Rules for preventing corruption in Germany

Latest Update: September 2023

Rules for preventing corruption in public administration and the private sector

Corrupt behaviour may occur in many different forms and in different areas of society. Whether it is bribery or corruption in international business transactions or domestically and whether corruptibility can be found in politics or in the administration, corruption undermines the foundation of a society by damaging the citizens’ trust in the state and business and it can also cause material damage.

In Germany, different rules and instruments for the prevention and prosecution of corruption in administration, politics and business apply. These include laws, administrative regulations and measures to raise awareness. As corruption often takes place covertly, transparency is a key to preventing and recognising illegitimate practice.

Public administration

Authorities make decisions and set rules, in particular for activities in the private sector. Office holders are exposed to certain risks of corruption in the course of performing their duties. The German Penal Code (StGB), in particular, governs the relevant actions and penalties under criminal law.1 Accepting and granting undue advantage, corruption and bribery are punishable by law. The sentence ranges from three years (§§ 331, 333 StGB) to 15 years (§ 335 (1) No. 2 StGB). Corruption on the part of judges (§ 332 (2) 2 StGB) and corruption and bribery of elected representatives (§ 108e StGB) are indictable offences and risk a prison sentence of between one and ten years.
Civil servants employed by the federal government are not allowed to ask for, be promised or accept any rewards, gifts or other advantages in relation to their office/their professional duties for themselves or for a third party (§ 71 of the German Federal Civil Service Act (BBG)). The equivalent law for civil servants employed by Federal States or municipalities is § 42 of the Civil Service Status Act (BeamtStG). The prohibition applies to all advantages of an economic and non-economic kind.
A similar regulation applies to employees paid under the collective agreement (salaried employees and workers) as set out in § 3 (2) of the Collective Agree- ment for the Public Service (TVöD): It is not permitted to accept or request rewards, gifts, commissions or other benefits that relate to their professional duties.
Civil servants are subject to separate obligations in Germany such as the duty to maintain confidentiality and the obligation to work through official channels. In connection with corrupt activities, they are however entitled according to § 67 (2) sentence 1 No. 3 BBG and § 37 (2) sentence 1 No. 3 BeamtStG to report a suspicion of a corruption offence according to §§ 331 to 337 StGB to the highest administrative authority, a law enforcement authority or other agencies without following official channels.
Besides the statutory regulations the prevention strategy in the area of the federal administration is essentially based on the German Federal Government Directive concerning the prevention of corruption in the Federal administration from 2004 and the annexes thereto.2 The administrative regulation states concrete measures to avoid corruption, e.g. the regular identifi- cation of areas of work that are particularly susceptible to corruption, the cross-check principle, the appointment of a contact person for corruption prevention, raising awareness and further training for employees and guiding principles for awarding public contracts.2
At EU level there is the following important require- ments: Directive 2017/1371 dated 5 July 2017 of the European Parliament and the Council on applying criminal law to combat fraud directed against the financial interests of the Union and the agreement based on Article K.3 (2) (c) of the European Union’s treaty on combating bribery in which officials of the European Union and the EU’s member states are involved.
In terms of international law, German obligations on combating corruption are primarily based on the United Nations Convention against Corruption (UNCAC) from 20033, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organisation for Inter- national Co-operation and Development (OECD) from 1997 and the Criminal Law Convention on Corruption of the Council of Europe from 1999.4

Separate regulations apply to government administrations at Federal State level. They are essentially based on the German Federal Government guidelines.

Municipal administration

At municipal level, too, there are numerous regulations and measures to prevent corruption such as official procedures, codes of conduct and contact persons. In view of municipal self-government guaranteed in Art 28 (2) of the German Basic Law, municipalities are granted the right to regulate all local matters in their own responsibility within the framework of the law. As a rule, local administrations take detailed anti-corruption precautions.5

Bribery and corruption of elected representatives

Anyone who has a political mandate bears particular responsibility for the integrity of the political system in Germany.6 Corruption in the form of bribery and venality (e.g. “vote buying”) damages this integrity and thus democracy. In order to counter this risk, in 1994 it became a criminal offence to bribe a member of parliament. Following the implementation of the United Nations Convention against Corruption, the offence was broadened in 2014 and § 108e StGB was rewritten under the title of bribery and corruption of elected representatives. As of 19 October 2021, the penalty was made considerably tougher. As a result of this, bribery and corruption involving elected representatives is punished by a custodial sentence of between one and ten years, with less serious cases being subject to sentences of between six months and five years.

Prevention and control through transparency

Corruption is a crime that is committed covertly and those involved have no interest in it being discovered. In addition to this, the concrete losses for individuals and the general public can generally not be ascertained or only at a later date. Important instruments in the fight against corruption are therefore measures to create transparency. Relevant measures here are regulations to combat money laundering through disclosing “beneficial owners” via the transparency register (see chapter 3 c.ii). In addition, the transparency rights permitted in the environmental information law allow the disclosure of contents of authorisation decisions, which the companies extracting natural resources require for their practical work, including to avoid environmental pollutants that would break the law (see chapter 3.b.v).

