Anti-Corruption in Germany

By Dr. Andreas Lohner* and Dr. Nicolai Behr* (Baker McKenzie Munich)

1.      Domestic bribery (private to public)

1.1       Legal framework

Bribery of public officials (Vorteilsannahme, Bestechlichkeit, Vorteilsgewährung and Bestechung) is regulated under the German Criminal Code, Sections 331 to 338.

1.2       Definition of bribery

Bribery is committed by anyone who tries to corrupt a public official. German law distinguishes between: (i) giving/taking a bribe; and (ii) giving/taking a bribe as an incentive to perform an act in violation of one’s official duties. Whereas the former “broader” form of bribery involves the discharge of a duty, the latter form of bribery requires performance of an official act in violation of an official duty.

(a) Giving/taking a bribe

Giving bribes (Section 333 German Criminal Code) – This refers to offering, promising or granting a benefit to a public official, for that person or a third person for the discharge of a duty.

Taking bribes (Section 331 German Criminal Code) – This refers to demanding, allowing oneself to be promised, or accepting a benefit for oneself or for a third person for the discharge of a duty.

Under Sections 331, 333 German Criminal Code, as long as the public official’s duties are not violated, granting or receiving benefits is not punishable if the public official’s principal has authorized the benefit before or immediately after its receipt.

(b) Giving/taking a bribe as an incentive to perform an act in violation of one’s official duties

Giving bribes as an incentive to the recipient violating his or her official duties (Section 334 German Criminal Code) – This pertains to offering, promising or granting a benefit to a public official for that person or a third person, in return for the fact that he or she performed, or, will, in the future, perform an official act and thereby violated or will violate his or her official duties.

Taking bribes as an incentive to violating one’s official duties (Section 332 German Criminal Code) – This constitutes demanding, allowing oneself to be promised, or accepting a benefit for oneself or for a third person in return for the fact that one performed or, will, in the future, perform an official act and thereby violated or will violate one’s official duties.

(c) Bribery of a delegate / member of parliament

It is a criminal offense to offer, promise or grant any delegate or member of parliament an undue benefit for that member or a third party as a consideration for an act or omission of an act in relation to that member’s or delegate’s mandate (Section 108e para. 2 German Criminal Code). By the same token, the delegate / member of parliament can be held criminally liable if he demands or accepts the promise of such an undue benefit (Section 108e para. 1 German Criminal Code).

The term “member of parliament” comprises members of the two federal legislative chambers Bundestag and Bundesrat, the parliaments of the German Federal States, the European Parliament, elected members of municipal or regional associations, members of a parliamentary assembly of an international organization, and members of a legislative body of a foreign state (Section 108e para. 3 German Criminal Code).

1.3       Definition of public official

The German Criminal Code defines “public official” in Section 11 as anyone who: (1) serves as civil servant or judge; (2) otherwise carries out public official functions; or (3) has otherwise been appointed to serve with a public authority or another agency, or has been commissioned to perform public administrative services regardless of the organizational form chosen to fulfil such duties. The definition of public official is very broad and includes virtually any individual who exercises public functions. In particular, the definition is not limited to individuals in government functions. It also encompasses individuals employed by universities or public hospitals (i.e., all employees of public sector entities). The definition by the German Criminal Code, however, only comprises public officials under German law. For the extension of the Criminal Code to European and international public officials, see Section 3..

1.4       Consequences of bribery

(a) For the individuals involved

  • Imprisonment not exceeding three years or a fine (giving and taking bribes; Sections 331 and 333 German Criminal Code)
  • Imprisonment from three months (six months for public officials) to five years (giving and taking bribes as an incentive to the recipient’s violating his official duties; Sections 332 and 334 German Criminal Code; Bribery of a member of parliament; Section 108e German Criminal Code)
  • In aggravated cases, imprisonment for up to 10 years (Section 335 German Criminal Code)
  • Fines: Under German criminal law, the fine is sanctioned through a number of daily penalties (up to 24 months); the amount to be paid per daily penalty is determined by the court and depends on the offender’s income.

