Corruption prevention regulations in Germany

Corruption prevention regulations in public administration and the private sector

Corrupt behaviour can occur in a variety of forms and in different areas of a society. Whether bribery or corruptibility in international business transactions or in one’s own country, whether venality in politics and administration – corruption undermines the foundations of a society by damaging the trust of citizens in the state and the economy and can also cause material damage.

In Germany, various regulations and instruments are used to prevent and prosecute corruption in administration, politics and business. These include laws, administrative regulations and awareness-raising measures. Since corruption often happens in secret, transparency is key to preventing and detecting illegitimate practices.

Public administration

Public authorities make decisions and set rules, particularly for private sector activities. Public officials are exposed to certain corruption risks in the performance of their duties. Criminal offences and

penalties are regulated in particular by the German Criminal Code (StGB).¹ Accepting and granting benefits as well as bribery and corruption are punishable. The penalty ranges from three years (Sections 331, 333 StGB) to 15 years (Section 335(1)(2) StGB). Corruptibility of judges (Section 332(2) StGB) and corruptibility and bribery of elected officials (Section 108e StGB) are crimes and punishable by a prison sentence of one to ten years.

In accordance with Section 71 of the Federal Civil Service Act (BBG), civil servants of the Federal States and local authorities may not demand, accept promises of or accept any rewards, gifts or other benefits in relation to their office/official duties for themselves or third parties in accordance with Section 42 of the Civil Service Status Act (BeamtStG). The prohibition applies to all benefits of an economic and non-economic nature.

An analogous provision applies to employees covered by collective agreements (salaried and hourly workers) in accordance with Section 3(2) of the Collective Agreement for the Public Service (TVöD): Rewards, gifts, commissions or other benefits relating to official activities must not be accepted.

Civil servants in Germany are subject to special obligations, such as the duty of confidentiality and the obligation to comply with the official channels. In connection with acts of corruption, however, they are entitled under Section 67(2) sentence 1 no. 3 BBG or Section 37(2) sentence 1 no. 3 BeamtStG to report suspicions of a corruption offence under Sections 331 to 337 StGB to the competent highest service authority, a prosecution authority or other bodies without following official channels.

In addition to statutory regulations, the prevention strategy in the area of federal administration is essentially based on the Guideline of the Federal Government for Corruption Prevention in the Federal Administration from 2004 and its annexes. The administrative regulation specifies concrete measures to prevent corruption, e.g. the regular identification of work areas particularly at risk of corruption, the multiple-control principle, the appointment of a contact person for corruption prevention, awareness-raising and further training for employees as well as guidelines for awarding public contracts.²

The following key requirements exist at EU level: Directive of the European Parliament and of the Council 2017/1371 of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law and the Convention drawn up on the basis of Article K.3(2)(c) of the Treaty on European Union on the fight against corruption involving officials of the European Communities or officials of Member States of the EU.

Under international law, Germany’s obligations to combat corruption arise primarily from the United Nations Convention against Corruption (UNCAC) of 2003³, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organisation for Economic Cooperation and Development (OECD) of 1997 and the Criminal Law Convention on Corruption of the Council of Europe of 1999.⁴ Separate regulations exist for state administrations at the federal state level. They are essentially based on the Federal Government’s directive.

Municipal administration

A wide range of regulations and measures to prevent corruption can also be found at municipal level, such as service instructions, codes of conduct and contact persons. In view of the local self-government guaranteed in Art. 28 (2) Basic Law, the municipalities are granted the right to regulate all matters of the local community on their own responsibility within the framework of the law. As a rule, municipal administrations have detailed anti-corruption measures in place.⁵

Bribery and corruption of elected representatives

Anyone who holds a political mandate bears particular responsibility for the integrity of the political system in Germany.⁶ Corruption in the form of bribery and venality (e.g. “vote buying”) damages this integrity and therefore democracy. To counter this danger, the criminal offence of bribery of members of parliament was introduced in 1994. As part of the implementation of the United Nations Convention against Corruption, the offence was expanded in 2014 and Section 108e StGB was revised under the heading of bribery and corruption of public officials. On 19 October 2021, the penalty threat was significantly increased. Corruption and bribery of elected officials is therefore punishable by a prison sentence of one to ten years, and in less serious cases by a prison sentence of six months to five years.

Prevention and control through transparency

Corruption is an offence that is committed in secret and the parties involved have no interest in exposing it. Furthermore, the actual damage to individuals and the general public cannot usually be determined, or only after a delay. Measures to create transparency are therefore important instruments in the fight against corruption. These include, on the one hand, the regulations to combat money laundering with the help of the disclosure of “beneficial owners” through the Transparency Register (see Beneficial Owner). In addition, the transparency rights under the Environmental Information Act enable the disclosure of the contents of authorisation notices that companies in the natural resources extraction sector require for their practical activities, for example to avoid unlawful environmental pollution (see Public access to environmental information and “Authorisation Notices”).

Another instrument is the reporting of corruption by employees in companies and public authorities (whistleblowers). They are often the first to notice abuses and can use their information to ensure that violations of the law are uncovered, investigated, prosecuted and stopped. At state level, there are reporting offices for corruption, for example at the Federal Financial Supervisory Authority (BaFin), the state criminal investigation offices or in the form of ombudspersons in various federal states and municipalities. The contact persons for the prevention of corruption (at federal level in accordance with the Directive on the Prevention of Corruption, section 5) also receive reports of suspected cases of corruption.

The Directive (EU) 2019/1937 of the European Parliament and the Council of 23 October 2019 on the protection of persons who report breaches of Union law has now been implemented. On 2 July 2023, the law for better protection of whistleblowers and for the implementation of the directive on the protection of persons who report breaches of Union law came into force. The central component of the law is a new parent law for better protection of whistleblowers (Whistleblower Protection Act). The law also applies to the reporting of crimes, so that the reporting of corruption offences under Sections 321 et seq. StGB is also covered.

