CROSS-BORDER BRIEFING: U.S. Meets Germany: Beyond Volkswagen - White-Collar Defense and Corporate Investigations Across the Atlantic

Presentation Summary
November 2, 2022, Miami

A. The Situation in the U.S.: Bradley D. Simon

Huge shift in Department of Justice priorities over the past twenty years
The Department of Justice and other law enforcement agencies are asserting long-arm jurisdiction and bringing actions against companies and individuals all over the world
Germany has been a focus of attention, largely due to its position as Europe’s economic powerhouse: Siemens, Volkswagen, Deutsch Bank
Other German companies prosecuted: SAP, Allianz, Linde Group, Zimmerman Bilfinger, Deutsch Telecom and Daimler
Even local law enforcement agencies, such as the Manhattan District Attorney’s Office, have gotten into the act, bringing oversees prosecutions
Some cynically argue that the motivation for increased enforcement against German and other overseas companies is to protect U.S. companies from competition and to line government coffers
U.S. officials have argued that Germany is too lax when it comes to enforcement. If German prosecutors had taken steps to go after these companies, the U.S. would not have had to step in. The U.S. has accused Germany of being too soft in white collar crime. There is no mechanism for criminally prosecuting corporations in Germany.
Other countries, including the United Kingdom and France, have undertaken remedial measures. The UK passed its Bribery Act. France has enacted anti-corruption statutes and has started to bring corruption and bribery cases. Germany lags.
U.S. law enforcement’s aggressive approach toward Germany has resulted in significant cross-border work between U.S. and German lawyers.

B. The Situation in Germany: Dr. Oliver Pragal

Admittedly, Germany is lagging behind in terms of combating white-collar crimes, but overall, the situation is not as bad.

The following aspects deserve a closer look:

The (abandoned) Corporate Sanctions Act (“Verbandssanktionengesetz”)

- The draft act was abandoned by the new German Government (further information available here); it included:
  - enhanced fines (up to 10% of group revenue)
  - sentencing guidelines
  - rules for internal investigations
- Present state
  - § 30 OWiG (Administrative Offence Act)
  - fines: 5 Mio. € (negligence) / 10 Mio. € (intent), thresholds can be exceeded in case of higher profit
  - no sentencing guidelines
- Outlook: a new Corporate Sanctions Act (draft) is expected to be rolled out soon

2. European Investigation Order

Based on European Directive, came into force by end of 2020
Substantial acceleration/simplification of mutual legal assistance (raids, wiretaps, seizure of evidence, etc.)
Must be executed within a maximum of 90 days
Very limited reasons for rejection by requested state

3. European Public Prosecutor´s Office (EPPO)

Established in June 2021
Competency: responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU (fraud, VAT fraud with damages above 10 million euros, money laundering, corruption, etc.)
Investigations conducted by OLAF
Indictment/trials before domestic courts within EU-countries

4. EU Whistleblowing Directive

Coming into force soon
Whistleblowing systems then mandatory for companies with 50+ employees
Sweeping protections rules against retaliation
Internal/external whistleblowing equally admissible
Consequence: substantial incline of prosecution regarding white-collar crime

5. Money Laundering

Germany as paradise for money laundering?
§ 261 German Penal Code: all crimes approach
Establishment of an “FBI” against money laundering (BFKA)
New initiative by Interior Minister Nancy Faeser to limit cash transactions to max. 10.000 € (see official press release)

6. Corruption in Germany

Corruption on the rise: 34.9 % incline of corruption offences in 2021 in comparison to 2020 (see “Bundeslagebild Korruption”, German only)

7. New German law on ESG in Germany enters into force on 1 January 2023 (English version available here)

Please contact us in case of any questions

Bradley D. Simon Dr. Oliver Pragal