14
Sun, Aug
57 New Articles

White Collar Crime Laws and Regulations in Czech Republic

White Collar Crime Laws and Regulations in Czech Republic

White Collar Crime Comparative Guide: 2022
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Contributed by DLA Piper.

1. Legal Framework 

1.1. What is the legal framework for bribery and corruption in your jurisdiction?

The Czech Act No. 40/2009 Coll., the Criminal Code, as amended (Criminal Code) and the Act No. 418/2011 Coll., on Criminal Liability of Legal Entities and Proceedings against Them (Corporate Criminal Liability Act), as amended, are the main pieces of Czech legislation governing bribery and corruption.

1.2. Which international anti-corruption conventions apply?

The following anti-corruption conventions apply to the Czech Republic:

UNCAC – The Czech Republic is part of the United Nations Convention against Corruption. The Convention was promulgated on December 23, 2013, in the Collection of International Treaties, volume 57, number 105/2013 Coll.

OECD – The Organisation for Economic Co-operation and Development also deals with the fight against corruption. The Czech Republic signed its Convention against Bribery of Foreign Public Officials in International Business Transactions on December 17, 1997, in Paris.

GRECO – The Group of States against Corruption was established in 1999 by the Council of Europe to monitor states’ compliance with their anti-corruption standards. The Czech Republic became a member in 2002.

The Czech Republic is also part of the International Anti-Corruption Academy (IACA) and the European Partners Against Corruption (EPAC), an informal network of 61 national police and anti-corruption watchdogs from EU Member States and the Council of Europe.

1.3. What is the definition of bribery?

Under the Criminal Code, a bribe shall be understood as an unauthorized advantage consisting in direct asset enrichment or another profit that is to be given to the bribed person or with their consent to another person and to which they are not entitled. 

The principal offenses under this legal framework are:

Accepting a bribe

Whoever themself or through another person accepts a bribe or a promise of a bribe for themself or for another (Section 331 of the Criminal Code).

Bribery

Whoever provides, offers, or promises a bribe for another person (Section 332 of the Criminal Code).

Indirect bribery

Whoever requests or accepts a bribe for that they will use their influence or influence of another to affect the exercise of powers of a public official, i.e. indirect bribery (Section 333 of the Criminal Code).

To constitute a criminal offence, the corruption call must furthermore be related to the procurement of a matter of general interest or conducting business. (Section 334 Common Provisions of the Criminal Code).

Furthermore, corporate entities can also be found liable for bribery-related criminal activity, under conditions described in Section 4.1.

1.4. Is private sector bribery covered by law? If yes, what is the relevant legislation?

The same provisions of the Czech criminal law apply for bribery and corruption in public and private sector. This means the criminal liability itself (criminal liability of natural persons as well as of corporate entities) as well as the charges as a consequence thereof are governed by the same provisions.

1.5. What is the definition of a public official and a foreign public official? Are employees at state-owned or state-controlled enterprises treated differently? Are there official lists of public officials, offices, or state-owned or state-controlled enterprises?

The Criminal Code defines a public official through a list of public functions such as a judge, public prosecutor, certain political functions such as members of parliament, the cabinet or the president, a member of the city council or a responsible official of a territorial body, state administration body or other public authority, members of public security forces, etc., but only at the time when they perform the tasks of the state or society and only at the time when they use the powers delegated onto them to perform those tasks.

An official of a foreign state or international organization is deemed to be an official under the Czech Criminal Code, if so provided by an international agreement or if it operates in its territory with the consent of the Czech authorities. This consent is not required if it is an official of an international criminal court, an international criminal tribunal, or a similar international judicial body who meets at least one of the conditions specified in the Act on International Judicial Cooperation in Criminal Matters.

For a bribe to be committed, as defined in Section 1.3, an involvement of a public official is not necessary (if however a bribe is committed by a public official, a higher imprisonment penalty applies). For an action to be considered a bribe in the sense of the Czech Criminal Code, the corruption call must be related to the procurement of a matter of general interest or to conducting business.

