By Michael H. Wiehen

Member of the Vorstand, TI Deutschland

In Germany, the law incorporating the OECD Convention (and parts of the OECD Recommendation) into the German legal structures (Internationales Bestechungsgesetz or IntBestG) was passed shortly after the Convention was signed and came into effect on 15 February 1999, concurrently with the Convention itself.

The Phase I Review by the OECD took place in 1999. TI on 31 March 1999 submitted a brief assessment of the German legislative process and concluded that the process and the result were less than fully adequate in two respects: Germany does not have a system of corporate criminal liability, and the sanctions provided by the Ordnungswidrigkeiten-Gesetz (OWiG) usually cited by the German authorities as "fully compliant" could not be considered as the "functional equivalent" of corporate liability. The Phase I Review Report of the OECD commented critically on these issues but did not require Germany to immediately legislate any changes.

The Phase II Review by the OECD took place in the summer of 2002. TI, at a meeting with the OECD Review Group on 5 June 2002 in Berlin, made a detailed presentation commenting critically on a number of factors. A copy of the presentation is available on request. The Phase II Review Report of the OECD was issued with much delay in June 2003, due to protracted efforts by the Justice Ministry of Germany to fine-tune the "agreed" text of the Review Report. The Report contains a number of diplomatically formulated recommendations. Even more telling are many "comments of the reviewers". The main points of criticism are the following: Neither the Government nor the industry associations have done enough to raise awareness of the Convention (and Recommendation) and the new legal situation it has created (that bribing a foreign official is now a criminal act under German law, and that bribe payments are no longer tax deductible). The media could not yet report on convictions under the new law, because there were no convictions yet. The prosecutorial offices are inadequately staffed and resourced. The prosecutors (who are structured on a decentralized "Länder" basis) are not sufficiently interconnected. A central register of companies guilty of corruption and therefore not eligible for new public contracts does not yet exist at the central, national level, but only in several subordinate jurisdictions, with very limited effect. Existing information sources are not being effectively utilized: Civil Servants, auditors and tax consultants are not under obligation to report suspicious cases. Whistleblowers are neither encouraged nor protected. The Report suggests that training for prosecutors deal more effectively with the issues of prosecuting foreign bribery. It also calls for better and more detailed statistics on corruption cases. Finally, the Report suggests stronger anti-corruption demands on companies: Codes of Conduct and compliance programs should also be adopted by medium size companies active in exports. Members of the Supervisory Boards should be obligated to pass along to the prosecutors any indication, in the audit report, that serious violations of the law may have taken place.

Both the TI submission and the OECD Report commented critically on the fact that there were no convictions under the IntBestG yet, and very few investigations. The situation has not really changed since then. There do not yet appear to be any convictions, and still only a handful of investigations, to the best of our knowledge. The reason for this surprising degree of uncertainty is the fact that there is no central statistic on international corruption cases, and no central office that is responsible to collect information or even to prosecute such international cases, as has been repeatedly criticized. Most prosecutors are very reluctant to disclose information on current investigations.

The cases under investigation known to TI Deutschland are the following:

Bribery in South Africa by a German weapons exporter related to naval frigates

Bribery in Lithuania related to the export of hunting weapons

Bribery in Rumania by a German contractor related to pipeline construction

Bribery in Georgia and Azerbaidjan

Two cases of unknown content being investigated in Frankfurt.

What are the obstacles?

To some extent, all the obstacles listed in the Working Papers for this seminar apply in Germany. It is difficult to give weights, but the writer of this note would speculate as follows, based on discussions with many prosecutors throughout the country:

Lack of Complaints:

In the two-three cases where prosecutors were sent reasonably complete information on violations by media representatives or by Civil Society groups abroad, they promptly opened an investigation. But it seems that there is a severe lack of complaints. "Competitors" of successful bribers might have been expected to submit formal complaints, especially if the briber is a national of another country, but so far this has not happened. One can only speculate why not. And nobody else has taken it upon themselves to collect and submit to the prosecutors the allegations etc published in the media of countries where the bribery of officials took place. The prosecutors themselves do not carry out a media scan, as far as we know.

One should note here that the German media have reported extensively on a number of international corruption cases (Lesotho et al) which however all took place prior to February 1999 and therefore are not covered by the IntBestG.

A sub-point:

Prosecutors do not seem to take action when they learn especially from foreign media reports of suspicion, allegations or even legal investigations in other countries involving companies in their jurisdiction. Nor do German diplomatic representations in other countries pick up such reports and pass them along to the appropriate German prosecutor.

Adequacy of Resources:

German prosecutors almost unanimously complain about the lack of adequate resources - financial, staff and police support. Corruption cases and economic crime in general are particularly staff-intensive, complex and drawn-out. In a situation where prosecutors have to produce "case numbers", corruption cases often are put on the back burner. In Germany several Länder (and the two cities Munich and Frankfurt/Main) have installed "focus prosecutorial offices for economic crime" or even for "corruption", and most of those have been able to build up expert staff capable of reading balance sheets etc. A "general prosecutor" is hard pressed to give adequate weight and time to corruption cases.

Decentralization of Prosecution:

This would not necessarily be a problem if prosecutors' offices would effectively network, share information, "assign" cases among the various Länder. But this network does not exist or function. The Bundeskriminalamt (BKA) is a central federal (police) office with responsibility for selected matters of criminal justice, but it is not even allowed to collect and distribute information on international corruption cases. That should be a minimal demand - to make the BKA responsible for central information management with basically "clearing house" function. Beyond that - the German Government should consider instructing the "Federal Attorney" (Bundesanwalt) to take responsibility for assuring that all cases of suspicion, or allegations, of international corruption are followed up systematically by one of the Länder-Prosecutors.

Difficulty in Obtaining Mutual Legal Assistance:

The South-Africa case being investigated in Munich demonstrates the difficulties in obtaining adequate and timely mutual legal assistance. Since requests have to go via the diplomatic channels (foreign offices), much valuable time is lost. And the interest of the South-African prosecutors in cooperation apparently is limited, probably also affected by a lack of resources.

Statutory Shortcomings:

There is no evidence yet but it is likely to happen that the slow information collection process will result in the present statute of limitations turning out to be too short.

Government Support for Enforcement:

The writer of this note would argue that the government (Bund or Länder) is not providing any visible support to the prosecution of international corruption. The only evidence for this is the absence of any public pronouncements pushing for prosecutions. Whether any prosecutors (who after all are subject to instructions by their political masters) have received actual "guidance" from their superiors to lay off investigations or prosecutions of politically powerful export companies is not known.

It is good news however that after many years, when prosecutors and other jurists in Germany rejected out-of-hand any suggestion that prosecutors should be independent of instructions, very recently the professional association of prosecutors demanded "independence", and thus at least the debate has begun.

Munich, 2 October 2003