The Federal Criminal Police Office provides information on annual developments and corruption statistics in the Federal Situation Report on Corruption. In addition, the Federal Ministry of the Interior publishes an annual Report on Corruption Prevention in the Federal Administration (since the 2020 reporting year, the “Integrity Report”), which provides an account of the implementation of the Corruption Prevention Directive to the German Bundestag.

Private Sector

Corruption is harmful to business and society and is also prohibited. Corruption in the form of bribery and venality in business dealings is a criminal offence (Section 299/Section 300 StGB) and can be punished with a fine or a prison sentence of up to three years or a prison sentence of three to five years.

Many companies support the 17 Sustainable Development Goals (SDGs), which underline, for example, in Goal 16 “Peace, justice and strong institutions” and more specifically in Subgoal 16.5 “Substantially reduce corruption and bribery in all their forms”.

Based on 10 universal principles and the Sustainable Development Goals, the UN Global Compact (UN GCD) pursues the vision of a more inclusive and sustainable economy for the benefit of all people, communities and markets, today and in the future. Currently, the signatories include over 25,000 companies and organisations from civil society, politics and science in more than 160 countries. In Germany, more than 1,250 participants are registered, including about 1,200 companies from DAX to mid tier and SMEs. In principle 10 of the UNGC on Anti-Corruption, companies are asked to “fight all forms of corruption, including extortion and bribery”.

Other sustainability frameworks also contain principles or requirements in the area of anti-corruption. Criterion 20 of the German Sustainability Code, for example, specifies behaviour that complies with the law and guidelines. The user group includes large and small, public and private companies with and without sustainability reporting, companies subject to reporting requirements and all those organisations that want to inform their stakeholders about their sustainability performance. Selected indicators of the Global Reporting Initiative (GRI) and European Federation of Financial Analysts Societies (EFFAS) need to be reported.

Compliance is generally understood to mean ensuring that a company, its executive bodies and employees and, where applicable, third parties act in accordance with the statutory, internal and external regulations that affect the company by means of suitable, usually sub-legal measures. This does not only include compliance per se, but also the formal and informal organisation of compliance through the implementation of appropriate measures. Compliance management systems in companies are based on a risk-based approach that takes into account the long-term interests of the company, ethical behaviour, reputational risks and special liability risks in addition to avoiding conduct that is relevant under criminal law and subject to fines. Compliance regulations and codes of conduct play a central role as an instrument of prevention and a core element of an effective compliance management system. In addition, many companies have compliance officers and whistleblower systems as central points of contact for the implementation of compliance regulations.

In codes of conduct¹ , companies usually formulate a zero-tolerance policy towards corruption, which is generally binding for all employees.

Although there are no comprehensive legal regulations on compliance, some government regulations in particular are close to compliance. For example, the law on administrative offences and company law (Section 43 GmbHG and Sections 91, 93 AktG) should be mentioned here. In addition, the German Corporate Governance Code (DCGK) in the 2022 version plays a central role, for which every listed public limited company must issue a declaration of compliance in accordance with Section 161 AktG. In addition, there are a number of special statutory provisions, such as for insurance companies in the Insurance Supervision Act, for companies in the financial sector in the Securities Trading Act, in the Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing MiFID II Directive with regard to organic requirements for investment firms, the Investment Services, Conduct and Organization Regulation, in the Banking Act or in the circulars of the German Federal Financial Supervisory Authority (BaFin), in particular the Minimum requirements on risk management (MaRisk) or the Minimum requirements on the compliance function and other conduct, organization and transparency obligations (MaComp).

If a company fails to take appropriate compliance measures and a corruption offence is committed as a result, the company may be fined in accordance with Sections 130 and 30 OWiG (German Administrative Offences Act). The respective requirements on compliance are not specifically regulated by law.

 

¹ In addition to the Criminal Code, corruption offences are also punished under disciplinary and labour law, for example.

² The Federal Ministry of the Interior and Home Affairs (BMI) submits a report on integrity in the federal administration (Integrity Report) to the Bundestag committees on 30 September of each year, which is published on the BMI website once it has been approved. URL: https://www.bmi. bund.de/DE/themen/moderne-verwaltung/integritaet-der-verwaltung/integritaetsberichte/integritaetsberichte-node.html (accessed 9 October 2024).

³ United Nations Convention against Corruption, ratified by Germany in 2014.

⁴ Germany ratified the Criminal Law Convention in 2017. The Civil Law Convention has not yet been ratified, as the Federal Republic of Germany has not yet fulfilled all the requirements, particularly with regard to whistleblower protection. In addition, ratification would require authorisation from the EU, as the agreement affects competences under EU law.

⁵ The municipalities provide information on the Internet about corruption prevention and contact persons, see for example Wiesbaden, capital of the Federal State of Hesse: https://www.wiesbaden.de/vv/oe/beauftragte/141010100000066754.php (Accessed: 3 January 2024)

⁶ Code of conduct against corruption and the guidelines for superiors and heads of authorities: URL: https://www.verwaltungsvorschriften-im-internet. de/BMI-O4-0001-NF-673-KF-001-A001.htm (Accessed 9 October 2024).

⁷  Examples of Code of Conduct of companies participating in the D-EITI will be published on the respective company websites: Harbour Energy, Dyckerhoff group, Heidelberg Materials, Holcim GmbH, K+S Aktiengesellschaft, Neptune Energy Deutschland GmbH, Quarzwerke group, Sibelco Deutschland GmbH, Südwestdeutsche Salzwerke AG, Vermillion Energy Germany GmbH & Co. KG and Wacker Chemie AG