EU Commission announces new measures to fight corruption
The EU Commission has announced that it will take action against abuse, organized crime and corruption with a new anti-corruption strategy and presented a comprehensive catalog of measures for this purpose on May 3, 2023. In this context, the EU Commission presented a comprehensive catalog of measures on May 3, 2023, to combat corruption within the member states and in third countries. The aim is to modernize and largely harmonize the legal framework for the criminal prosecution of corruption in the member states. In particular, the criminal offenses to be prosecuted as corruption offenses are to be defined uniformly. The level of punishment and the statute of limitations, which currently varies widely between the member states, are also to be harmonized, and a new system of sanctions for third countries is to be introduced, which will allow entry bans and asset freezes.
Formation of EU anti-corruption network planned
It will bring together law enforcement agencies, public authorities, professionals, civil society representatives, and other stakeholders to develop best practices and practical guidelines and assist the Commission in identifying areas of high corruption risk. The goal is to incorporate the network’s findings into the future EU anti-corruption strategy. This is to ensure that the planned measures of the EU anti-corruption strategy are applied with the most significant possible impact and consistency across the borders of the member states.
New EU directive to help modernize and harmonize the fight against corruption
Furthermore, the Commission has presented a draft directive on fighting corruption, which aims to modernize the existing EU legal framework, actively promote the prevention of corruption, and establish a culture of integrity. To this end, various initiatives are planned to raise awareness regarding corruption and ensure the highest possible accountability in the public sector, in particular, the transparent management of conflicts of interest and the verification of assets of public officials. Definitions of corruption offenses are to be harmonized so that not only bribery but also embezzlement, influence peddling, abuse of office, obstruction of justice, and illicit enrichment can be prosecuted across the EU in the future. The aim is for all criminal offenses under the United Nations Convention against Corruption to be regulated in EU legislation and for corruption in the public and private sectors to be dealt with in the same legal act.
1. Enhanced sanctions regime for corruption.
The draft directive provides for more stringent sanctions for natural and legal persons. Articles 16 and 17 of the draft directive are particularly noteworthy. Under the sanctions regime proposed by the EU Commission, legal entities can be held liable for corruption offenses committed by their board members or other persons in a managerial position and which have been committed for the company’s benefit. The extensive catalog of sanctions under Article 17 of the draft directive should not be underestimated:
- Group-wide fines of up to 5% of the worldwide turnover of the financial year preceding the fine
- Permanent or temporary exclusion from public procurement procedures
- Withdrawal of permits or authorizations to carry out activities in the context of which the offense was committed
- Placement of the legal entity under judicial supervision
- Judicial order to dissolve the legal entity
2. Recognition of effective compliance management systems and voluntary self-disclosures
In addition to tightening the sanction rules, the EU Commission intends to bring about EU-wide harmonization of aggravating and mitigating circumstances with its draft. Article 18 mentions the establishment of an effective compliance management system and effective internal controls to prevent corruption as mitigating circumstances. The draft guideline also explicitly recognizes subsequent compliance measures as a mitigating circumstance. Similarly, in its decision of April 22, 2022 (Ref.: 5 StR 278/21), the German Federal Court of Justice (BGH) also explicitly confirmed that subsequent compliance measures can be taken into account in the retribution portion of the fine under Section 30 OWiG (see our blog post dated November 29, 2023). With an implementation of the Anti-Corruption Directive into German law, this approach is likely to finally find its way into the statutory law.
In addition, the EU Commission’s draft directive shows certain parallels to the recently updated Corporate Enforcement Policy of the U.S. Department of Justice DOJ (see our blog post dated February 10, 2023). This is because, according to the draft directive, voluntary self-disclosures and remedial measures after the discovery of a criminal offense are also to be taken into account as mitigating circumstances.
3. Strengthening law enforcement agencies for a more effective fight against corruption.
According to the draft directive, member states must ensure that law enforcement agencies and prosecutors have appropriate investigative tools to fight corruption. Due to the often borderless nature of corruption, the cooperation and equipment of law enforcement agencies are to be strengthened. According to Article 19 of the draft directive, it must be ensured that privileges and immunities granted to public officials or other public servants can be revoked promptly in the event of corruption investigations by means of an effective and transparent procedure. Furthermore, the sanction instruments of the Common Foreign and Security Policy are to be extended to severe corruption offenses.
Before the proposed Anti-Corruption Directive can become EU law, it must be negotiated and adopted by the European Parliament and the Council.
Conclusion
The corruption scandal involving the Vice-President of the European Parliament Kaili had once again impressively demonstrated that corruption does not stop at the EU’s and its institutions’ borders. In addition to the immense economic damage, corruption always means undermining trust in fundamental democratic values. With its package of measures, the EU is steering in the right direction to prevent further scandals and close loopholes in international law enforcement. It remains to be seen to what extent the Anti-Corruption Directive will influence the revision of the German Administrative Offences Act (Ordnungswidrigkeitengesetz, OWiG), which is now planned following the failure of the Association Sanctions Act (Verbandssanktionengesetz) in Germany. With the draft of the Anti-Corruption Directive, the EU is moving significantly closer to a comprehensive corporate criminal law based on the U.S. model. German companies should keep an eye on these developments and review their compliance management system with regard to the requirements announced in the draft.
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