Fighting Corporate Wrongdoing – Hell and High Water
Germany: Corporate Sanctions Law failed
Now it’s official: After this development had been apparent for several months, the legislative project for a German corporate sanctions law has now failed; at least for this legislative period.
Although the governing parties had already agreed on a “new sanctions law for companies” in the coalition agreement in 2018, and an “unofficial” draft bill was available in August 2019 (see our blog post of August 29, 2019), which finally made it to a governmental draft in 2020 under the title “Law to Strengthen Integrity in Business” (see also our blog post of April 24, 2020), the project has now (for the time being) failed after intensive discussions in recent months. One of the main reasons for the failure is said to be the disagreement on how to deal with internal investigations. In particular, the planned separation between criminal defense on the one hand and legal advice and support for internal investigations on the other, and the associated limited prohibition on the confiscation of any investigation results, proved to be obviously incapable of consensus (see also the article in the FAZ of June 9, 2021).
It remains to be seen whether and to what extent a new attempt will be made to introduce corporate criminal law after the German parliamentary elections in the fall. At least some election programs suggest that corporate criminal law will be on the agenda again in the next legislative period. Thus, there is no reason to put corporate prevention and compliance efforts on hold. This is particularly true in view of the fact that the prosecution of corporate offenses remains at the top of the agenda, at least internationally, especially with regard to corruption, money laundering and fraudulent activities.
USA: Fight Against Corruption Declared as a Core National Security Interest
In particular, new developments in the United States, show that the fight against corruption is once again made a priority. On June 3, 2021, President Joe Biden issued a so-called “Presidential Action” in which he declared the global fight against corruption to be a core national security interest (Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest). The memorandum calls on more than a dozen U.S. federal agencies to submit a report within 200 days with more specific proposals to prevent and actively combat corruption at both the national and international levels. This initiative is expected to have a significant impact on the activities of investigative agencies in the field of international anti-corruption.
Europe: European Public Prosecutor’s Office (EPPO) launched its operations
But the fight against corporate crime is now also being noticeably advanced at the European level: On June 1, 2021, the European Public Prosecutor’s Office (EPPO) launched its operations, whose task is in particular to protect “European taxpayers against crimes such as money laundering, corruption and cross-border VAT fraud.” Thus, the EPPO is specifically tasked with investigating and prosecuting the following fraud and other crimes against the EU’s financial interests (see also the European Commission’s press release of June 1, 2021).
Speaking to media representatives, the first European Chief Prosecutor, Laura Kövesi, stressed that the EPPO would take a close look at all areas where EU funding is involved. Among the priorities, she listed health care, agriculture, investment, and public procurement. In addition, Kövesi announced that the first registered case came from Germany (see also the interview with Laura Kövesi in the Handelsblatt of June 9, 2021 (“No country is clean“).
Outlook
Even though the Corporate Sanctions Act will not come into force in Germany for the time being, the risk of criminal prosecution for internationally active companies continues to increase. Companies should therefore by no means take a break, but continue their compliance efforts in the light of the Corporate Sanctions Act. It should be in particular taken into consideration that various regulations relevant to sanctions continue to increase and further compliance-relevant legislative initiatives are already in the pipeline in Germany, such as the Whistleblower Protection Act (see our blog post of February 18, 2021), or have already been passed, such as the introduction of a Lobby Register Act (passed on March 25, 2021) or the Act on Corporate Due Diligence in Supply Chains and the Transparency Register and Financial Information Act (both passed on June 11, 2021).
We would be happy to support you in your considerations, audits, and further development measures with a view to establishing an effective “defense-proof” compliance management system. Please contact us at any time!