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Germany: Illegal lobbying – New criminal offense to combat corruption

Fraud, Bribery & CorruptionGermany: Illegal lobbying – New criminal offense to combat corruption

In Germany, a new criminal offense of improper lobbying came into force on 18 June 2024. Its impact on the lobbying activities of companies may not be underestimated. Amongst others, the practice of paid lobbying at ministries or other public bodies by mandate holders is now subject to criminal prosecution. It will hence be vital for companies to critically review lecture and consultancy fees for mandate holders as well as remuneration for supervisory board positions and managing director activities for their appropriateness with immediate effect.

Contents

Tightening of criminal law after the German “mask affair”

Details of the new criminal offense

Validity for German, European and international mandate holders

Extended criminal liability for paid lobbying

Unjustified pecuniary advantage and link to parliamentary law

Entry into force

The new regulation is a reaction to the so-called “mask deals” concluded during the coronavirus pandemic. Specifically, members of the German Bundestag and the Bavarian state parliament established contacts between mask traders and decision-makers in federal and state authorities, in some cases with explicit reference to their position as parliament members. They received consultancy and commission fees in return.

Although the mask affair caused a major political stir in Germany, it did not lead to any criminal consequences for the mandate holders. This is because, according to previously applicable corruption law, exerting influence on mandate holders by promising or granting undue pecuniary advantages was only punishable, if the inducted act was part of the exercise of the mandate, such as voting for or against a legislative proposal. However, the threat of punishment did not cover the provision of other considerations outside of the mandate activity, such as the procurement of business contacts for which the mandate holder received a commission.

This gap is now closed by the new criminal offense enshrined in Section 108f of the German Criminal Code, which generally subjects the unlawful lobbying activities of mandate holders to the ban on corruption. This also covers lobbying activities outside of parliamentary activities, provided they are carried out while holding a mandate.

With Section 108f of the German Criminal Code, the German legislator is following comparable regulations at international level, such as those found in the United Nations Convention Against Corruption and the Criminal Law Convention on Corruption of the Council of Europe.

Pursuant to Section 108e para. 1 of the German Criminal Code, anyone who demands, is promised or accepts an unjustified pecuniary advantage for themselves or a third party in return for performing or refraining from performing an act to protect the interests of the party offering the advantage or a third party during their mandate may be punished with imprisonment of up to three years or a monetary penalty. Anyone who offers, promises or grants a corresponding advantage can also be punished accordingly (Section 108e para. 2 of the German Criminal Code).

Validity for German, European and international mandate holders

In addition to members of the German Bundestag and state parliaments, Section 108e of the German Criminal Code also covers German members of the European Parliament and the parliamentary assembly of international organizations. In contrast to Section 108e of the German Criminal Code, members of the Federal Assembly and local elected representatives are not covered by the new prohibition.

Extended criminal liability for paid lobbying

It is punishable to exert influence on mandate holders by offering, promising or granting pecuniary advantages as well as the acceptance of such advantages by mandate holders. In return for the benefit, the mandate holder must perform or refrain from performing an act in the interest of the party offering the benefit or a third party during their term of office.

The decisive innovation is that criminal liability for corruption no longer requires that the consideration of the mandate holder is part of the exercise of their mandate, for example as a participant of parliamentary committees. Section 108f of the German Criminal Code merely refers to an “act” and does not provide a more detailed description of the activity initiated. This takes account of the fact that, due to their position, mandate holders regularly have special connections and privileged access to ministries, authorities and other public bodies that can also be commercialized outside of any activities directly related to their mandate. The new criminal offense therefore applies to all cases in which mandate holders exploit their connections with public bodies for the benefit of a company in return for payment.

According to the wording of Section 108f of the German Criminal Code, on the other hand, it is not punishable if the consideration is only granted to the mandate holder after the end of the mandate or after an act has been carried out and without an agreement to this effect. In practice, however, the public prosecutor’s office is likely to tend to assume, at least initially, that there was a prior agreement between the mandate holder and the company regarding the benefit granted in place.

Unjustified pecuniary advantage and link to parliamentary law

The offense also requires the promise or granting of an unjustified pecuniary advantage.
Unlike Section 108e of the German Criminal Code, Section 108f of the German Criminal Code hence does not cover non-economic benefits, such as unpaid campaigning for the mandate holder in the form of advocacy with voters.

In contrast, the concept of an “unjustified” advantage lacks precise definition and has already met with extensive criticism during the legislative process. Ultimately, it is currently not entirely foreseeable which benefits will be considered unjustified in practice.

To that effect, the new regulation only refers to the provisions relevant to the legal status of the mandate holder. As these provisions vary between the different parliamentary bodies, criminal liability will ultimately also depend on whether the exertion of influence takes place at the federal, state or international level. At the same time, German parliamentary law for example does not exhaustively list the duties to which mandate holders are subject. Section 44a of the Members of Parliament Act expressly permits members of the German Bundestag to engage in professional and other activities in addition to their mandate and otherwise only stipulates specific prohibitions on activities, such as, in particular, consultancy work in direct connection with their mandate. Whether and to what extent the representation of interests vis-à-vis other authorities and public bodies is inadmissible remains open, as does the question of which activities are directly related to the mandate.

Nevertheless, the reference to parliamentary regulations for members of the German Bundestag is at least helpful insofar as Section 45 para. 2 no. 1 of the Members of Parliament Act allows the conclusion to be drawn that professional and advisory activities, the provision of expert opinions or publishing and lecturing activities that were already undertaken prior to the mandate are permissible in compliance with the relevant transparency regulations and are not subject to any risk of criminal liability. In addition, since the mask affair, Section 44a para. 4 Members of Parliament Act makes it clear that, in professional or business matters, any reference to membership of the Bundestag is improper and inadmissible if it could result in a (professional or business) advantage for the Member of Parliament.

From a compliance perspective, companies will in the future not be able to avoid checking the appropriateness of all monetary business relationships with mandate holders very carefully in advance and documenting such compliance checks just as carefully. Parliamentary law may provide an initial guidance for this review. Ultimately, however, it will come down to a thorough case-by-case analysis.

Entry into force

The illegal lobbying offense of Section 108f of the German Criminal Code came into force on 18 June 2024 and applies with immediate effect.

Click here to read the German version.

Story from www.globalcompliancenews.com

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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