Anti-Corruption in Germany: An Introduction

Corruption offences have lost none of their significance for criminal law practice, as recent statistics of the Federal Criminal Police Office clearly show: according to these statistics, an average of more than 5,000 cases for suspicion of corruption were recorded each year between 2019 and 2023. These included suspected cases of active and passive corruption of public officials (Sections 331 et seq of the German Criminal Code), as well as taking and giving bribes in commercial practice (Section 299 of the German Criminal Code) and in the healthcare sector (Sections 299a and 299b of the German Criminal Code), among others.

A particular stir was caused by stunning criminal proceedings before the Frankfurt Regional Court against a former senior public prosecutor who, prior to becoming a criminal suspect himself, was a highly respected head of a department for combatting corruption in the healthcare sector and widely regarded as a high-profile “corruption hunter”.

During the trial, he confessed to having demanded and accepted bribes over many years in exchange for awarding commissions to external medical experts to deliver profitable expert opinions that were allegedly necessary for the pursuit of the investigations he was overseeing. The company of his accomplice, who was an old school friend, was the main beneficiary of these commissions.

Following a tip-off from his late former girlfriend, the investigation was conducted under strictest secrecy before he was arrested in his own public prosecutor's office in July 2020. Having served as press spokesman for the public prosecutor's office in Frankfurt, he was previously one of the most distinguished members of the authority, with an impeccable reputation. Therefore, his arrest shook the Frankfurt judiciary and the legal community beyond, and was described by observers as an “unprecedented event in German judicial history”.

After a four-month trial, he was sentenced to six years in prison for bribery, breach of trust and tax evasion by the Frankfurt Regional Court in May 2023. The court sentenced his schoolmate to two years and nine months in prison for bribery and subsidy fraud. Both have appealed against the verdict at the Federal Court of Justice.

Recent Developments in Criminal Law Regarding Members of Parliament

At the national level, the most significant legislative developments in recent years have focused on bribery involving members of parliament. In June 2024, a new criminal provision (Section 108f of the German Criminal Code) established the offence of “improper promotion of interests” for elected officials.

Under the new provision, it is a criminal offence for elected officials to demand, allow themselves to be promised or accept an undue pecuniary benefit for themselves or a third party in return for performing, or refraining from performing, an act during their tenure, in order to promote the interests of the party offering the benefit or a third party. In turn, any individual who offers, promises or grants an undue pecuniary benefit to an elected official in return for that elected official performing, or refraining from performing, an act during their tenure, in order to promote the interests of the party offering the benefit or a third party, is liable to a prison sentence of up to three years or a fine.

Prior to the introduction of Section 108f of the German Criminal Code, the only basis to prosecute elected officials for bribery and corruption was Section 108e of the German Criminal Code. Under Section 108e, whoever – in their capacity as a member of the federal parliament (Bundestag) or as a member of one of the state (Länder) parliaments – demands, allows themselves to be promised or accepts an undue benefit for themselves or a third party in return for performing, or refraining from performing, an act, upon request or instruction, in the exercise of their mandate incurs a penalty of imprisonment for a term of between one year and ten years.

Background: implications of the “Mask Affair”

The perceived shortcomings of Section 108e became apparent in the aftermath of the so-called “Mask Affair”, and were highlighted in an important decision of the Federal Court of Justice from July 2022.

In the underlying case, a private entrepreneur sought to sell face masks to German federal and state authorities at the beginning of the COVID-19 pandemic. The entrepreneur approached a member of the German federal parliament (Bundestag) and a member of the Bavarian state parliament with a request to exercise their authority and influence as members of parliament, with the objective of facilitating the purchase of the masks by the relevant authorities, in exchange for a fee.

The two politicians agreed to the proposal and subsequently contacted decision-makers at various federal and state authorities and worked towards the conclusion of purchase contracts for the masks. The total net purchase price under the brokered contracts exceeded EUR50 million. As agreed, the politicians were to receive remuneration in the millions for their activities. After their scheme was uncovered, criminal investigations were opened against the politicians and the entrepreneur.

The Federal Court of Justice, however, confirmed the opinion of the lower court that the members of parliament were not criminally liable under Section 108e. For the offence to be committed, it is necessary that a member of parliament performs, or refrains from performing, an act “in the exercise of their mandate”. According to the Federal Court of Justice, this phrase (“in the exercise of the mandate”) is to be understood in such a way that only the mandate activity as such is covered, which includes activities undertaken during plenary sessions, in committees and within other parliamentary bodies, such as groups or commissions composed of members of parliament. In contrast, other activities of elected officials that are merely related to the mandate are not included. Therefore, the requirement in Section 108e is not met if elected officials merely invoke their status in extra-parliamentary activities or exploit the relationships they have established.

The legislator's response

Even prior to the Federal Court of Justice's ruling, criminal liability of members of parliament was subject to mounting criticism, and the existing legal framework was deemed inadequate with respect to political corruption.