Employees at state-owned or partially state-owned or municipal enterprises are not treated any differently than employees in the private sector when it comes to bribery and anti-corruption in the sense of criminal law. However, public or partially public enterprises are further regulated by various means to prevent corruption, such as the duty to disclose various information to the general public upon a formal request, the duty to automatically disclose all contracts in a publicly accessible register of contracts, the duty to comply with public procurement regulation when seeking a supplier or subcontractor, etc. These means of regulation may also apply to private companies in a specific situation, typically if a private company interferes with public funds through public subsidies, supplying goods or services to a public body or company, etc. All of these measures serve as a prevention to bribery and corruption. Nevertheless, if a bribe is committed, criminal law applies.

A state-owned enterprise can have various forms. It could either have a legal form of a “state enterprise” (statni podnik) or a legal form of a commercial entity, where the stakeholder is (entirely or partially) the Czech Republic. Furthermore, Local Self-Government Units (municipalities (obce) or counties (kraje) may and often do have major stakes or are the only stakeholder to certain legal entities that may have a legal form of a commercial entity, but are, due to its stakeholder, subject to certain regulations private entities are not required to comply with. 

1.6. Are there any regulations on political donations?

A political donation could be considered a bribe if it meets the criteria set out in this note. In relation to civil servants (public officials) the Czech Act. No. 234/2014 Coll., on Civil Service, stipulates that a value limit of gifts or other benefits provided to a civil servant amounts to CZK 300 (approximately EUR 12), however, the Supreme Court adjudicated in its recent jurisprudence that even a gift below this limit may constitute a bribery offense in certain situations.

Furthermore, according to the Act on Associations in Political Parties and Movements, political entities may not accept a donation or other gratuitous performance exceeding CZK 3 million per year from a single natural or legal person. Should this amount be exceeded, it must be returned to the donor or transferred to the state budget. 

Financial (monetary) donations to a political party, if they exceed CZK 1,000, must be supported by a donation contract. Parties may not accept donations from municipalities, state enterprises, trust funds, or foreign persons (natural or legal).

Parties are obliged to keep two transparent accounts: an election account, purely for campaign expenses, and an account for donations and state contributions, showing three years’ history of such receipts. They must also publish a full list of donors three days before the election.

1.7. Are there any defenses available?

For natural persons, there are no specific statutory defenses to charges related to bribery. In general however, confession to a crime is usually an extenuating circumstance, together with cooperation with the investigation with police and other authorities, such as prosecutors and judges.

A legal entity can try to discharge itself from criminal liability if it has implemented all necessary measures that could be reasonably required to prevent the crime (the “compliance defense”), pursuant Section 8 (5) of the Corporate Criminal Liability Act. However, the only related guidance on this matter is the Supreme Public Prosecutor’s Office Guidance, while the view of the courts and the Ministry of Justice remains unclear. Generally, to be used as a compliance defense, the respective legal entity needs not only to implement a compliance system introducing internal rules and processes to prevent and detect corruption, but also needs to ensure (and eventually prove in a criminal proceeding) that all of the relevant employees, suppliers, the management, etc. have been duly and regularly trained for the compliance system to prove functional and effective.

1.8. Is there an exemption for facilitation payments?

The Czech Republic prohibits facilitation payments and any gift given with the intent to illegally influence decision-making. Therefore, facilitation payments may be considered a bribe, provided they meet the criteria described above. Furthermore, facilitation payments may be considered bribes no matter how small the amount is.

1.9. What are the criminal sanctions for bribery? Are there any civil and administrative sanctions related to bribery cases?

Individuals face up to 12 years’ imprisonment, forfeiture of property, monetary penalties, house arrest, community service, prohibition of entry to sporting, cultural and other social events, deportation, and prohibition of residence.

The Corporate Criminal Liability Act recognizes a broader scale of sanctions for companies. The act provides for: forfeiture of property; monetary penalties (up to CZK 1.46 billion (approximately EUR 56 million)); forfeiture or seizure of assets; prohibition of certain activities; prohibition from taking part in public procurement, punishment by disqualification from participating in public tenders; prohibition from receiving grants or subsidies; and publication of the judgment. If held liable, the company may also be dissolved (in extreme cases).