(b) For the company/legal entity

Companies cannot be held criminally liable under German law. However, administrative monetary fines may be imposed directly on companies if a company representative or representative body (e.g., member of the board of directors, general manager) commits a criminal or administrative offense, and the company hereby breaches a company duty or profits in an illegal manner (Section 30 of the German Administrative Offence Act). If a company representative violates his or her supervisory duties, that is, if for example no adequate safeguards to prevent corruption have been implemented, the company representative can be held liable. At the same time, the violation of a supervisory duty by the company representative can be attributed to the company and a monetary fine can be imposed on the company (Section 130 of the German Administrative Offence Act). The fines for a company can be up to EUR 10 million per offense.

Moreover, if an employee or company representative commits an administrative or criminal offense, a court can order the forfeiture “of the acquired something” (see Sections 73, 73a of the German Criminal Code, and Section 29a of the German Administrative Offence Act) against the company, meaning that the company may have to release all assets resulting from the commission of the unlawful act. Forfeiture may not be ordered if the company has already been fined (Section 30 para 5 of the German Administrative Offence Act).

In 2014, a discussion around implementing criminal liability for companies emerged. The discussion lost some momentum in 2016 but it is still ongoing.

1.5       Political contributions

Contributions to political parties are regulated by the Parteispendengesetz. In general terms, contributions to political parties are unrestricted. However, political parties are subject to a transparency mechanism, requiring the immediate publication of any contribution exceeding EUR 50,000 and the corresponding benefactor. Contributions exceeding EUR 10,000 (but amounting to less than EUR 50,000) will be published approximately 12 to 18 months from the contribution.

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

The German Criminal Code does not establish quantitative or qualitative limitations on hospitality expenses. However, German courts consider “small” favours permissible and use a very strict approach in determining what is or is not legal. Even inexpensive presents, such as pens or promotional free gifts, may be (but are not necessarily) considered impermissible. Whether a hospitality expense could be considered bribery needs to be assessed on a case-by-case basis, taking into account all available facts. Some public bodies have issued guidelines that provide for a threshold of EUR 25. This threshold may serve as a guideline for companies. However, in general, it is advisable not to provide any benefits to public officials.

2. Domestic bribery (private to private)

2.1       Legal framework

Private bribery is regulated under the German Criminal Code, Sections 299 to 301. It is applicable to all employees or agents of a business.

2.2       Definition of private bribery

Taking bribes in commercial practice – Whosoever as an employee or agent of a company (including the management of a company):

(a) demands, allows himself to be promised or accepts a benefit for himself or third person in a business transaction as consideration for according an unfair preference to third person in the competitive (domestic or foreign) purchase of goods or commercial services; or

(b) without the prior approval of the company demands, allows himself to be promised or accepts a benefit for himself or third person as consideration for an act or omission of an act that violates the duties towards the company shall be held criminally liable (Section 299 para 1 German Criminal Code).

Giving bribes in commercial practice – Whosoever:

  1. for competitive purposes offers, promises or grants an employee or agent of a business a benefit for himself or for a third person in a business transaction as consideration for such employee’s or agent’s according him or another person an unfair preference in the purchase of goods or commercial services; or
  2. without the prior approval of the company offers, promises or grants an employee or agent of a business a benefit for himself or for a third person as consideration for an act or omission of an act that violates the duties towards the company shall be held criminally liable (Section 299 para 2 German Criminal Code).

2.3      Consequences of private bribery

(a) For the individuals involved

  • Imprisonment not exceeding three years or a fine
  • In aggravated cases, imprisonment of up to five years

(b) For the company/legal entity

See Section 1.4 (b).

