11-13-2019Article

Chambers White-Collar Crime 2019 Guide

White-Collar Crime: Law & Practice

1. Legal Framework

1.1 Classification of Criminal Offences

According to German law, criminal offences are divided into administrative offences, offences and crimes. The latter are punishable by a minimum term of imprisonment of one year under the Criminal Code (Strafgesetzbuch ; StGB), while offences are punishable by a lower minimum term of imprisonment or fines.

For a criminal offence, both the objective elements (eg, crime-object and crime-action) and the subjective elements of a criminal norm of the Criminal Code or other laws that standardise criminal offences must be fulfilled. The subjective element is considered fulfilled if the offender acts with (at least conditional) intent or negligence (if the law provides a punishment for negligence).

There is also the possibility of criminal liability for attempting to commit a criminal offence, provided that the offence is a crime in the aforementioned sense or the relevant criminal law expressly provides for criminal liability in that case.

Administrative offences lead to fines, not to imprisonment.

1.2 Statute of Limitations

According to German law, the statute of limitations for the prosecution of white-collar crime depends on the punishment threatened for the relevant crime. For example, the limitation period is 20 years for offences punishable by a maximum term of imprisonment of more than ten years, ten years for offences punishable by a maximum term of imprisonment of more than five years to ten years, five years for offences punishable by a maximum term of imprisonment of more than one year to five years and three years for other offences. The time limit is determined by the threat of punishment, regardless of any penalties or mitigation provided for in the provisions of the General Part of the German Criminal Code (eg, in the case of attempted or assisted conduct) or the severity of the case.

According to German law, the statute of limitations begins as soon as the offence has ended. If a successful act, forming part of the offence, occurs later, the statute of limitations begins at this point in time.
Under certain conditions, the statute of limitations can be suspended (Section 78b of the Criminal Code) or interrupted (Section 78c of the Criminal Code). The latter is, in particular, the case with regard to various measures taken by the criminal prosecution authorities, such as interrogations or searches; and the courts, such as the scheduling and opening of the main proceedings. However, it should be noted that although the statute of limitations begins anew after each interruption, criminal prosecution is statute-barred at the latest if twice the statutory statute of limitations has elapsed since the beginning of the statute of limitations, or, if the statute of limitations is shorter than three years under special laws, after at least three years.

1.3 Extraterritorial Reach

There are several provisions of the German Criminal Code which claim extraterritorial validity. This depends in general on the type of the punishable offence.

For example, German criminal law – irrespective of the law of the place where the offence was committed – applies to the offences under Section 5 of the Criminal Code committed abroad, insofar as these are considered to have a domestic connection. This is the case, for example, in accordance with Section 5(12) and 5(13) of the Criminal Code for offences committed by a German public official or a person with a special obligation in the public service during a period of service or in relation to the service, or to offences committed by a foreigner as an official or a person with a special obligation in the public service. Pursuant to Section 5(15), German law also applies, for example, to corruption offences if the offender is German at the time of the offence or the offender is a European public official at the time of the offence and his place of business is located in Germany, if the offence is committed against an official, a person with a special public service obligation or a soldier of the German Armed Forces or the offence is committed against a European official or arbitrator who is German at the time of the offence.

Irrespective of this, German criminal law shall apply, irrespective of the law of the place where the offence was committed, to the offences under Section 6 of the Criminal Code committed abroad, since the legal interests mentioned are regarded as internationally protected. This includes, for example, subsidy fraud pursuant to Section 6(8) of the Criminal Code.

Finally, German criminal law can also apply to other offences (irrespective of the type of offence). This is the case pursuant to Section 7(1) of the Criminal Code for offences committed abroad against a German, if the offence is punishable at the scene of the offence or if the scene of the offence is not subject to criminal power.

In accordance with paragraph 2 of this norm, this also applies to other offences committed abroad whether or not the offence is punishable at the scene of the offence if the offender was German at the time of the offence or became German after the offence or was a foreigner at the time of the offence, is effected in Germany and, although the Extradition Act would permit his extradition according to the type of offence, is not extradited because an extradition request is not made or refused within a reasonable period of time or the extradition is not executable.

1.4 Corporate Liability and Personal Liability

At this point in time only natural persons are subject to German criminal law. In the current absence of corporate criminal law, legal entities may be prosecuted only via administrative offence law. Pursuant to Section 30 of the Act on Administrative Offences, companies are accessorily liable for criminal offences and administrative offences committed by their executives.

In such cases Section 130 of the Act on Administrative Offences may be applied. Section 130 sanctions the violation of a supervisory duty as an administrative offence. Under Section 130, management must take supervisory measures to prevent the commission of criminal offences within the company. This means that a company must take all appropriate, necessary and reasonable supervisory measures to prevent criminal offences. If these supervisory measures are omitted and, as a result, criminal offences are committed within the company, the company is liable under Section 30 of the Act on Administrative Offences.
Obviously, only a fine can be imposed on legal entities. Alternatively or cumulatively, the secondary sanction of confiscation known from criminal law (Sections 22 et seq of the Act on Administrative Offences) may be ordered.

On the basis of this legal situation, the sanctioning of a legal successor in accordance with Section 30 of the Act on Administrative Offences is permitted if there is almost identity between the former and the new asset relationship from an economic point of view.

It is likely, that the legal basis for sanctioning companies will change in the foreseeable future. The German Federal Ministry of Justice and Consumer Protection has presented its long-awaited draft of a Corporate Criminal Act. In the case of association-related offences, this draft provides for independent prosecution of the association in addition to prosecution of the individual offender. The draft law proposes an association Criminal Code which establishes the criminal liability of associations for offences committed by their employees or members against the criminal laws, if these offences have violated obligations which affect the association, or if the association has been or should be enriched by them. The prosecution of associations on suspicion should no longer – as it is currently the case – be at the discretion of the criminal prosecution authorities (so-called opportunity principle), but rather mandatory (legality principle). Monetary sanctions of up to 10% of the turnover may be imposed, or in the worst cases, liquidation. This Act also regulates the legal succession to the corporate sanctions, which is considered possible in the case of universal succession and partial universal succession.

1.5 Damages and Compensation

Victims of white-collar offences may claim compensation for their loss before the competent civil courts in accordance with general civil law provisions, and possibly also in conjunction with criminal law provisions.