To address these concerns, the Members of Parliament Act (Abgeordnetengesetz) was subject to a comprehensive revision in October 2021. The amendments introduced a more rigorous set of rules of conduct and enhanced transparency measures for members of the federal parliament (Bundestag), in order to safeguard the independence of the mandate and to prevent undue influence in the political sphere.

In particular, Section 44a of the Members of Parliament Act was revised to prohibit the acceptance of material benefits and the paid representation of interests. It should be noted, however, that these regulations are merely administrative law and that breaches thereof do not constitute a criminal offence in their own right. Therefore, a breach of these new rules of conduct does not per se result in criminal liability.

Furthermore, the criminal penalties under Section 108e of the German Criminal Code have been increased to the effect that the offence now constitutes a serious criminal offence (Verbrechen). However, this amendment did not close the gap in criminal liability under Section 108e, which was highlighted by the above-mentioned decision of the Federal Court of Justice.

In response to that ruling, the legislator enacted the new criminal offence in Section 108f of the German Criminal Code with the aim of closing the criminal liability gap on the one hand and striking the right balance with the constitutional rights of elected officials on the other hand. Although there is no doubt that corrupt actions by elected officials may seriously undermine the integrity of parliament, the free exercise of the mandate guaranteed by the German Constitution (Grundgesetz) would be severely impaired if members of parliament were to be exposed to incalculable risks of prosecution for performing all kinds of activities that are generally considered appropriate.

New offence under Section 108f of the German Criminal Code

After coming into force in June 2024, Section 108f of the Criminal Code now extends to extra-parliamentary activities. According to the legislative reasoning, the new offence intends to safeguard the integrity of parliamentary democracy and its elected representatives, prevent undue influence on the government and administration, and ensure the impartiality of decision-making processes.

Elected officials regularly have special connections and privileged access to the ministries, authorities and other agencies subject to their parliamentary control. If elected officials were to exploit their position, which has been entrusted to them in the interest of the common good, for their own benefit by trading in influence, this could undermine trust in parliamentary democracy and its elected officials as a whole. Accordingly, the new offence now also applies to cases in which members of parliament exploit their contacts, networks or position to influence official procedures in exchange for remuneration.

At the same time, criminal liability is restricted to the paid promotion of interests that would “violate provisions governing the legal status of the public official”. This is intended to ensure that nothing is criminalised that would be permissible under the relevant provisions of parliamentary law. In this respect, the offence is in line with the provisions of the Members of Parliament Act.

The penalties provided for under Section 108f are substantially lower than the penalties under Section 108e of the German Criminal Code. This is due to the consideration that the improper promotion of interests does not constitute a direct manipulation of the exercise of a mandate, but instead has a subtler effect of influencing the integrity of the parliamentary system.

Current Developments at European Level: New EU Anti-corruption Directive

There have also been important developments at the European level, with the European Commission announcing a comprehensive package of measures to effectively combat corruption in the European Union and presenting a draft anti-corruption directive in May 2023.

This draft directive sets forth minimum provisions for the definition of criminal offences and sanctions in the area of corruption, as well as measures for the prevention and combating of corruption. In June 2024, the draft directive was adopted by the Council of the European Union with numerous proposed amendments; the further course of the European legislative process is yet to be seen.

For the first time at a European level, the draft directive brings together requirements on criminal liability for corruption in the public and private sectors in a single legal act. Under the draft directive, EU member states will be required to criminalise different forms and types of corruption as defined in the draft directive. This is designed to prevent EU member states from establishing their criminal law systems based on different concepts of corruption.

EU's competences to harmonise anti-corruption legislation

In principle, the European Union is not vested with general and comprehensive competences to pass legislation in the area of criminal law. Nevertheless, through the issuance of directives, the European Parliament and the Council may establish minimum standards pertaining to the definition of criminal offences and sanctions in areas of particularly serious crime that have a cross-border dimension due to the nature or impact of the offences or a special need to combat them on a unified basis. Corruption is one such area of criminality and therefore the European Union has legislative competence.

A directive is binding in terms of the desired outcome for each EU member state to which it is addressed, yet allows for flexibility in terms of form and methods at the national level. Consequently, a directive must be implemented through the enactment of national legislation, as it does not have direct legal effect in EU member states.

It should be noted that implementing the directive (once it becomes final and binding) will not necessarily result in a complete overhaul of existing criminal provisions in all EU member states. Instead, the need for legislative action to implement the requirements of the draft directive will depend upon the criminal provisions that are already in place within the respective EU member state. Therefore, EU member states that have already enacted tough criminal legislation against corruption may only be required to implement relatively minor amendments to their existing legal framework in order to comply with the draft directive.

At this stage, it is not yet possible to predict with certainty which provisions of German criminal law will need to be amended and adapted as a result of the draft directive. This is because the European legislative process for the draft directive is still in progress, and there may be significant changes to the specific wording of the future requirements. Nevertheless, some general trends can already be outlined at this point.

