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Trends and climate

Trends

Have there been any recent changes in the enforcement of anti-corruption regulations?

The most expansive reforms to German anti-corruption regulations took place recently, with the introduction of criminal liability for bribing delegates and doctors in private practice and the extension of criminal liability for bribery in the private and public sector. These changes will have a significant impact on the healthcare and pharmaceutical sector. Several public prosecutors have already announced that they will take a deeper look into these issues. Therefore, the enforcement of anti-corruption provisions will likely change in future.

Legislative activity

Are there plans for any changes to the law in this area?

Germany is preparing legislation for the ratification of the Council of Europe Criminal Law Convention on Corruption (1999) and its Additional Protocol (2003).

Regarding corporate liability in general, several different actors (most recently a federal state) have attempted to introduce a special code for corporate criminal liability in Germany. However, the legislative process is not progressing at a significant pace.

Legal framework

Authorities

Which authorities are responsible for investigating bribery and corruption in your jurisdiction?

In Germany, the general law enforcement authorities are responsible for investigations (ie, the police departments and the public prosecutor’s offices). There are special taskforces at the police level in some federal states and cities. Usually, each prosecutor’s office – which is the leading investigative authority – has a special investigation team for corruption offences. In addition, most federal states have centralised the prosecutor’s offices that specialise in anti-corruption investigations. Most bribery and corruption cases are discovered by the tax auditors, as they must inform the responsible public prosecutor’s office about audit findings that could lead to a preliminary criminal proceeding.

Domestic law

What are the key legislative and regulatory provisions relating to bribery and corruption in your jurisdiction?

The key provisions relating to bribery in Germany are:

  • bribery in the public sector – Sections 331, 332, 333, 334, 335, 335a and 336 of the Criminal Code;
  • bribery in the private/commercial sector (business transactions) – Sections 299 and 300 of the Criminal Code;
  • bribery in the healthcare sector – Sections 299a, 299b and 300 of the Criminal Code;
  • bribing voters – Section 108b of the Criminal Code; and
  • bribing delegates – Section 108e of the Criminal Code.

In general, German law speaks only of bribery. ‘Corruption’ is not a legal term in Germany. Therefore, we address only core bribery offences and not those that may be placed in the wider context of ‘corruption’ (eg, fraud, money laundering and embezzlement).

International conventions

What international anti-corruption conventions apply in your jurisdiction?

The following anti-corruption conventions apply in Germany:

  • the United Nations Convention against Corruption;
  • the United Nations Convention against Transnational Organised Crime;
  • the Organisation for Economic Cooperation and Development Convention on the Bribery of Foreign Public Officials in International Business Transactions;
  • the EU Convention on the Fight against Corruption involving Officials of the European Communities or Officials of Member States of the European Union;
  • EU Council Framework Decision 2003/568/JHA on combating corruption in the private sector;
  • Resolution (99)5 of the Committee of Ministers of the Council of Europe: Agreement Establishing the Group of States against Corruption; and

Council of Europe Resolution (97)24 on the Twenty Guiding Principles for the Fight against Corruption.

Specific offences and restrictions

Offences

What are the key corruption and bribery offences in your jurisdiction?

The following provisions contain the key bribery offences under German law.

Bribery in public sector
Taking bribes as or giving bribes to a German public official or servant, German judge or arbitrator, International Criminal Court judge, member of an EU court or soldier or member of the German Federal Armed Forces for the performance or omission of an official act that complies with the law (Sections 331, 333, 335, 335a(2) and(3) and 336 of the Criminal Code) constitutes bribery.

Moreover, taking bribes as or giving bribes to a public official for the performance or omission of an official act that violates official duties (Sections 332, 334, 335, 335a(1) and 336) constitutes bribery. These provisions apply not only to German public officials, but also to foreign public officials, foreign judges, judges of international tribunals, members of non-governmental organisations and soldiers (Sections 332, 334 and 335a(1) of the Criminal Code).

