Germany’s strong anti-bribery enforcement against individuals needs to be matched by comparably strong enforcement against companies

Merkel 2018 G7

From left to right: Mr Donald TUSK, President of the European Council; Ms Angela MERKEL, German Federal Chancellor. Shoot location: Charlevoix – CANADA. Shoot date: 08/06/2018. Copyright: European Union.

This article is brought to you in association with OECD.

Germany continues to demonstrate a high level of anti-bribery enforcement having prosecuted and sanctioned 328 individuals and 18 companies in foreign bribery cases since 1999. Germany is commended for its focus on holding culpable individuals liable, however, with companies held liable in only a quarter of the concluded foreign bribery cases there are concerns that there is insufficient enforcement against companies, according to a new report by the OECD Working Group on Bribery.

The 44-country OECD Working Group on Bribery has just completed its Phase 4 evaluation of Germany’s implementation of the Convention on Combating Bribery of Foreign Public Officials and related instruments. The report praises Germany’s role as one of the highest enforcers of the Anti-Bribery Convention and its pragmatic approach to prosecuting and sanctioning individuals for foreign bribery. This results from the use of a range of related alternative offences and of a variety of proceedings, such as non-prosecution arrangements. The Working Group, however, raises concerns about the low corporate enforcement rate as well as an inconsistent approach to holding companies liable across the different Länder (states) in Germany. The report also notes that the sanctions imposed on both individuals and companies are not always sufficiently deterrent and that whistleblower protection needs to be reinforced.

The Group made a range of recommendations to Germany, including to:

  • Review its overall approach to holding companies liable for foreign bribery and proceed with the 2018 Coalition Agreement to review the principle of prosecutorial discretion
  • Introduce clear and transparent guidance on the procedures and criteria attached to self-reporting by companies when concluding a foreign bribery case
  • Consider introducing a system of resolutions for companies as part of its efforts to increase enforcement against companies
  • Ensure the consistent compilation at Federal and Länder level of statistics relevant to the monitoring of the enforcement of German legislation implementing the OECD Anti-Bribery Convention
  • Ensure that sanctions imposed for foreign bribery or related alternative offences are always sufficiently deterrent, particularly for large companies

The report also notes a number of positive developments, such as the recent intention stated in the Coalition Agreement to increase the maximum punitive fine available for companies. The Working Group also welcomed the broad use of investigative techniques and tools by German investigators in foreign bribery cases, including coordinated investigations with tax authorities and Joint Investigative Teams in multi-jurisdiction investigations; as well as the effectiveness of the tax authorities in the detection of foreign bribery.

Germany’s Phase 4 report was adopted by the OECD Working Group on Bribery on 14 June 2018. The report, available at www.oecd.org/corruption/anti-bribery/Germany-Phase-4-Report-ENG.pdf, lists the recommendations the Working Group made to Germany on pages 84-87, and includes an overview of recent enforcement activity and specific legal, policy, and institutional features of Germany’s framework for fighting foreign bribery. In accordance with the standard procedure, Germany will submit a written report to the Working Group within two years (June 2020) on its implementation of all recommendations and its enforcement efforts. This report will also be made publicly available.

The report is part of the OECD Working Group on Bribery’s fourth phase of monitoring, launched in 2016. Phase 4 looks at the evaluated country’s particular challenges and positive achievements. It also explores issues such as detection, enforcement, corporate liability, and international cooperation, as well as covering unresolved issues from prior reports.

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