Companies convicted of bribery offenses may also face debarment from public procurement contracts under the EU Public Procurement Directive.

1.10. Does the national bribery and corruption law apply beyond national boundaries?

General territorial provisions of the Criminal Code and of the Corporate Criminal Liability Act apply. Regarding individuals, general criminal law jurisdictional principles apply, i.e. the territorial principle and the personality principle.

  •     The territorial principle means that Czech criminal law applies to criminal offenses committed in the territory of the Czech Republic.
  •     The personality principle means that Czech criminal law applies to Czech citizens no matter where the respective criminal offense has been committed.

Regarding companies, the Corporate Criminal Liability Act applies to corporations that have their registered office in the Czech Republic, have a business or branch in the Czech Republic, carry out activities in the Czech Republic, or have assets in the Czech Republic.

1.11. What are the limitation periods for bribery offenses?

The statute of limitations for bribery offences varies from three to 15 years, depending on the gravity and nature of the specific offence. The limitation period is generally determined by the upper limit of the penalty of imprisonment for the offence.

1.12. Are there any planned amendments or developments to the national bribery and corruption law?

No change in terms of amendment to the current legislation is planned in the foreseeable future.

2. Gifts and Hospitality

2.1. How are gifts and hospitality treated?

Hospitality expenses or gifts are not subject to any quantitative or qualitative restrictions in the Criminal Code, as the Criminal Code makes no express provisions with regard to corporate hospitality and any financial or other advantage.

2.2. Does the law give any specific guidance on gifts and hospitality in the public and private sectors?

The relevant legislation does not provide for specific guidance on gifts and hospitality in the private sector so the general provisions described in Section 1 apply.

In the public sector, further guidance is provided on giving gifts to public officials, as described in Section 2.3. 

2.3. Are there limitations on the value of benefits (gifts and hospitality) and/or any other benefit) that may be given to a government/public official? If so, please describe those limitations and their bases? 

Limitations for giving and receiving of gifts and hospitality in the public sector are rather difficult to be generalized but for the sake of simplicity, it can be concluded that public officials either (i) cannot accept gifts at all; or (ii) can only accept gifts which do not exceed CZK 300 in value as specified below. Which of these is the case depends on the regime under which the individual public official is employed and this usually cannot be assessed in standard situations. A general recommendation therefore is not to give gifts to any individuals who are perceived as government or public officials. A more detailed explanation of the underlying legal regulations and categorization of the groups of public officials is as follows.

A. Employees within public security forces

Employees serving as members of public security forces (military, state or municipal police, customs office, etc.) may not accept any gifts.

B. Public officials under the Civil Service Act 

In the civil (public) service, an employee must not accept gifts or other benefits for themself or for anyone else in the course of or in connection with their decision-making. 

Gifts that do not affect the proper performance of their duties may be accepted by a public official only if their value does not exceed CZK 300 (in the case of repeated offers of small gifts in the near future, whose individual value does not exceed CZK 300, the individual values must be added together at the moment when these gifts are repeatedly offered by one or more donors in close temporal proximity, but in the same matter). This threshold applies per gift for each public official. 

By way of an example, officials under the Civil Service Act would typically include officials at the Cadastral Office, Tax Office, etc.

C. Public Officials under the Act on Officials of Local Self-Government Units

Act No. 312/2002 Coll., on Officials of Local Self-Government Units stipulates that the basic duties of a civil servant include not accepting gifts or other benefits in connection with the performance of their employment, except for gifts or benefits provided by the local authority with which they are employed or on the basis of legislation and collective agreements.

By way of an example, officials under the Act on Officials of Local Self-Government Units would typically include employees of a local Self-Government Unit, such as a municipality, assigned to governmental administrative agenda such as vehicle register, vital records, etc.

D. Employees under the Labour Code within the public sector

Pursuant the Labor Code (Act No. 262/2006 Coll.), employees in the public sector may not accept gifts in connection with the performance of their employment, except for gifts provided by the respective Office where they are employed or pursuant to legal provisions.