In all cases, the official act need not be performed in order to trigger criminal liability. It is sufficient – but also necessary – that a quid pro quo agreement exists between the two parties involved. Moreover, the unlawful benefit of such an agreement need not be granted to one of the persons mentioned above, but can be granted to any other third person.

Aggravated cases of public bribery are typically those in which:

  • the offence involves a major benefit for the bribe taker;
  • the offender continues to accept benefits for performing an official act in future; or
  • the offender acts on a commercial basis or as a gang member with the purpose of continued commission of the offence (Section 335 of the Criminal Code).

Bribery in private/commercial sector
Bribery in business transactions is punishable according to Section 299 of the Criminal Code. This provision punishes any employee or agent of a business who demands, allows himself or herself to be promised or accepts a benefit for himself or herself or another in a business transaction as consideration for unfair preference in an internal or external competitive purchase of goods or commercial services. Similarly, the briber is punishable if he or she offers, promises or grants an employee or agent of a business such a benefit.

The preference is considered unfair if it is not based on reasonable decision making (ie, it is based only on the quid pro quoagreement between the parties).

Section 299 of the Criminal Code was recently expanded (Paragraphs 1(2) and 2(2)). In addition to the abovementioned offences, an employee or agent of a business who, without the company’s consent, demands, allows himself or herself to be promised or accepts a benefit for himself or herself or another in conjunction with a purchase of goods or commercial services – and thereby breaches his or her duties towards the company – will be held criminally liable. The same applies to a person who offers, promises or grants an employee or agent of a business such a benefit while the employee violates his or her duties towards the company in conjunction with a purchase of goods or commercial services. This provision also applies to cases in which the employee violates his or her duties by an act of omission.

Aggravated cases are regularly offences which result in a major benefit for the bribe taker or where the offender acts on a commercial basis or as a gang member with the purpose of continued commission of the offence (Section 300 of the Criminal Code).

Bribery in healthcare sector
In 2012 the Supreme Court ruled that doctors in private practice do not fall under the scope of application of public bribery provisions, since they cannot be considered as public officials according to these provisions; this meant that no criminal liability arose for bribery offences in this sector. As such, in July 2016 the legislature enacted a new law to address this issue.

The new Sections 299a and 299b of the Criminal Code accordingly extend criminal liability to any member of the medical profession who demands, allows himself or herself to be promised or accepts a benefit for himself or herself or another as consideration for unfair preference in an internal or external competition by means of prescribing or acquiring medical equipment or medicaments or allocating patients. The briber is equally punishable under these provisions.

Aggravated cases are regularly offences which result in a major benefit for the bribe taker or where the offender acts on a commercial basis or as a gang member with the purpose of continued commission of the offence (Section 300 of the Criminal Code).

Bribing voters
Section 108b of the Criminal Code extends criminal liability to any person who offers, promises or furnishes gifts or other benefits to another for voting in a particular manner. A person who requests, is promised or accepts gifts or other benefits in exchange for not voting or voting in a particular manner is also punishable under this provision.

Bribing delegates
Section 108e of the Criminal Code extends criminal liability to any person who undertakes to buy or sell a vote in the European Parliament, the German Federal Parliament, state parliaments, the legislative assemblies of municipalities or municipal associations, foreign parliaments or parliamentary assemblies of international organisations.  

Providing a political mandate or function or donating to a political party in accordance with the law does not constitute an unjustified benefit under Section 108e of the Criminal Code.

Hospitality restrictions

Are specific restrictions in place regarding the provision of hospitality (eg, gifts, travel expenses, meals and entertainment)? If so, what are the details?

There are no specific laws in Germany regarding the provision of hospitality. In general, providing gifts, meals or the coverage of travel expenses and the like are not exempt from criminal liability. However, certain socially accepted ‘giveaways’ that are low in value and do not follow a regular pattern, for example, would not typically reach the threshold to establish criminal liability. That said, overall there is no rigid statutory threshold, since the benefit for the bribe taker can be any material or immaterial advantage. The only condition is that the bribe taker’s situation is improved, either financially or personally. This encompasses advantages for third parties, including public authorities or legal entities. What constitutes such a benefit for the bribe taker in concreto is determined by the court on a case-by-case basis. With respect to public bribery, a stricter view on hospitality is usually taken in comparison to the realm of commercial bribery.

