This blog is part of Exporting Corruption 2020.
Germany was classified as active enforcer against foreign bribery ever since Transparency International started reporting on enforcement of the OECD Anti-Bribery Convention in 2005.
However, in this year’s Exporting Corruption 2020 report, Germany missed the mark and was demoted from active enforcement to moderate enforcement status. This is in part explained by the priority prosecutors have been giving to prosecuting individuals over companies.
Companies often escape prosecution and sanctions
Indeed, prosecution of individuals is mandatory, whereas the prosecution of companies lies in the discretion of the prosecutor. This is contrary to the OECD Anti-Bribery Convention’s requirement of effective, proportionate and dissuasive sanctions for companies.
To address this gap, the government introduced a draft Act on Association Sanctions (Verbandssanktionengesetz) in Parliament that would make the prosecution of companies mandatory. However, this draft Act faces opposition in the second chamber, the Bundesrat, making it hard to predict in which form it will be passed, if at all.
Companies are liable for foreign bribery offenses, if management commits the offense or fails to properly supervise lower-level employees. Yet, in only about half of the case clusters have companies been sanctioned alongside individuals between 2016 and 2019. In several cases, the profits from the corrupt deal were simply confiscated without any additional penalty.
A need for more comprehensive reporting
Likewise, more consistent publication of decisions would have made it easier to classify cases as “major”. Transparency International’s methodology for calculating enforcement activity requires cases to be reported by the media or made available in legal databases in order to be considered “major” foreign bribery cases.
However, cases involving the prosecution of individuals are often terminated with payment of a sum of money, in most cases before court proceedings are even opened and thus made public. Such terminations are also not published in legal databases. To counter this, Transparency Germany recommends that at least basic information on cases be included in annual corruption reports. In addition, legal databases should routinely publish not only decisions of federal courts – as is current practice – but also of regionals courts.
This is where most foreign bribery offenses are tried. The media can request the text of court decisions in anonymized form, a practice confirmed by federal courts, but this does not extend to the decisions of prosecutors. Such decisions are made in cases where companies fail to properly supervise lower-level employees. The Airbus decision of the Prosecutors’ Office in Munich of February 2018 is an example. Prosecutors published a press release, but Transparency Germany tried in vain to obtain the text of this decision.
To more vigorously prosecute companies and comprehensively publish court decisions, the German legal system requires additional human and financial resources. Germany is currently implementing a ‘Pact for the Rule of Law’, which will amongst other measures allocate EUR 220 million to the Länder to create 2,000 positions for judges and prosecutors by 31 December 2021.
There is hope that by the time of the next Exporting Corruption Report, Germany will once again lead the way as an active enforcer against foreign bribery.