September 2016 - On 1 July 2016, a new amendment to the Criminal Procedure Code came into effect which is intended to motivate the perpetrators of corruption offences to notify law enforcement authorities themselves, in return for a conditional exemption from criminal liability. As the lawmakers state in their explanatory report to the new legislation, the fact that Czech criminal law considers both active and passive bribery a criminal offence, people who promised to pay a bribe merely because they had been asked for one are often reluctant to report the misconduct. In many cases though, self-reporting of perpetrators could significantly help the authorities in detecting cases of serious and complex corruption, where a lack of comprehensive evidence often leads to an unresolved investigation.
Exemption from criminal liability for bribery-related offences is not unknown in Czech legislation; the previous Criminal Code recognised a similar concept. However, analyses show that it was rarely used in practice and was often abused (for example a person did not notify the authorities until two years after paying a bribe and only because the recipient asked for another one). Following criticism from various international organisations, such as GRECO and OECD, it was finally abandoned in 2009 under the new Criminal Code.
Under the new amendment, the police can decide to temporarily discontinue criminal prosecution against a person that promised to pay a bribe, provided that (i) the bribe was requested by the recipient, and (ii) the person promising to pay the bribe voluntarily and without undue delay notified law enforcement authorities and bound themselves to provide full and true testimony to the authorities. Previously, the possibility of exemption from criminal liability included both the promise and actual payment of a bribe. However, lawmakers decided not to extend the exemption to cases where the offender actually paid the bribe. Furthermore, because of certain international commitments of the Czech Republic, foreign public officials cannot benefit from this provision.
In our opinion, the provision will also apply to companies. Since 2012, corporate criminal liability has been governed by the Act on Corporate Criminal Liability. However, due to the act’s relatively short effective period, there is a lack of relevant case law which would set clear guidance in relation to alternative forms of criminal proceedings against companies. In fact, the only applicable ruling of the High Court pertains to a conditional discontinuance of criminal proceedings. Under this ruling, criminal proceedings against a company may be conditionally discontinued if the individual actually committing the offence pleads guilty. The High Court grounds this reasoning in the fact that the Act on Corporate Criminal Liability does not exclude application of alternative forms of criminal proceedings in relation to companies. We are of the view that the reasoning in this particular ruling could also apply to the new exemption from criminal liability.
A state prosecutor might decide to rescind the exemption and resume proceedings if, for example, new facts come to light or the notifying person does not cooperate appropriately. If no such grounds for cancellation of the decision arise, the state prosecutor decides whether to permanently discontinue proceedings against the cooperating offender. This decision to discontinue, however, is conditioned by the prior effective termination of proceedings against the person who asked for the bribe. It is questionable why lawmakers decided to vest this competence solely in state prosecutors without providing for surveillance by the court. This, in our view, gives state prosecutors too much discretion.
Although exemption from criminal liability is not recognised by most Western European countries and is often criticised by numerous anti-corruption bodies, it has been implemented with a varying level of success in some Central and Eastern European countries. Romania serves as a good example, where the payer of a bribe might not be held criminally liable if he notifies the authorities of the offence before anyone else does. Interestingly, the payer may even have the bribe returned. The implementation of exemptions in Romania has aided in bringing forward to the prosecution a higher number of cases (some of them entailing prosecution of corporates as well), which resulted also in an increase in the conviction of high level officials from across the entire political spectrum, of businessmen or corporates. Variations of the exemption from criminal liability has been implemented in other countries as well, for example in Slovakia and Hungary.
Adoption of the new amendment should definitely be considered a step in the right direction. However, certain flaws remain which, in our view, may hinder its enforcement. Firstly, the provision leaves cooperating persons hanging in uncertainty throughout the entire proceedings as to whether the state prosecutor will finally decide to drop the charges. Especially in complex cases of corruption, this can take several years. Also, the cooperating offender must take into account all periods that Czech law provides for appeals and other remedial measures. No wonder if such person decides in the end not to notify the authorities.
Secondly, limiting the applicability of the exemption of criminal liability only to instances where the individual or company merely promised to pay the bribe and did not actually pay it may also prove to be problematic in the future. It will be hard to prove that a promise was made if there is no other evidence (for instance bank account statements). In our view, this may lead to situations where it will be impossible to prove the cooperating person’s allegations. Also, as already mentioned, there are no safeguards against potential misuse by state prosecutors.
Nevertheless, in our view the newly incorporated provision still has the potential to broaden sources of information in the detection of bribery and, along with other planned changes to laws (for example a new amendment to the Criminal Code coming into force in December this year will extend the possibility of companies to exculpate themselves from criminal liability) gives the impression that things are set to change.