Another instrument is the reporting of corruption by employees in companies and authorities (whistleblowers). They are often the first to notice abuses and, through their tips, can ensure that violations of the law are uncovered, investigated, prosecuted and stopped. At government level, offices exist to report corruption, for example the German Federal Financial Supervisory Authority (BaFin) and the Criminal Investigation Authorities of Federal States or in the form of ombudsmen in different Federal States and municipalities. The contact persons for corruption prevention (at the federal level according to section 5 of the guideline for corruption prevention) also receive reports on suspected cases of corruption.

Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law has now been implemented. The law for better protection of whistleblowers and for the implementation of the Directive on the Protection of Persons Reporting Breaches of Union Law, came into force. The central component of the law is a new parent provision for better protection of whistleblowers (Whistleblower Protection Act). The law also applies to the reporting of criminal offences, so that the reporting of corruption offences under § 321 et seq StGB is covered.

The Federal Criminal Police Office provides information on the annual development and corruption statistics in its Corruption National Situation Report (Bundeslagebild Korruption). Each year the Federal Ministry of the Interior publishes an Annual report on corruption prevention in the Federal administration (“Integrity report” from the 2020 reporting year), with accountability to the German Bundestag as regards the implementation of the corruption prevention directive.

Private Sector

Corruption is damaging for business and society and, furthermore, it is prohibited. Corruption in the form of bribery and corruption in business transactions is punishable (§ 299/§ 300 StGB) and can result in a fine or custodial sentence of up to three years or a custodial sentence of between three and five years.

Many companies support the 17 goals for sustainable development (Sustainable Development Goals, SDGs), which emphasise, for example, Goal 16 “Peace, justice and strong institutions” and, more especially, target 16.5 “Substantially reduce corruption and bribery in all their forms”.

Based on ten universal principles and the Sustainable Development Goals, the UN Global Compact (UNGC) pursues the vision of a more inclusive and sustainable economy to the benefit of all people, communities and markets, today and in the future. There are currently signatories in more than 170 countries, representing over 19,000 companies and organisations from civil society, politics and science. In Germany there are more than 800 participants, covering approx. 740 companies ranging from those in the DAX to mid-sized companies and SMEs. In Principle 10 of the UNGC to combat corruption, companies are urged to “work against corruption in all its forms, including extortion and bribery”.

Other sustainability frameworks also include principles or requirements in the field of anti-corruption. Thus the German Sustainability Code (GSC) lists in its criterion twenty behaviours that are compliant with legislation and guidelines. The user group includes large and small companies, in the public and private sectors and with and without sustainability reporting, companies with mandatory reporting obligations and all those companies and organisations that want to inform their stakeholders about their sustainability performances. Selected indicators of the Global Reporting Initiative (GRI) and the European Federation of Financial Analysts Societies (EFFAS) must be reported.

Compliance is generally understood to mean ensuring that a company, its bodies and employees and, if applicable, third parties act in compliance with the rules in respect of all statutory, internal company and external regulations that relate to the company by taking suitable measures. This does not only include observing the rules per se but it also involves implementing appropriate measures to organise compliance with the rules through formal and informal means. Compliance Management Systems in a company build on a risk-based approach which, in addition to avoiding types of behaviour that will bring penalties under criminal law and punishments in the form of fines, pays attention to the long-term interests of the company, ethically justifiable actions, reputational risks and special liability risks. Compliance rules and a Code of Conduct play a central role as an instrument for prevention and are the core element of an effective Compliance Management System.

In their Codes of Conduct7, which the companies generally formulate a zero tolerance policy regarding corruption, which is generally binding for all employees.
Although an explicit and generally applicable legal regulation on compliance does not exist, some requirements (some of which are specific to a legal form) come close to compliance. Examples are the legislation on administrative offences, company law (§ 43 GmbHG or §§ 91, 93 AktG) and the German Corporate Governance Code (DCGK). Furthermore, there is a series of special legal regulations such as the Insurance Supervision Act for insurance companies, the Securities Trading Act (WpHG) for companies in the field of financial management, the Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing the MiFID II Directive as regards the organic requirements for investment firms, the German Investment Services, Conduct of Business and Organisation Regulation (WpDVerOV), the German Banking Act (KWG) and the circulars of the Federal Financial Supervisory Authority (BaFin), which include the minimum requirements for risk management and the minimum requirements for the compliance function and additional requirements governing rules of conduct, organisation and transparency.
If a company fails to implement appropriate compliance measures and if, as a result, a corruption offence occurs, a regulatory fine against an association of persons pursuant to §§ 130, 30 of the German Act on Regulatory Offences (OWiG) can be imposed on a company. The respective compliance requirements are not specifically defined by law.