Under civil service law, public officials and servants are generally prohibited from accepting any gifts, gratifications or benefits from a third party. In the public service there are internal administrative regulations that provide guidelines for employees. With respect to ‘ordinary’ federal state servants, it is commonly stipulated that only gifts below €10 (eg, promotional items such as pens or calendars) are considered acceptable. Further, only one such gift by one donor per year is acceptable. The same applies to hospitality gestures (eg, meals) directed at a public official that are directly connected to the performance of his or her duties and therefore cannot be rejected out of politeness. In such cases it is deemed that the public servant acts in accordance with a general (prior) consent of the employer. In any other case (ie, for gifts up to €50), employees must ask for an individual allowance. However, regarding public officials of German federal states, each state is allowed to establish its own guidelines regarding the maximum limit that a public official is allowed to take in gifts without requesting a special allowance. These rules are established in several different state laws.

Facilitation payments

What are the rules relating to facilitation payments?

Under German law, there is no exemption from criminal liability for granting or receiving facilitation payments to or as a German or European public official, German judge or arbitrator, International Criminal Court judge, member of an EU court or member of the German Federal Armed Forces (Sections 331, 333, 335a(2) and (3) of the Criminal Code).

Bribery of foreign public officials, on the other hand, is punishable only if the future performance of the official act violates official duties (Sections 332, 334 and 335a(1) of the Criminal Code). In such case, pure facilitation payments are also punishable under German law. If the future performance of the foreign public official does not violate official duties (Sections 331, 333 and 335a(2) and (3) of the Criminal Code), pure facilitation payments are not punishable under German law.

Liability

Scope of liability

Can both individuals and companies be held liable under anti-corruption rules in your jurisdiction?

Under German criminal law, only individuals can be held criminally liable. However, the anti-corruption provisions of the Criminal Code come into play for corporate liability through the Code on Regulatory Offences (OWiG). This law provides for fines of up to €10 million for corporations where a representative of the corporation or any other executive employee is criminally responsible for any bribery offence under the Criminal Code.

Can agents or facilitating parties be held liable for bribery offences and if so, under what circumstances?

Under German law, agents and facilitating parties can be held criminally liable. Depending on the involvement of these persons in the criminal act, they can be charged with aiding and abetting (Section 26 of the Criminal Code) or as co-perpetrators (Section 25(2) of the Criminal Code). Most crucial to this distinction is the intent and knowledge of a person regarding his or her involvement in corrupt practices.

Foreign companies

Can foreign companies be prosecuted for corruption in your jurisdiction?

Foreign companies cannot be prosecuted in the strict sense of criminal law, but can be held liable under the OWiG. The key factor triggering German jurisdiction is that the offence was committed in the German territory. Nonetheless, for some corruption offences a special regulation exists that triggers German jurisdiction regardless of a territorial link; Section 5 Numbers 15 and 16 of the Criminal Code refer to bribery in the public sector (Section 331-336 of the Criminal Code) and to the offence of bribing delegates (Section 108e of the Criminal Code). This means that a foreign company can be charged with regulatory offences and consequently be fined, regardless of whether the corrupt act of an individual involving public officials, servants or delegates which triggered the corporation’s liability was conducted in Germany.

Whistleblowing and self-reporting

Whistleblowing

Are whistleblowers protected in your jurisdiction?

There is no general law in Germany that provides for protection of whistleblowers in all sectors. In general, whistleblowers are at risk of having their employment contracts terminated or being sued for damages in case of unjustified whistleblowing.

