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Draft of a Law on Strengthening Integrity in the Economy

Against the background of the Diesel scandal, the German government has set itself the goal in the coalition agreement of comprehensively reforming the law on sanctions for companies. After a much-noticed (and criticized), but unofficial "Draft of a Law on Combating Corporate Crime" was already circulating at the end of August (for details see https://www.fgvw.de/en/news/archive-2019/german-legislative-initiative-on-a-stricter-corporate-sanctions-law), the Federal Ministry of Justice and Consumer Protection has now officially published a draft bill.

Critics will be disappointed, however. Apart from the title - the law is now to be called "Law to Strengthen Integrity in the Economy" in more positive terms - and the no longer surprising deletion of the association's dissolution as the most severe sanction conceivable, the draft now presented does not contain any far-reaching changes compared with the unofficial version from last year. In particular, the sanction framework of the association's fine (up to ten percent of the average (group) annual turnover) has been retained, as has the sharply criticized separation of internal investigation and defense of the company.

After an initial review, the following changes are noteworthy:

  • Associations whose purpose is not aimed at an economic business operation, e.g. music and sports clubs, are now explicitly excluded from the scope of regulation (cf. section 1 Association Sanctions Act, "VerSanG"). This does not change the punishment of the association under section 30 Administrative Offences Act ("OWiG").
  • The dissolution of the association as a possible association sanction (formerly section 14 VerSanG) has been deleted.
  • The court "shall" (formerly "may") mitigate the association sanction if an internal association investigation according to section 17 VerSanG was carried out. The court is therefore bound in its discretion.
  • A new paragraph 3 has been added, according to which the court has to take into account in particular the nature and extent of the facts disclosed and their significance for the clarification of the offence, the time of disclosure and the extent of the association's support for the prosecution authorities. Moreover, a mitigation is excluded if the association discloses the results of the association's internal investigation only after the opening of the main proceedings.
  • Within the explanatory memorandum to the act, the clarification is to be welcomed that in the case of small and medium-sized enterprises with a low risk of legal infringements, even a few simple measures may be sufficient and that the "purchase" of a compliance program or certifications is regularly not necessary in this respect.
  • The same applies to the now included statement that when assessing the precautions taken by the managers to avoid association offences (cf. section 3.1 no. 2 VerSanG), it must be taken into account that it will not be possible to guarantee complete protection against criminal offences and that compliance measures have their limits in particular where the perpetrator acts from outside the association and is firmly resolved to act, so that even far-reaching compliance would have to remain ineffective. It is also correctly stated that in the case of such excesses, additional compliance measures are not suitable for preventing crimes.

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