2.4. Are there any defenses or exceptions to the limitations (eg reasonable promotional expenses)?

No specific defenses or exceptions apply and it needs to be assessed in every situation, whether a gift can constitute bribery as a criminal offense as defined in Section 1.3.

3. Anti-corruption compliance

3.1. Are companies required to have anti-corruption compliance procedures in place?

Companies are not required to have anti-corruption compliance procedures in place. A company may however discharge itself from criminal liability if it has implemented such compliance procedures, as described in Section 1.7.

3.2. Is there any official guidance on anti-corruption compliance?

The only related guidance on this matter is the Supreme Public Prosecutor’s Office Guidance. This guidance provides brief information about the standard compliance measures, such as an anti-corruption program, regular training of staff, and internal guidelines. It also provides guidance as to how prosecutors will assess such compliance programs, with a focus on the firm’s culture and employee engagement in practice. However, both the courts’ and the Ministry of Justice’s view remains unclear.

3.3. Does the law protect whistleblowers reporting bribery and corruption allegations?

Within the area of public service, whistleblowing is regulated in the Governmental Regulation No. 145/2015 Coll., on measures related to the reporting of suspected infringements in a public office (Regulation). The Regulation requires all public offices to create a position for an employee who will be in charge of receiving such whistleblowing reports on breaches or suspected breaches of law and will be responsible for follow-up internal investigation based on these reports. Furthermore, the Regulation requires the identity of the whistleblower, if known at all, to be kept secret and the whistleblower must not, under any circumstances, face pressure or any kind of harm.

In the private sector, the legislation in the Czech Republic currently does not provide for regulation of whistleblowing. As of May 2022, the Draft Act on Whistleblowing based on the EU Whistleblowing Directive is still in the legislative procedure.

4. Corporate criminal liability

4.1. Can corporate entities be held liable for bribery and corruption? If so, what is the nature and scope of such liability?

Yes, corporate entities can be held liable for bribery and corruption (see also Section 1.9.).

A legal person is liable for the actions of:

  •     the statutory body, a member of the statutory body, or another person authorized to act on behalf of the legal person; 
  •     a person in a leading position who performs supervisory or controlling activities in the legal person, a person who exercises decisive influence on the management of the legal person; or
  •     an employee in the performance of their work tasks; either on the basis of the approval or instructions of the senior persons referred to earlier or if these senior persons have not taken measures that can be fairly required of them to prevent such actions by the employee (internal codes of ethics and compliance programs).

Moreover, such actions must occur within the framework of the activities of the legal entity or in its interest.

4.2. Can a company be liable for a bribery offense committed by an entity controlled or owned by it? Are there requirements for the parent to avoid liability in these situations?

Criminal liability of legal entities, including corporations, is governed by the Corporate Criminal Liability Act. In general, a parent company cannot be liable for its subsidiary’s involvement in bribery, since the parent company and the subsidiary are two separate legal entities.

However, the parent company (i.e. the controlling entity) should reimburse the controlled entity if there is any damage arising from such control.

4.3. Can a company be liable for corrupt actions of a third-party agent engaged to help it obtain or retain business or a business advantage (such as government or regulatory actions or approvals)? If so, are there measures recognized in law, enforcement, or regulatory guidance to mitigate this liability?

In general, a company cannot be liable for its third-party agent’s involvement in bribery, since the company and the third-party agent are two separate legal entities. It would, however, require a deeper assessment, before any criminal liability of the company can be excluded.

A duly implemented and functioning compliance program may help to reduce the risk of criminal liability of the company in such a case, as described in Section 3.

4.4. What are the sanctions for the corporate criminal entity?

The Corporate Criminal Liability Act provides for: forfeiture of property; monetary penalties (up to CZK 1.46 billion (approximately EUR 56 million)); forfeiture or seizure of assets; prohibition of certain activities; prohibition from taking part in public procurement, punishment by disqualification from participating in public tenders; prohibition from receiving grants or subsidies; and publication of the judgment. If held liable, the company may also be dissolved (in extreme cases).

