The “employer model” (Geschäftsherrenmodell)
The new Anti-Corruption Law, which entered into force on 26 November 2015, marks a new era in the fight against corruption in Germany.
The background to the amendment of the existing laws is in particular the effort of the German government to fully transpose and implement the European Framework decision on fighting corruption in the private sector. Although Germany already implemented a number of international regulatory requirements, some adjustments were necessary to achieve compliance with EU law.
The amendment of the law leads, inter alia, to a tightening of the provisions on corruption of public officials and to the equal legal status of European and German public officials in terms of granting or accepting an undue advantage. One significant aspect of the new regulation is the implementation of the so called “employer model” (Geschäftsherrenmodell) into the criminal offence of receiving and granting bribes in commercial practice (sec. 299 of the German Criminal Code (Strafgesetzbuch - “StGB”)).
What are the changes resulting from the newly implemented “employer model”?
So far, bribes outside the context of market competition were not covered by sec. 299 StGB. Under German criminal law it was only punishable if someone demanded, or allowed himself to be promised or accepted a benefit for himself or a third person in a business transaction in return for an unfair competitive advantage. Same applied if someone promised or granted an undue advantage in this context. Due to the amendments, the “employer model” supplements this offence now, and this will lead to relevant changes.
From now on, it is a punishable offence under sec. 299 StGB, to accept or give any benefits without the consent of the business owner in exchange for a breach of duty in the context of purchasing goods or commercial services. A link to market competition is no longer required. Thus, all actions in the course of business dealings might be punishable under sec. 299 StGB now. However, an act or omission by the other party must be intended as consideration for the benefit.
For example, in the context of granting a credit the new offence might now cover offering advantages to bank employees in order to reach a quicker processing of the credit application. Another example would be procurements where an employee is offered money so that internal procurement guidelines - such as the requirement to obtain comparison offers - are violated. Regardless of whether there had been an actual offer made by competitors or not, disregarding such guidelines could lead to a criminal liability.
What is not covered by the new law
Breaches of purely internal duties or guidelines do not lead to a criminal liability. For example, it would not be a violation of the new “employer model” if, contrary to internal company guidelines, an employee uses a company car privately to assist a friend to move and obtain money for this.
Furthermore, the new provision does not apply if the employer gives prior consent to the illicit action of the employee.
Overview over further amendments
The offence of receiving and granting bribes in commercial practice (sec. 299 StGB) has been established as a predicate offence for money laundering (sec. 261 StGB). Besides, money laundering activities may now be punishable even if the offender participated in the predicate offence (“self-money laundering”). Henceforth, the new Anti-Corruption Law includes European public officials within the provisions of the German Criminal Code on corruption and extends the scope of corruption offences to include certain foreign and international public officials (sec. 335a StGB).
What are the consequences for companies
The risk of criminal liability has considerably increased. Companies should now examine if their internal processes and regulations are sufficient in order to minimize the risk of criminal liability and adapt their processes and regulations accordingly. Especially labor law and compliance guidelines may require an adjustment. The buying departments are particularly affected. Here again, internal guidelines should be reviewed and, if necessary, adjusted.