Christian Pelz, Germany: Despite continuing requests for reform, German law still does not acknowledge the concept of corporate criminal liability in the strict sense. However, corporations can be fined pursuant to § 30 Ordnungswidrigkeitengesetz [Act on Administrative Offences] if a criminal or administrative offence was committed by a member of the board, a manager, an employee with signatory powers or a person entrusted with supervision obligations. The maximum fine is one million euros per incident. Such a fine can be imposed for any kind of offences and is not limited to bribery. In addition to this, everything which the corporation has obtained by such criminal or administrative offence is subject to forfeiture. It must be noted that the act of bribing a German or foreign public official as well as commercial bribery have long been a criminal offence under German law, even if committed abroad. Additionally, board members and managers can be punished for failure to establish adequate organisation and procedures as well as for insufficient supervision and control if this facilitated corrupt activities.
Since the last years, the prosecution of corruption cases, both committed in Germany and abroad, has significantly increased and fines imposed upon companies meanwhile exceed 1 billion euros, with still increasing tendency. Forfeiture of what a corporation has obtained through an act of bribery is top priority, together with efforts to demonstrate personal liability of the top management. Unlike in the UK, prosecution is mandatory (ex officio) and need not necessarily be in the national interest. Further, investigating and tax authorities are obligated to inform each other about any suspicion of corruptive activities, so that bribery is fought by both penal and tax means.
Bruno Cova, Italy: Italy is second only to the United States in the number of enforcement actions against corporations allegedly engaged in wrongdoings.
These enforcement actions are based on Legislative Decree No. 231 of 8 June 2001 on the administrative liability of legal persons, companies and associations (hereinafter referred to as “Law 231”), which introduced the concept of criminal liability of companies in relation to specific categories of crimes, among which corruption, committed by officers or employees of corporations, in the interest of the corporation. While Law 231 formally refers to “administrative” liability, from a practical standpoint the liability is of a criminal nature.
Law 231 provides a list of crimes which can lead to the liability of corporations. These offences include domestic and international bribery, but also extend to financial and accounting crimes, health and safety, data protection, and other white-collar crimes.
If a director, an officer or an employee of a corporation has committed a crime, the corporation can be exonerated from liability in the following cases: (a) where the offenders acted solely in their own interest or on behalf of third parties and not in the interest of the corporation; and (b) where the corporation can prove that has adopted effective and specific internal compliance measures.
In particular, corporations must prove that, before any offence was committed, they established and implemented effective internal control systems for the purposes of preventing offences covered by Law 231, by implementing an adequate internal compliance program tailored to the characteristics of the company and setting up a supervisory body properly vested with independent initiative and inspection powers with the task of supervising the implementation and updating of the compliance program.
Although the adoption and implementation of a compliance program is not mandatory, the lessons in this last decade show that Italian companies and foreign companies doing business in or into Italy that have in place effective instruments to prevent the commission of the crimes and to monitor the risk areas in which they operate, may avoid potential liability under Law 231.
If a corporation is found guilty of an offence under Law 231, it may be subject to a combination of the following sanctions: a) a monetary fine up to Euro 1,500,000; b) the seizure of the profits resulting from the offence; c) the publication of the decision; d) disqualifying sanctions. Law 231 sets out exemptions to the applicability of the disqualifying sanctions as a consequence of the corporation’s payment of compensation for the damages resulting from the criminal offences and having implemented suitable compliance measures.
Disqualifying sanctions can be very pervasive, and can be imposed as precautionary measures. Such sanctions include the imposition of a judicial commissioner who takes over the management of a company.
Generally, Law 231 applies to offences committed by Italian corporations in Italy and abroad, provided that no prosecution against the corporation has been initiated in the State in which the relevant crime was committed (in practice, this is not always the case). An Italian corporation, for the purposes of Law 231, is not exclusively taken to be a company incorporated in Italy, with its registered office in Italy, but also a corporation that conducts the administration of its interests in Italy.
Law 231 does not provide a specific provision that discusses its applicability to foreign companies. However, there is a general principal of Italian criminal law (specifically, Section 6 of the Criminal Code) that provides that all crimes committed in the territory of Italy are punishable under Italian law, even if they have been committed by a foreign person or entity. Crimes are deemed to have been committed in the territory of Italy when the criminal action was performed in Italy, or when the damages resulting from the criminal action were suffered in Italy.
Based on this general principle, some of the recent cases dealing with the issue at hand (e.g. Siemens AG, various international banks in the Parmalat case) have stated that the provisions of Law 231 may be applicable to foreign corporations when their representatives commit a crime punishable under Law 231 in the territory of Italy, or abroad, if the consequences of the crime were felt in Italy.
A debate is ongoing as to possible changes to Law 231 that would provide more certainty to corporations as to the viability of their compliance programs.
Alberto Echarri, Spain: Criminal offences and liabilities under Spanish Law are regulated by Act 10/1995 (the “Criminal Code”). Before one of the latest amendments of the Criminal Code, corporate entities, although could not be held criminally liable, were joint and severally liable for the payment of fines imposed to its representatives due to criminal offences committed by said representatives on behalf of the corporate entity.
However, this beneficial legal status of corporate entities was modified after Act 5/2010 came into force. This piece of legislation amended the Criminal Code, introducing in Spanish Law the possibility of corporate entities being held liable for criminal offences.
Under this new regulation, corporate entities will be liable for criminal offences committed by their representatives or directors and by their employees, to the extent that said criminal liability is established by Law for corporate entities.
Act 5/2010 sets forth a list of criminal offences for which corporate entities can be held liable. Among those, Act 5/2010 includes national and international bribery, fraud, money-laundering, health and safety or environmental crimes.
The corporate entity’s behaviour may influence in the graduation of its criminal liability. Some circumstances, such as the confession of the crime or the collaboration in its investigation may reduce the criminal liability whereas others, such as the recidivism, may increase it.
The Criminal Code, under its new wording, establishes, among others, the following penalties for corporate entities:
- Fines, which amount shall be proportionate to the gravity of the committed crime.
- Winding-up of the corporate entity.
- Suspension of its activities and closure of its premises.
The transformation, merger or split-off of the corporate entity does not extinguish its criminal liability, which will be transferred to the corporate entity resulting from this type of transactions.
Finally, it is important to highlight that under this new regulation, corporate entities being held criminally liable, will also be responsible under civil law, joint and severally with the individuals having committed the crime. This civil liability will imply the restitution to the situation previous to the commitment of the crime, the reparation of the caused damage and the indemnification for material and moral damages.