Companies convicted of bribery offenses may also face debarment from public procurement contracts under the EU Public Procurement Directive.

5. Criminal proceedings into bribery and corruption cases

5.1. What authorities can prosecute corruption crimes?

Currently, there is no specialized prosecution branch focused on corruption-related crimes, therefore general public prosecutors are responsible for the prosecution of both individuals and corporates, in front of general criminal courts.

Nonetheless, a police branch dedicated to investigating organized and financial crime has been established. It is called the National Centre Against Organized Crime and it was created by merging two special police offices: the Anti-Corruption Office and the Office for Fighting Organized Crime.

5.2. Is there a legal obligation to report bribery and corruption cases? If so, to whom does it apply and what are the sanctions for failing to meet such an obligation?

The offences of accepting bribes and bribery are subject to the general reporting duty under the Criminal Code.

Thus, whoever learns in a credible manner that another has committed a criminal offence of accepting bribes and bribery and fails to report the offence without delay to the public prosecutor or police authority will be punished by imprisonment for up to three years.

The reporting duty does not apply if reporting would mean putting oneself or a close person at risk of death, bodily harm, other serious harm or criminal prosecution.

5.3. Is there any civil or administrative enforcement against corruption crimes? 

Should a certain action or series of actions constitute a bribe as defined in Section 1.3, provisions of criminal law, including the criminal procedure apply, being superior to civil or administrative means of enforcement. This does, however, not exclude the possibility for harmed individuals to claim damages within the criminal proceeding. If these damages claims are not resolved within the criminal proceeding itself, usually if the court decides more evidence is needed, the court separates these damages claims into a civil dispute.

5.4. What powers do the authorities have generally to gather information when investigating corruption crimes?

The authorities may use any relevant powers and instruments set out in the Criminal Procedure Code to investigate corruption offences. Such powers include, for example, search of home and person, search of other premises and land, entry into dwellings, other premises and land, seizure and opening of packages, substitution and surveillance, interception and recording of telecommunication traffic, etc.

Some of the instruments stated above, typically any large interference into one´s privacy such as search of premises or monitoring of communication, require authorization by the court and cannot be carried out by the investigating bodies themselves.

5.5. Is there any form of leniency law in your jurisdiction, allowing a party to a bribery or corruption crime to voluntarily confess to the crime in exchange for a release from liability or reduction of the penalty?

In general, confession to a crime is an extenuating circumstance, together with cooperation with police and other authorities of the criminal trial, such as the prosecutors and judges. This applies particularly if the accused party plays a substantial role in the conviction of other parties involved in the criminal activity.

Furthermore, if agreed between the accused party and the prosecutor and approved by the court, a special type of settlement may be executed as an alternative to a regular trial before the criminal court. This procedural institute that would become an option in such a situation is further described in Section 5.6 below.

5.6. Can a person plea bargain in corruption cases? If so, how is such a process conducted? 

In most cases, it is at least formally possible to reach a settlement agreement (called an “Agreement on Liability and Sentence,” (Dohoda o vine a trestu)) under the conditions set out by the Criminal Procedure Code (Act No. 141/1961 Coll.). This is an agreement between the perpetrator and the State Prosecutor, while the victim is partially involved in the settlement process as well. The perpetrator must admit their criminal liability for the criminal activity committed and agree with the proposed sentence and damages to the victim. The settlement agreement must be confirmed by the court or by the state prosecutor (at the pre-trial phase). All the mandatory conditions must be satisfied together with the court’s or state prosecutor’s consideration that the settlement is sufficient with regard to the crime. In such a case, no further trial regarding this perpetrator is held.

Guide Contributors For Czech Republic

Petr Sabatka

Partner and Head of Litigation and Regulatory Practice

petr.sabatka@dlapiper.com

+420 222 817 670

 

Jan Karabeles

Associate

jan.karabeles@dlapiper.com

+420 222 817 815

 

Jaroslav Fort

Junior Associate

jaroslav.fort@dlapiper.com

+420 222 817 350

 

Download Guide PDF