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

The German Criminal Code does not establish quantitative or qualitative limitations on hospitality expenses. Usually, it is permissible to offer private sector business associates a favour to enhance the goodwill of the (future) business partner or to reward him or her for past actions. This behaviour becomes impermissible when a court sees it as an attempt to influence future business decisions.
Presents of low value or an invitation to a middle-class restaurant are generally socially acceptable. To determine social acceptability, courts take into account the particular circumstances of the case and decide whether granting a specific favour could have led to favourable treatment in an unfair manner or to a violation of the recipient’s duties towards the company. In particular, a court would consider the benefit, the personal background of the acting persons, the financial value of the favour and the business relationship between the giver and the recipient’s employer. Even though the courts do not state which favours are socially acceptable, general opinion contends that favours granted to employees or agents of private entities are less likely to be considered socially unacceptable than comparable favours granted to public officials.

2.5       New: Corruption in the healthcare sector

On 4 June 2016, Sections 299a and 299b German Criminal Code came in to force. The two provisions extend German anti-corruption legislation to large parts of the country’s healthcare sector.

The new provisions close a gap that was identified by the German Federal Court of Justice in a decision of 29 March 2012. The court held that the then existing anti-corruption provisions of the German Criminal Code did not to apply to independent health practitioners. Independent health practitioners neither qualified as “employee or agent” under the provisions outlawing commercial bribery (Section 299 German Criminal Code), nor were they “public officials” under the laws prohibiting public bribery (Section 331 German Criminal Code). Yet, politically, the criminal liability of healthcare professionals was deemed appropriate.

Under the new Section 299a German Criminal Code, bribery constitutes a criminal offense if a healthcare professional in relation to his occupation, demands, allows himself to be promised or accepts a benefit for himself or another for according an unfair preference in domestic or international competition when prescribing or procuring pharmaceutical products, or when introducing patients or examination material. Conversely, those who offer, promise or grant such a benefit to a healthcare professional under these circumstances may be held criminally liable pursuant to Section 299b German Criminal Code.

The punishment is imprisonment of up to three years or a fine; in aggravated cases, imprisonment of up to five years.

3.      Corruption of foreign public officials

3.1      Legal framework

Bribery of foreign public officials usually takes place abroad (i.e., outside Germany). German criminal law applies extraterritorially if there is a connection to Germany (i.e., if one of the participants was a German citizen or if one of the actions in connection with the bribing of a public official took place in Germany). Action in this sense could be the approval of a bribe payment via email or via phone and the granting of funds for the bribe payments abroad, among others..

German Criminal law distinguishes between the following:

(i) Public officials of the European Union;

(ii) Public officials of foreign countries (including member states of the European Union) and international organizations

(iii) Foreign delegates / members of parliament.

3.2      Bribery of public officials of the European Union

Public officials of the European Union are to be treated as German public officials. Therefore, Section 1 above applies.

3.3       Bribery of public officials of foreign countries and international organizations

The new Section 335a German Criminal Code extends in particular the scope of Section 334 of the German Criminal Code, that is, offering, promising or giving bribes as an incentive to the recipient’s future violation of his official duties (see Section 1.2) to foreign public officials. Foreign public officials are equally liable if they demand, allow themselves to be promised or accept a bribe as incentive for the future violation of their official duties.

Foreign public officials include public officials of a foreign state (including public officials of a member state of the European Union) or international organization, any person entrusted to exercise a public function with or for an authority of a foreign state or international organization, or soldiers of a foreign state or international organization..

3.4       Bribery of foreign delegates / members of parliament

Bribery of foreign delegates / members of parliament may be covered by two sections. The first one is Section 108e German Criminal Code (see above Section 1.2 (c)). Similarly, under Section 2 of the Law against International Bribery, it is prohibited to offer, promise or give a benefit to a member of a legislative body of a foreign state or a parliamentary assembly of an international organization as consideration for an action or omission in connection with his mandate or tasks, with the intent to obtain or secure for oneself or a third party an undue advantage in the international competition..

3.5       Consequences of corruption of foreign public officials

(a) For the individuals involved

  • Imprisonment from three months (six months for public officials) to five years (giving and taking bribes as an incentive for the recipient’s violation of his or her official duties)
  • In aggravated cases, imprisonment for up to 10 years
  • Daily fine for up to 24 months (a judge will ultimately determine the daily penalty, taking the financial situation of the individual into account)

(b) For the legal entity

See Section 1.4 (b).