However, in July 2016 new legislation regarding the Federal Financial Supervisory Authority was enacted in order to protect whistleblowers (Section 4d of the Federal Financial Supervisory Authority Code (FinDAG)). Anyone can now provide information regarding violations of regulations that are under the supervision of the Federal Financial Supervisory Authority. Such information can be provided anonymously; otherwise, the Federal Financial Supervisory Authority is legally obliged to protect the identity of the whistleblower and the individual under investigation. However, this does not apply where court rulings or other laws demand disclosure of the person’s identity. If employees of corporations that are under the supervision of the Federal Financial Supervisory Authority provide such information, no criminal or employment law consequences can be attached to this behaviour (Section 4d of FinDAG). Moreover, there is an exemption from any claims of damages, unless a false notification was produced with intention or gross negligence. These whistleblower rights are not subject to contractual agreements (ie, any contrary disposition between employee and employer is void).

Self-reporting

Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed?

In general, judges have the discretion to reduce criminal sentences, depending on the offender’s cooperation. Likewise, the prosecutor will usually reduce the sentencing request made in the public charges.

The existence of compliance programmes often serves as a factor for leniency at the sentencing level.

The explicit key witness protection, which results in a mitigation of sentence (laid down in Section 46b of the Criminal Code), applies only to individuals, not legal entities.

In practice, general cooperation with the authorities will help to minimise potential administrative penalties against the company (Section 30 of the Code on Regulatory Offences).

Dispute resolution and risk management

Pre-court settlements

Is it possible for anti-corruption cases to be settled before trial by means of plea bargaining or settlement agreements?

There is no specific law governing the settlement of corruption cases. The general provisions of the German Code of Criminal Procedure apply and provide for different forms of settlement without judgment.

Different types of pre-trial settlement with the prosecutor (and the court) are available, in addition to plea bargaining possibilities at trial.

Pre-trial settlement
Under Section 153 of Code of Criminal Procedure, if a misdemeanour (ie, where the minimum prison term is less than one year or a fine) is investigated, the prosecution may dispense with the investigation and indictment if the perpetrator’s guilt is deemed to be of a minor nature and there is no public interest in the prosecution. The court may do the same if the public charges have already been preferred and the public prosecutor and indicted person agree to settle. In these cases, the guilt of the accused is not yet proven.

According to Section 153a of the Code of Criminal Procedure, if a misdemeanour is investigated, the prosecution may dispense with the investigation and indictment with the consent of the accused and the court and impose certain conditions and instructions on the accused (eg, paying a sum to a non-profit institution or the Treasury, or performing a non-profit service), provided that such conditions sufficiently eliminate the public interest concerns of the case and the perpetrator’s degree of guilt does not present an obstacle. The court may do the same if the public charges have already been preferred and the public prosecutor and indicted person agree to settle. In these cases, the guilt of the accused must be obvious and easy for the prosecution to prove.

Plea bargaining at trial
The possibility of plea bargaining at trial is laid down in Section 257c of the Code of Criminal Procedure. In suitable cases, the court may reach an agreement with the participants on the further course and outcome of the proceedings. The subject matter of this agreement may comprise only the possible legal consequences of the judgment, associated rulings and other procedural measures relating to the course of the underlying adjudication proceedings and the conduct of the participants during the trial. A confession must be an integral part of any negotiated agreement. The verdict of guilt may not be the subject of such a negotiated agreement.

In addition to Section 257c, the Code of Criminal Procedure allows for judicial reviews and discussions among the parties of the trial at every stage of the proceedings, provided that they are conducted in furtherance of the trial.

Defences

Are any types of payment procedure exempt from liability under the corruption regulations in your jurisdiction?

Facilitation payments made to foreign public officials do not fall under the German anti-corruption provisions if the official act does not violate official duties. No other forms of payment are exempt from criminal liability. In particular, the possibility to deduct any bribes from taxes is no longer available.

What other defences are available and who can qualify?

The general defences of the Criminal Code are available for all crimes, including bribery. However, none of these defences (eg, self defence) is perceivably suitable in the case of bribery.

