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Commission Proposes New Directive to Step Up Fight Against Corruption

Commission Proposes New Directive to Step Up Fight Against Corruption

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While allegations of corruption continue to make headlines in Austria, the Ministry of Justice responded in January with draft legislation on the Corruption Law Amendment Act 2023.

Now, the Commission is proposing a new directive to update and harmonise the EU rules on how to define and punish corruption offences. While the proposal aims to create a level playing field in all Member States in the fight against corruption, mainly by requiring Member States

  • to put or have in place bodies in their national law specialised in preventing and repressing corruption;
  • to ensure the liability of legal persons, while excluding that such liability is alternative to that of natural persons;
  • to regard certain circumstances as aggravating, i.e. if the crime is committed by a high-level official; and
  • to regard certain circumstances as mitigating, for instance where offenders provide information or collaborate with authorities, or in the case of legal persons, to have effective internal controls in place,

it also contains several provisions that go beyond Austria's Corruption Law Amendment Act 2023. As a reminder: Besides introducing a stricter regime for "candidates for office" and the prohibition to purchase mandates, i.e. by demanding/offering a fee for the allocation of a mandate for oneself or a third party, the Austrian Corruption Law Amendment Act 2023 also amends the law on the Responsibility of Legal Entities (Verbandsverantwortlichkeitsgesetz; "VbVG"). Under this law, a legal entity can be held criminally liable for criminal acts committed by its current or former employees and decisionmakers in their capacities as employees and/or decisionmakers of the company.

The maximum fine can range from 40-180 daily rates based on the maximum imprisonment sentence for the offence in question. Currently, the maximum daily rate is capped at EUR 10,000. With its new Act, the Ministry of Justice wants it raised to EUR 30,000, meaning that the maximum fine for a corruption offence in Austria could amount to EUR 4.65m. If the Commission's proposal becomes law, this will not be sufficient. The

Commission is proposing fines "which should not be less than 5 % of the total worldwide turnover" and other harsh sanctions, including temporary or permanent disqualification of that legal person from the possibility to engage in commercial activities.

The proposal will have to be negotiated and adopted by the European Parliament and the Council before it can become EU law. If it does, it will not only affect the new Austrian Corruption Law Amendment Act 2023 but will have a significant impact on enforcing anti-corruption law violations across the EU.

We will keep you posted about any new developments.

By Klara Kiehl, Partner, and Katharina Mydza, Associate, Schoenherr

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