Minimum requirements for criminal offences

Articles 7 to 13 of the draft directive lay down the duty of EU member states to provide for criminal offences for the following acts, including incitement and aiding and abetting:

• bribery and corruption in the public sector (Article 7);
• bribery and corruption in the private sector (Article 8);
• embezzlement by public officials (Article 9 paragraph 1);
• undue influence (Article 10);
• enrichment through corruption offences (Article 13); and
• obstruction of justice in connection with the commission of any of the offences listed above (Article 12).

To the extent that German criminal law already provides for criminal offences addressing these requirements, the need for amendments may be limited. In certain areas, however, significant structural differences between the draft directive and German criminal law can be identified, which could possibly necessitate more substantial amendments to German criminal law.

For example, German criminal law on corruption distinguishes between public officials on the one hand (Sections 331 et seq of the German Criminal Code) and elected members of parliament on the other hand (Sections 108e and – most recently – 108f of the German Criminal Code). Under the draft directive, however, members of parliament “shall be assimilated to a national official in accordance with national law”. Accordingly, under the draft directive, bribery of a member of parliament constitutes a sub-case of bribery of a public official. This assimilation reveals one of the main differences to the existing provisions of the German Criminal Code.

Under the current German legal doctrine, an argument against such equalisation refers to the different scope of duties and the lack of specific obligations for elected officials. While it is upon elected representatives to enact the laws, public officials enforce the laws. Even if the German legislator may not be forced to abandon the current distinction between public officials and members of parliament altogether as a result of the draft directive, a possible need for amendments is certainly becoming apparent.

Requirements for sanctions

In accordance with the provisions set forth in the draft directive, EU member states shall take the necessary measures to ensure that criminal offences are punishable by effective, proportionate and dissuasive criminal penalties.

For the most serious offences, where the act to be performed by the official is in breach of that official’s duties, Article 15 of the draft directive provides for a maximum term of imprisonment of at least four years for natural persons. Without prejudice to prison sentences, EU member states shall also implement the necessary measures to ensure that a natural person may be subject to additional sanctions or measures proportionate to the gravity of the conduct. Sanctions specified by the draft directive include:

• fines;
• removal, suspension and reassignment from a public office; and
• disqualification from holding a public office or exercising a public service function.

Corporate liability

Article 16 of the draft directive contains provisions on the liability of legal persons. EU member states shall ensure that legal persons can be held liable for certain corruption offences when such offences are committed for the benefit of those legal persons by any person who has a leading position within the legal person concerned, acting either individually or as part of an organ of that legal person, based on:

• the power of representation of the legal person;
• the authority to take decisions on behalf of the legal person; and
• the authority to exercise control within the legal person.

Furthermore, EU member states shall take the necessary measures to ensure that legal persons can be held liable where the lack of supervision or control by a person referred to above has made possible the commission of a corruption offence for the benefit of the legal person by a person under its authority. This is similar to the provisions of the Administrative Offences Act, which is already in force in Germany.

If a legal person is liable in accordance with these provisions, the draft directive also provides for a strict sanctioning regime by imposing criminal or non-criminal penalties or measures. Such penalties may include financial penalties or fines, the amount of which shall be proportionate to the gravity of the conduct and the individual, financial and other circumstances of the legal person concerned.

The fines outlined in the draft directive can be rather significant. EU member states shall ensure that the maximum level of such fines is at least 5% or 3% (depending on the nature of the offence) of the total worldwide turnover of the legal person, respectively, either in the business year preceding that in which the offence was committed, or in the business year preceding the decision to impose the fine. A revenue-based assessment of fines is already known at European level from other areas of law, such as the General Data Protection Regulation and the Market Abuse Regulation.

Instead of turnover thresholds, the minimum and maximum amounts of the fine can also be determined in absolute numbers, in which case the amounts shall not be less than EUR40 million or EUR24 million, respectively.

In addition to financial penalties, the draft directive outlines further sanctions against legal persons. Besides the exclusion of the company concerned from public benefits or public funding, the competent authorities shall be able to issue trade bans and to revoke or withdraw licences. Furthermore, authorities that have concluded contracts with the company concerned may choose to annul or rescind a contract in the context of which the offence was committed. As a last resort, the draft directive provides for the winding up or closure of such a company.

Outlook: increasing importance of compliance

As a result of the proposed directive, the relevance of compliance and internal investigations will be strengthened once again. This is because it may be considered a mitigating circumstance if the offender provides the competent authorities with information that they would not otherwise have been able to obtain, helping them to investigate or bring to justice the other offenders or to gather evidence.

Likewise, effective internal controls, ethics awareness and compliance programmes to prevent corruption set up by a legal person prior to or after the commission of an offence may be considered a mitigating circumstance. The prompt and voluntary reporting of an offence to the relevant authorities and the following implementation of remedial action may also be regarded as a mitigating factor under the draft directive.

Companies are well advised to keep an eye on the further development of the directive and to adjust their compliance systems in time accordingly.