Grand coalition’s draft agreement updates the rules in Germany
by Désirée Maier, Vera Wichers, and Mélina Krulik
The German Act on Regulatory Offences currently allows a maximum fine of €10 million against companies. It does, though, recommend fines should exceed any benefit gained. This has led to penalties of up to a billion euros. Typically, cooperation is considered; however, the rules are unclear. There’s uncertainty, too, around privilege in internal investigations.
Germany’s grand coalition plans to clarify these points. The draft coalition agreement suggests fines against €100 million+ turnover companies could go up to 10% of annual turnover. Rules on how to account for cooperation and on making sanctions public are also planned.
Discretionary prosecution could be abolished and the public prosecutor’s office obliged to start proceedings, if given sufficient grounds. Among other issues, regulations on procedural dismissals could include a new framework for settlement discussions and agreements with agencies.
The final bill is unlikely to come into force any time soon. Meanwhile, the Federal Ministry of Justice is working on regulating internal investigations, which would cover privilege, though details are unknown.
Italy targets bribery
by Francesca Rolla and Alessandro Borrello
On 31 January 2019, Italy’s new Anti-Corruption Law comes into force. It includes higher penalties for corruption, with prison sentences from three to eight years, among other provisions. Anyone sentenced to more than two years in prison will be permanently disqualified from contracting with the public administration, while sentences of less than two years will lead to a five to seven-year ban. Those who report in a timely manner and provide useful information can avoid the punishment.
There’s also a crackdown on private bribery: managers and directors can now be prosecuted without the offended party’s claim.
The law also amends corporate quasi-criminal liability: it adds influence peddling as a crime that could lead to liability and provides that the company may be disqualified from various activities for four to seven years for crimes committed by management or two to four years for crimes by employees.
These periods may be reduced to between three months and two years under certain circumstances. First, if during the investigation the company preserves evidence, identifies the offenders, and avoids any further effects of the misconduct. Second, if it has in place, before the first instance verdict, an effective organizational model that removes shortcomings and prevents a repeat of the crime.
With this in mind, you should make sure your Decree 231 organizational model is updated and ironclad.
New bill widens the scope of corporate criminal liability in Poland
by Marek Wroniak, Celine Bujalska, and Anna Wiktorow
In 2018, the Ministry of Justice published a bill that rewrites the rules on corporate criminal liability and widens their scope. If passed, the new law will no longer rely on an individual being convicted before an entity can be prosecuted. Instead, entities will be liable for offenses that result from lack of due diligence or not having procedures in place.
The bill raises financial penalties to between PLN 30,000 and PLN 30 million (€7,500 and €7.5 million), which may be doubled. It will introduce new curbs — for example, a ban on seeking public contracts — and non-financial penalties, too.
If a whistle-blower’s rights are infringed — say, their contract or employment ended — the court will be able to have the person reinstated or compensated.
Notably, the new law will apply to crimes committed before it comes into force. Due diligence, compliance programs, and self-disclosure are your best defense. They can limit your liability and reduce penalties.
Companies in Russia can avoid liability for bribery
by Alexei Dudko and Daria Pavelieva
Russia has no corporate criminal liability. If someone bribes another for a company, the person who gives the bribe would be criminally liable. The company would be handed an administrative fine.
The Administrative Offences Code recommends fines of no less than RUB 1 million and up to 100 times the sum of the bribe. This depends on the scale of the offense.
The exemption from liability also applies to victims of extortion. This is in line with the exemptions from liability in the Russian Criminal Code for individuals in bribery cases. But the amendment does not extend to bribery of foreign public officials or public officials of international organizations.
The amendment separately allows authorities to apply to the court to freeze the assets of a company suspected of bribery up to the maximum amount of the fine for the indicted bribery. This is an interim measure pending the outcome of the investigation, and it can be appealed.
Court rulings in Spain reflect a change in mood
By Ignacio Sanchez
Last year saw several striking rulings. The National Court convicted the former treasurer of the Popular Party, among 29 defendants, for corruption and other offenses. The party had exchanged public contracts for kickbacks. The court also fined the party €245,000 because it benefitted from the scheme.
This was the first time a Spanish political party has been found guilty of a crime. Notably, the judgment confirms a recorded conversation is admissible evidence — if it includes the person recording.
Bribery, however small, is a serious crime
The Supreme Court upheld a judgment by the Canary Islands’ High Court. A customs official turned a blind eye to merchandise violating copyright in exchange for €650. He was sentenced to four years in prison.
The judgment underscores that bribery is a felony. The sum involved is neither here nor there. Likewise, it doesn’t matter whether the wrongdoing damaged the public administration or whether the person knew what they were doing.
Compliance programs make a difference
The Supreme Court issued a ruling that highlights why compliance programs matter. The judgment states compliance programs are essential. They stop corporate criminal liability where managers or employees commit an offense. And they avoid offenses of misappropriation and management fraud.