Why Companies Cannot Commit Crimes Themselves
Suspicion of corruption in a company – hardly anything shakes a company to its core more quickly. In addition to criminal proceedings against the individuals involved, the company itself faces substantial fines, the forfeiture of any economic benefits obtained, and massive damage to its reputation. Those who understand the legal mechanisms can take countermeasures in time. We advise and represent companies and executives nationwide – from the initial house search to the court trial.
A central principle of German law is: Only natural persons can commit criminal offenses. Legal persons – such as limited liability companies (GmbH), stock corporations (AG), or registered associations (e.V.) – cannot be prosecuted in a criminal sense themselves, except in cartel law cases. The same applies to unincorporated associations or partnerships with legal capacity, such as a GmbH & Co. KG. Corruption in a corporate context is therefore always the act of an individual: the managing director, a board member, an authorized signatory (Prokurist), or an employee involved in bribery.
However, this does not mean that the company remains unaffected. The administrative offenses law, through Sections 30 and 130 of the Administrative Offenses Act (OWiG), creates a system that attributes the actions of natural persons to the company and imposes its own fines. In parallel, Section 29a of the OWiG provides for the confiscation of all economic benefits that have accrued to the company from the offense. Thus, criminal law targets the individuals acting, while administrative offenses law targets the company.
What is corruption in the legal sense?
In German law, the term corruption encompasses several criminal offenses. Particularly relevant in the business context are bribery and corruption in commercial dealings (§§ 299, 299a, 299b of the German Criminal Code), as well as bribery and corruption of public officials (§§ 334, 332 of the German Criminal Code). Additionally, criminal offenses such as embezzlement (§ 266 of the German Criminal Code) can occur if managers use company funds for bribe payments, as well as money laundering (§ 261 of the German Criminal Code) if funds obtained from bribery are concealed.
Common to all offenses is that the actual criminal act can only be committed by a natural person. By definition, corruption requires an individual to request, accept, or grant an advantage. The company as such remains criminally neutral but comes under the focus of authorities for administrative offenses as soon as a person in a leadership position has acted in its name.
How is the company liable under Section 30 of the Administrative Offences Act (OWiG)?
The central attribution rule for companies is Section 30 (1) of the Administrative Offenses Act (OWiG). According to this, a fine can be imposed on a legal entity or an association of persons if a management person has committed a criminal offense or an administrative offense, and thereby either duties incumbent upon the company have been violated, or the company has been or should have been enriched. The group of persons considered management personnel is exhaustively defined in Section 30 (1) OWiG. This includes: organs authorized to represent the entity and their members, executive boards of unincorporated associations, managing partners authorized to represent partnerships with legal capacity, general proxies as well as authorized signatories and persons authorized to trade, as well as other persons acting responsibly for the management of the business. This includes not only managing directors and executive board members, but also managing partners of general partnerships (OHG) and limited partnerships (KG) who are authorized to represent the company, as well as de facto management personnel without a formal position as an organ. Important: The action of the management person must have a functional connection to the company – the offense must have been committed „as“ a management person, not in a private capacity.
What role does § 29a OWiG play in forfeiture?
In addition to the corporate fine according to § 30 OWiG, administrative offense law provides for an independent confiscation provision in § 29a OWiG. This allows for the confiscation of a sum of money up to the amount obtained – meaning the economic benefits that the company derived from the corruption offense. Additionally, there is usually independent confiscation according to § 76a StGB. In the case of a corporate fine according to § 30 OWiG, confiscation according to § 29a OWiG for the same offense is excluded.
What is § 130 OWiG, and who does it apply to?
In addition to Section 30 of the Administrative Offenses Act (OWiG), Section 130 of the OWiG is an independent basis for liability for business owners and managers. The provision is directed against the owner of an operation or enterprise who intentionally or negligently failed to implement supervisory measures that would have been necessary to prevent a violation. In the case of corruption, this means that if a managing director has not established effective control mechanisms – no compliance system, no four-eyes principle, no regular audits – and an employee can therefore bribe a competitor's purchasing agents unhindered, the managing director can himself be fined under Section 130 OWiG. At the same time, the company can be sanctioned under Section 30 OWiG if the managing director is to be classified as a management person within the meaning of this provision.
Are companies legally obligated to implement compliance measures?
The question of whether companies are legally obligated to implement anti-corruption compliance cannot be answered with a simple yes or no. Currently, there is no general, explicit legal obligation in German law to establish a compliance management system. However, what the law does require are specific supervisory duties of the business owner according to § 130 OWiG (Administrative Offenses Act). The owner is obligated to take the necessary supervisory measures within the scope of what is reasonable to prevent business-related offenses. What is „necessary“ depends on the size of the company, the industry, the level of risk, and the specific field of activity. For areas prone to corruption – sales, purchasing, public tenders – the requirements are correspondingly higher.
What else threatens the company?
Besides fines and asset forfeitures, suspicions of corruption can lead to further consequences that, in individual cases, can be more significant than the financial penalty itself. Public contracting authorities can exclude companies from being awarded public contracts for a certain period. Regulated industries risk the withdrawal of their licenses or regulatory interventions. The reputational damage caused by investigations becoming public can have a lasting negative impact on customer relationships, bank financing, and stock prices. In parallel with fine proceedings, civil claims for damages by those affected are typically pursued.
What defense strategies are available for companies?
In penalty proceedings under Section 30 of the German Administrative Offenses Act (OWiG), various defense strategies exist. First, it must be examined whether the attribution requirements are met at all: Did the acting person actually have the status of a management person? Was there a functional connection between the offense and the company's activities? Was the company actually enriched or was enrichment intended? An effective compliance management system can both reduce the punitive portion of the fine and, in the case of internal investigations and early cooperation with authorities, lead to a significant reduction of the overall sanction. The separation of the punitive portion and the disgorgement portion in corporate fines opens up further avenues: If the economic advantage actually gained can be quantified as less than assumed by the authorities, the lower limit of disgorgement decreases. We represent companies, shareholders, and executives from an early stage, starting with the analysis of the investigation file up to the main hearing. The first hours and days after a suspicion of corruption becomes known are crucial for the room for maneuver the company retains.
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