3.6       3.6 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

See Section 2.4.

4.      Facilitation payments

The German Criminal Code does not distinguish between facilitation payments and other payments. No facilitation payment exception applies under German law. Therefore, it is advisable to refrain from facilitation payments.

5.      Compliance programs

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

The German Criminal Code neither imposes criminal liability on legal entities nor expressly allows for compliance programs to mitigate or eliminate liability. However, legal entities may mitigate the risk of being exposed to fines under the German Administrative Offence Act (see 5.3.)..

5.2      Absence of a compliance program as a crime

The German Criminal Code does not recognize the absence of a compliance program as a crime. However, failure to implement adequate measures to supervise the company and its employees and to prevent illegal conduct may constitute an administrative offense by the company and the company representatives (see Section 1.4). If misconduct known to the management continues, there is a risk that failure to stop the misconduct can be viewed as aiding and abetting by the management and thus, could cause its criminal liability.

5.3      Elements of a compliance program

(a) Legal framework

The German Criminal Code does not recognize nor regulate the elements of a compliance program. There are some special regulations that apply to, for example, financial institutions. Provisions in the German Administrative Offence Act, the German Stock Corporation Act and the German Corporate Governance Codex require companies on an abstract basis to implement a compliance program.

(b) Recommended practice

German civil courts are in the process of establishing a best practice. The District Court in Munich recently handed down a decision that defines the compliance-related duties of the board of directors of a German stock corporation. The key points of the decision are the following:

(a) As a consequence of his duty of legality, each board member is obliged to organize and monitor the company in a way that no violations of law such as bribe payments to foreign public officials or foreign private persons occur. A board member violates his duties if he implements a deficient compliance system and if he does not sufficiently monitor the compliance system.

(b) In case of a respective risk exposure, a board member only complies with his organizational duty if he implements a compliance organization aiming at damage prevention and risk control. Decisive factors for the extent of the compliance organization are type, size and organization of the company, applicable laws, geographical presence and previous compliance incidents.

(c) The adherence to the duty of legality and therefore the implementation of an effective compliance system are joint obligations of all board members. The board is obliged to obtain on a continuous basis comprehensive information about known compliance incidents. The board must assess whether the implemented compliance system is adequate to prevent violations against compulsory laws.

(d) Cross-border bribe payments constitute violations of the law and may not be justified by arguing that economic success in corrupt markets would otherwise not be possible. Strict rules apply to the implementation of a compliance system to prevent bribe payments.

6. Regulator with jurisdiction to prosecute corruption

There is no specific office or institution that exercises exclusive responsibility to prosecute corruption cases. Provided an initial suspicion of corruption persists, any public prosecutor may begin to investigate facts he becomes aware of. However, within the public prosecutor’s service, certain prosecutors specialize in white collar crimes such as corruption.


Baker McKenzie Partnerschaft von Rechtsanwälten,
Wirtschaftsprüfern und Steuerberatern mbB
Theatinerstrasse 23
80333 Munich Germany

Dr. Andreas C. Lohner

Andreas Lohner advises and represents companies in corporate governance and compliance-related issues. Over the last years, he has conducted a number of multijurisdictional compliance projects and compliance investigations.

andreas.lohner@bakermckenzie.com

Tel: +49 89 5 52 38 263

Baker McKenzie Partnerschaft von Rechtsanwälten,
Wirtschaftsprüfern und Steuerberatern mbB
Theatinerstrasse 23
80333 Munich Germany

Dr. Nicolai Behr

Nicolai co-heads the compliance practice in Germany and the innovation and legal tech team for Baker McKenzie Germany / Austria. Nicolai is the founder of GlobalComplianceNews, a compliance news website with global reach moderated by Baker McKenzie. He co-chairs the committee “International Affairs” of the German Institute for Compliance (DICO). Nicolai is a regular speaker and author on compliance, white collar crime, innovation and legal tech topics.

nicolai.behr@bakermckenzie.com

Tel: +49 89 5 52 38 204