The German Federal Ministry of Justice and Consumer Protection (BMJV) has revised the draft bill of the German Associations Sanctions Act (VerSanG-E), which was first circulated in August 2019, and recently published it officially on 22 April 2020. We have already reported on the first draft bill. The following article highlights the essential modifications of the VerSanG-E.
While the first draft of the bill carried the title “Law for Combating Corporate Crime” (“Gesetz zur Bekämpfung der Unternehmenskriminalität”), the current draft bill is entitled “Law for Strengthening Integrity in Business” (“Gesetz zur Stärkung der Integrität in der Wirtschaft”), the centerpiece of which in turn is the “Law for Sanctioning Association-Related Crimes” (“Association Sanctions Act”/ “Verbandssanktionengesetz – VerSanG”). This purely linguistic modification in the form of a terminology with positive connotations emphasises the positive effects intended by the law as well as the fact that the majority of companies behave in accordance with the law. A general criminalisation of companies – so the worries from the business community about the previous title – is avoided in this way.
The draft also no longer refers to an “associational offence” (“Verbandsstraftat”) but only to an "act of association" (“Verbandstat”). However, this purely linguistic modification, with the avoidance of the word “offence”, does not change the fact that the VerSanG-E is in fact corporate criminal law, which becomes particularly clear from the references to and amendments of criminal procedural law, the mandatory prosecution principle and the sanction system similar to individual criminal law.
Section 1 VerSanG-E now restricts the area of application of the law to associations “whose purpose is directed towards an economic business operation”. Thus, especially non-profit associations are not covered by the VerSanG, but continue to be subject to the German Administrative Offences Act (OWiG).
According to section 14 VerSanG-E, the public announcement of the conviction of the association is only permissible if this serves to inform the injured parties in view of possible claims for compensation against the convicted association. Accordingly, a publication would should be excluded if the association has already satisfied any claims. According to the official explanation to the Act, this is to avoid a pillory effect for convicted associations in the sense of “naming and shaming”.
Furthermore, the ultima ratio sanction of liquidation of the association was deleted without replacement.
The possibility of mitigating sanctions connected with an Internal Investigation has been modified.
Among the requirements for mitigating sanctions, compliance with the applicable laws within an Internal Investigation is not mentioned as an explicit requirement in the current version of section 17 para. 2 VerSanG-E, but is mentioned in the official explanation to the law as a self-evident, unwritten requirement. The reason for this is that the state could only reward law-abiding behaviour with a mitigation of sanctions.
The discretion of the court (“may”) provided for in the first draft regarding the application of the mitigation option has now been changed to a mandatory mitigation (“shall”) if the requirements are met. However, at the same time this was put into perspective by the fact that the court, when deciding whether the requirements for the possibility of mitigation are met, has to take certain circumstances into account (nature and extent of the facts disclosed, their significance for the investigation of the offence, the time of disclosure and the extent of support for the prosecution authorities), section 17 para. 3 sentence 1 VerSanG-E. Also, according to section 17 para. 3 sentence 2 VerSanG-E, mitigation of sanctions is excluded if the association discloses the results of the Internal Investigation after the main proceedings at court have begun (Section 203 German Criminal Procedure Code – StPO).
It is to be expected that the draft bill agreed upon by the grand coalition will be passed promptly and probably without any further substantial changes, possibly even before the summer break.
The “Act to Strengthen Integrity in Business” – and with it also the VerSanG – is to come into force two years after its proclamation on the first day of the following quarter. This gives associations a good two years to review their internal processes and, if necessary, take (further) compliance measures or introduce a risk-appropriate compliance management system for the first time.