursuant to § 153 of the StGB, whosoever knowingly abuses his authority to dispose of assets of another or to engage another thus causing a financial loss for the other person commits embezzlement. Abuse of authority is committed when one unduly violates rules that serve the protection of the assets of the beneficial owner(s).

The offense of embezzlement protects the assets of the beneficial owner(s) only. The assets of the person granting authority are not protected if this person is not himself the beneficial owner.

In companies, the shareholders are considered to be the beneficial owners. This means that the assets of the company granting authority itself are not protected pursuant to § 153 of the StGB if the beneficial owners’ assets are not harmed or the actor is identical with the beneficial owner.

Normally, the value of the shares is affected if a company incurs damage and hence the assets of the beneficial owner(s) suffer damage. In essence, damage to the assets of the company granting authority is only then not protected if: (i) all shareholders consent to the act; (ii) the loss of assets for the company correlates with an increase of assets in the same amount for all shareholders (as also does a symmetrical distribution); or (iii) the damage is so minor that it does not harm the value of the shares in any way.

Depending on the damage caused, the penalty may be imprisonment for up to 10 years

5. Compliance programs

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

Legal entities may be held responsible for a criminal offense committed by a decision maker (Entscheidungsträger) or by an employee if the offense was committed for the benefit of the company or the commission of the offense violated legal obligations of the association.

It is in the event that a criminal offense is committed by an employee that compliance programs may help mitigate or eliminate criminal liability. The law states that companies may only be held liable for criminal offenses committed by their employees if the commission of the offense was made possible (or essentially facilitated) due to the fact that the decision makers disregarded reasonable and necessary diligence. This is possible through a flaw in the implementation of essential technical, organizational or staff-related measures for the prevention of such crimes. These measures include, for example, guidelines, trainings and controls. Which measures are considered necessary have to be assessed on a case-by-case basis, depending on the size, structure, sector, etc. However, an effective compliance program may constitute a mitigating/eliminating factor.

Pursuant to the VbVG, the prosecution also has discretion on whether or not to prosecute associations or conditionally withdraw from the prosecution. In deciding whether to apply these measures, the prosecution will take into account, inter alia, the conduct of the entity after the offense and will factor in the taking of preventive measures. The adoption of a compliance system will be considered as such a preventive measure.

5.2       Absence of a compliance program as a crime

The absence of a compliance program is not considered a criminal offense in the StGB.

5.3       Elements of a compliance program

(a) Legal framework

Until now, the StGB does not provide a legal framework for compliance programs, and there are no legal provisions establishing the type of compliance model that has to be adopted in Austrian law. At present, there is also no jurisprudence that sets out criteria.
However, recourse can be made to the requirements being set out in ONR 192050, a compliance management system standard published by Austrian Standards in 2013.

Furthermore, a special compliance program is mandatory for banks, according to Paragraph 18 of the Supervision of Securities Act (Wertpapieraufsichtsgesetz). The absence of a compliance program leads to regulatory penalties or even to the revocation of the banking license.

(b) Recommended practice

Since the absence of implemented compliance programs can lead to criminal responsibility in the legal entity’s part, the effective implementation of a compliance program is highly recommended.

Moreover, the diversified goals of compliance programs include: the fulfilling of and compliance with statutes; prevention of dangerous, illegal corporate methods; and prevention of damages to the company through thievery, disloyalty and fraud. Furthermore, the defence against bribery and the increase in the company’s value and its heightened reputation make compliance programs indispensable.

Also, it is within corporate decision-makers’ responsibility to provide for appropriate systems of control and risk prevention according to the “specific needs of the company” (Section 70 Paragraph 1, 84 Paragraph 1, 99 corporate law Aktiengesetz). In this sense, in case of risks of compliance breaches, organs of corporations can be obliged by corporate and thus civil law to implement compliance programs. Failure to do so may lead to liability.

6. Regulator with jurisdiction to prosecute corruption

In September 2011, a central department of public prosecution (Zentrale Staatsanwaltschaft zur Verfolgung von Wirtschaftsstrafsachen und Korruption or WKStA) was established solely for the prosecution of economic offenses and corruption.
Pursuant to Section 20a n 5 of the Austrian Code of Criminal Procedure (StPO), offenses relating to Section 304 to 309 of the StGB (when the value of the benefit exceeds EUR 3,000) are governed by the WKStA.

Even if the value of the benefit for a corruption offense does not exceed EUR 3,000, the WKStA can claim competence for the case if it is in the public’s best interest (according to Section 20b, Paragraph 1 StPO).


Baker McKenzie
Diwok Hermann Petsche Rechtsanwälte
LLP & Co KG Schottenring 25
1010 Vienna
Austria

Georg Krakow

Georg Krakow advises corporate clients on compliance matters and on the consequences of penal law. He focuses on criminal cases, risk analysis, and on the development, implementation and control of compliance systems. Georg also counsels on internal investigations for business enterprises.

georg.krakow@bakermckenzie.com

Tel: +43 1 2 42 50 244

Baker McKenzie
Diwok Hermann Petsche Rechtsanwälte
LLP & Co KG Schottenring 25
1010 Vienna
Austria

Elisabeth Götz

Elisabeth Götz advises clients on corporate criminal law matters and represents clients in criminal proceedings. She also counsels clients regarding internal investigations and compliance systems with a focus on criminal law and anti- corruption issues.

elisabeth.goetz@bakermckenzie.com

Tel: +43 1 2 42 50 283
Mobile: +82 10 5451 0819