With regard to the bribery of public officials or servants, a specific defence is available under Sections 331(3) and 333(3) of the Criminal Code. An act is not punishable – neither for the bribe taker nor the bribe giver – if the perpetrator acts with the prior or subsequent consent of the competent public authority. However, this applies only if the official act carried out by the public official does not constitute a breach of duty or another illegal act. Moreover, bribing judges is exempt from the scope of application of this specific defence.

The existence of compliance programmes within a corporation does not constitute a defence; rather, it is potentially useful only for leniency purposes at the sentencing stage. 

Risk management

What compliance procedures and policies can a company put in place to assist in the creation of safe harbours?

Compliance programmes may assist in the creation of safe harbours in relation to corruption if they include concrete guidelines for employees. In particular, regarding hospitality and gifts, there may be a chance to frame safe harbours.

Compliance programmes should focus not only on internal controls, but also on critical third-party review – in particular, third-party due diligence, where before concluding a binding business contract the contractual partner is investigated in regards to past transactions and the risk for corrupt practices. By conducting in-depth research and submitting concrete questionnaires to potential contractors, such risks can be mitigated. Another crucial step is to review the publicly available debarment lists of the major international financial institutions (eg, the World Bank Group and the Asian Development Bank), in which individuals and corporations are named that have been involved in corrupt practices relating to internationally funded projects.

Any red flags that arise should be taken seriously and clarified with the potential partner in advance.

Record keeping and reporting

Record keeping and accounting

What legislation governs the requirements for record keeping and accounting in your jurisdiction?

Record keeping and accounting are governed largely by the Commercial Code, complemented by the Limited Liability Companies Act and the German Stock Corporations Act.

What are the requirements for record keeping?

The general rules for record keeping are laid down in Section 238 and following of the Commercial Code. According to this section, all merchants must keep records. These rules are complemented by:

  • Sections 264 and following of the Commercial Code;
  • Sections 150 and following of the Limited Liability Companies Act (with regard to limited liability companies);
  • Sections 41, 42 and 42a of the German Stock Corporations Act (with regard to German stock corporations); and
  • specific provisions in the Accounting Act (with regard to partnerships).

Records must be disclosed electronically through the so-called ‘Bundesanzeiger’ platform, which is publicly accessible (Section 325 of the Commercial Code). In certain cases, accounting firms must review the financial statements before a company can publish them (Section 316 of the Commercial Code). The representatives of a company must provide a written guarantee of the statements’ accuracy (Section 264(2)(3) and Section 289(1)(5) of the Commercial Code).

The publication of false financial statements can trigger criminal liability that is punishable by up to three years in prison or a fine (Section 331 of the Commercial Code).

In general, under tax law, records must be retained for a maximum period of 10 years (Section 147(3) of the Fiscal Code).

Further sector-specific requirements for record keeping and accounting with respect to credit institutions, insurance companies and pension funds are laid down in specific acts.

Reporting

What are the requirements for companies regarding disclosure of potential violations of anti-corruption regulations?

In consideration of the general criminal law principle of the privilege against self-incrimination, there is no legal obligation to report potential violations of anti-corruption provisions for affected companies. The practice of internal investigations and cooperation with law enforcement agencies derives solely from a company’s own interest in leniency; it is not mandatory by law.

Regarding credit institutions and insurance institutions, there are specific obligations to disclose or notify the competent authorities in case of suspicious circumstances; this mostly applies to cases of money laundering.

Penalties

Individuals

What penalties are available to the courts for violations of corruption laws by individuals?

The sentencing ranges of corruption laws differ in Germany.

For bribery in the public sector, the maximum sentence is 10 years in prison in aggravated cases of bribery. Apart from this, the penalty is usually a fine or prison term ranging from six months to three or five years.

Bribery in the private and healthcare sectors, as well as bribing voters and delegates, is punishable by a prison term of up to five years or a fine.

Companies or organisations

What penalties are available to the courts for violations of corruption laws by companies or organisations?

Companies and organisations can be fined. There is no possibility to simultaneously issue both an order of forfeiture against the corporation regarding the same offence and a monetary penalty. However, the possibility of confiscation remains. In addition, attachment in rem can be issued in order to secure the regulatory fine.