This post, the first of two parts, is based on an article that first appeared in the Magazine of the Deutsch-Amerkanische Juristen-Vereinigung by T. Markus Funk. Mr. Funk is a partner at Perkins Coie specializing in global anti-corruption compliance and internal investigations. The article is here.
The OECD Working Group on Bribery said in 2011 that Germany had assumed a "leading position in the investigation and prosecution of foreign bribery cases."
In its June 2013 Annual Report, the OECD ranked Germany second in total number of bribery cases since 1999 (after the United States), with the UK ranked a fairly distant third.
German anti-corruption laws have these features:
- Anti-Bribery provisions that make it illegal to pay, offer, or accept a bribe.
- German law prohibits bribery involving German public officials in both domestic and foreign transactions.
- German criminal law extends only to individuals. The country rejects the premise of a company committing crimes and seeks to hold individuals accountable for violations such as bribery.
- A company can be held liable, however, under Germany's Administrative Offenses Act (OWiG). If the corrupt act was committed by a person with managerial responsibility and the offenses involved violations of the company's policies, or the company was enriched or intended to be enriched, the company could be deemed liable. A company can also be held liable for failure to take reasonable supervisory measures to prevent bribery by its employees.
- Companies can be fined up to €10 million ($13.8 million) in such cases, disregarding confiscation or disgorgement of any economic advantage gained through the bribes.
In 1998, Germany signed onto anti-corruption protocols issued by the European Union and the OECD. Taken together, the European Union Anti-Corruption Act (EUBestG) and Germany's implementation of the OECD's Anti-Bribery Convention, called the Act on Combating International Bribery (IntBestG), greatly expanded Germany's anti-corruption focus.
The EUBestG prohibits offering and receiving bribes within the territory of the EU. The IntBestG prohibits the bribing of both domestic and foreign public officials.
German enforcement efforts since the implementation of these laws has been impressive. Between 2005 and 2010, 69 individuals were sanctioned for corruption-related offenses, including 20 who were tried criminally.
Since 2007, six companies have been found liable under German law for corruption-related offenses.
One of the most notable of these enforcements involved Siemens AG, which resulted in the industrial conglomerate paying almost €600 million ($833.2 million) to German authorities for bribes in a number of countries to secure public-works contracts.
Siemens paid a fine of €395 million ($569 million) to the Office of the Prosecutor General in Munich in December 2008 after previously paying €201 million ($285 million) to the Munich Prosecutor in October 2007.
Siemens also paid about $800 million in fines and disgorgement to the U.S. Department of Justice and the Securities and Exchange Commission, still the largest payout in FCPA enforcement history.
The OECD called Germany's action against Siemens a "striking example" of how to prosecute a case based on "breach of trust" rather than outright bribery. Using this strategy, individual defendants were convicted of breach of trust for establishing slush funds to be used for bribes, while Siemens was found liable as a company for the bribery offenses.
In Part 2, we'll examine basic compliance steps companies should consider when doing business in Germany.
Julie DiMauro is the executive director of FCPA Blog and can be reached here.