In response to the burgeoning economic crisis following Corona, which is likely to “wash a number of economic crimes to the surface”, the German Federal Ministry of Justice and Consumer Protection (BMJV) published the draft Bill of an “Act to Strengthen Integrity in the Economy” on 22 April 2020 after a coordination process with interested bodies (cf. already here).
The Bill’s aim is to not only punish offences committed by associations (legal entities and associations of persons) whose purpose is directed towards economic business operations with a fine under the current regime of the German Administrative Offences Act (“Ordnungswidrigkeitengesetz“, “OWiG“), but also to place the sanctioning of such associations on an independent legal basis and to subject them to the principle of legality. Accordingly, the Ref-E provides for a “Association Sanctions Act” (Verbandssanktionengesetz – VerSanG).
The current version of the draft has been somewhat toned down compared to the August 2019 version of the bill after massive criticism: The so-called “death penalty for companies”, which was previously contained in § 18 Ref-E of the VerSanG, is not included amy more in the current bill. Thus, “only” the “association monetary sanction” and the “warning with the association monetary sanction” are provided for as sanctions, see § 8 Ref-E VerSanG.
In addition, the innovations in the area of public disclosure and the (potentially mitigating) consequences of Internal Investigations – apparently also introduced after massive criticism – are interesting:
As already provided for in the previous version, “internal investigations” are intended to offer the possibility of considerably mitigating sanctions. The court is to mitigate the respective sanctions if the requirements for internal investigations provided for under § 17 Ref-E VerSanG have been complied with, i.e. in particular a substantial contribution to clarification has been directed (No. 1), uninterrupted and unrestricted cooperation with the investigating authorities (No. 3), employee surveys have been conducted “fairly” (No. 5) and the results of the internal investigation including the final report have been made available to the prosecuting authorities (No. 4). According to the current version of § 18 S. 1 Ref-E VerSanG, a association monetary sanction to be imposed pursuant to § 9 Ref-E VerSanG shall be reduced by half at most and a minimum requirement shall be completely waived. This, however, only then if after the numerous further exclusion facts a sanction is still possible at all or if according to §§ 35 or 36 Ref-E VerSanG a (further) prosecution of the association can be waived or at least if a warning with the association monetary sanction n (see § 10 Ref-E VerSanG) would not suffice.
Furthermore, according to § 18 sentence 1 Ref-E VerSanG, the otherwise possible public announcement of the conviction according to § 14 Ref-E VerSanG shall now be omitted if internal investigations sufficient to the provisions of § 17 Ref-E VerSanG have been carried out. For this reason alone, this provision, which is dreaded as “naming and shaming”, is unlikely to have a wide scope of application, as companies will probably agree to an internal investigation more easily for this reason alone…
… which – in order to have a mitigating effect – may only be carried out by such “third parties” who are independent of the defence counsel of the company or of a specific defendant from the association, cf. again § 17, Subsection 1, No. 2, Ref-E VerSanG. Meanwhile, according to the amendment of the corresponding provision of the German Code of Criminal Procedure provided for in Article 4 of the draft bill, a prohibition of seizure probably only applies to those documents which “can be attributed to the protected relationship of trust” between the defendant and the defence counsel (see p. 137 et seq. of Ref-E). In contrast, documents held by internal investigation officers may be confiscated at any time.
Finally, Part 6, §§ 54 et seq. of Ref-E VerSanG, creates a register of association sanctions (“Verbandssanktionenregister “) which thus joins a series of registers (e.g. the “transparency register” (see here) or the competition register) that have what it takes to remove companies from the market in a de facto way.
Conclusion: Even if the companies concerned are no longer threatened with the “death penalty” at least according to the revised draft, the actual objective of the BMJV is clearly evident from the draft: The “privatisation of law enforcement”. Although one does not trust the criminal defence lawyers, one trusts that enough “internal investigators” will already be found on a paid basis to do the work of the criminal prosecution authorities. In view of the numerous scandals in the economy, the diesel scandal being the only one worth mentioning here, the basic ideas of politics are certainly understandable.
However, the – rather obvious – design of the regulations aimed at making the work of the law enforcement authorities easier is only one point of criticism. On the one hand, as already explained elsewhere (here), German criminal law, with its idea of sanctions for “guilt”, does not recognize the criminal liability of associations per se. On the other hand, the current avoidance of criminal proceedings against managers of VW shows that managers who are possibly guilty themselves may “buy their way out” of criminal prosecution already now. The VerSanG will not change this – or maybe even make it easier in fact. But this will further reduce the criminal law to absurdity – as the truism “you hang the little ones, you let the big ones go” is threatening to be proven again.
BMJV: Ref-E „Gesetz zur Stärkung der Integrität in der Wirtschaft“ v. 22. April 2020 (in German)