1 In addition to the Criminal Code, corruption offences are also punished, for example, by disciplinary and labour law.

2 The Federal Ministry of the Interior and Community (BMI) submits an annual report on integrity in the federal administration (integrity report) to the committees of the German parliament by 30 September of each year. After having been discussed by the members of the committees the integrity report is published on the BMI website. URL: https://www.bmi. bund.de/EN/themen/moderne-verwaltung/integritaet-der-verwaltung/integritaetsberichte/integritaetsberichte-node.html (Accessed 3 January 2024)

3 United Nations Convention against Corruption, ratified by Germany in 2014.

4 The Criminal Law Convention was ratified by the Federal Republic of Germany in 2017. The Civil Law Convention has not yet been ratified because the Federal Republic of Germany has not yet fulfilled all the requirements, especially those that refer to the protection of whistleblowers. In addition, ratification would require an authorisation of the EU, as the Convention affects competences under Union law.

5 The municipalities provide information on the Internet about corruption prevention and contact persons, see for example Wiesbaden, capital of the Federal State of Hesse: https://www.wiesbaden.de/vv/oe/beauftragte/141010100000066754.php (Accessed: 3 January 2024)

6 Code of Conduct and guidelines for managers and the management of authorities. URL: https://www.verwaltungsvorschriften-im-internet.de/BMI-O4-0001-NF-673-KF-001-A001.htm (Accessed: 3 January 2024)

7Wintershall Dea, Heidelberg Materials and K+S Minerals and Agriculture GmbH, for example, publish their codes of conduct on their respective company websites: https://wintershalldea.com/sites/default/files/media/files/Code_of_Conduct-DE.pdf, https://www.heidelbergmaterials.com/sites/ default/files/assets/document/db/5d/hc-code-of-conduct-2020-en.pdf, https://www.kpluss.com/de-de/ueber-ks/wofuer-wir-stehen/code-of- conduct/

Rules for preventing corruption

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Glossar

In Federal States in which legislation does not include an excavation law and the State-level Nature Conservation Law does not apply to the extraction of non-energetic, ground-based natural resources in the context of dry excavations, this type of natural resource extraction falls within the scope of the relevant state building regulations.

Legal limitations also exist: State building regulations apply to the excavation of solid rock (limestone, basalt, etc.), for example, in quarries with an area of up to 10 hectares (ha) in which no blasting is carried out. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable.
In Bavaria and North Rhine-Westphalia, the above-ground excavation of non-energetic, ground-based natural resources in the context of dry excavations is determined at state level by the existing excavation laws (AbgrG). For the excavation of solid rock (limestone, basalt, etc.) in quarries where blasting does not occur, the AbgrG applies to sites with an area of up to 10 ha. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable. In the other Federal States, this type of natural resources extraction is regulated by the respective state building regulations or by the state-level nature conservation laws.

In general, the AbgrG applies to those raw materials the excavation of which is not directly subject to mining law or the mining authorities. These raw materials include (in particular) gravel, sand, clay, loam, limestone, dolomite and other rocks, bog mud and clays. However, the jurisdiction between AbgrG and mining law can vary from case to case in the case of certain raw materials, such as quartz gravels. The requested authority must always verify its own jurisdiction in each case. The AbgrG also encompasses surface area usage and the subsequent rehabilitation of the area.
The German Federal Immission Control Act (BImSchG) is the most important and practice-relevant law in the field of environmental law. It constitutes the basis for the approval of industrial and commercial installations. In the natural resources extraction industry, quarrying companies must have approval to extract stones and earth. Every quarrying area of 10 hectares or more must undergo a full approval procedure, including public participation and UVP (environmental impact assessment). A more simplified approval procedure is used for quarrying areas of less than 10 hectares.

The sphere of responsibility for the legal immission control approval procedure is fully specified in the Immission Control Acts of the Federal States. The Federal States are tasked with the administrative enforcement of the approval procedure. Each individual state’s Environment Ministry – the highest local immission protection authority – usually bears the responsibility for this procedure. Subordinate authorities include regional councils, district authorities and lower-level administrative authorities. Administrative jurisdiction generally lies with the lower-level administrative authorities.
The GDP measures the value of goods and services produced domestically (creation of value) within a given period (quarter, year). The Federal Office of Statistics calculates the GDP as follows: production value minus intermediate consumption = the gross value added; plus taxes on products and minus subsidies = GDP
The gross value added is calculated by deducting intermediate consumption from the production values, so it only includes the value added created during the production process. The gross value added is valued at manufacturing prices, i.e. without the taxes due (product taxes), but including the product subsidies received.

During the transition from gross value added (at manufacturing prices) to GDP, the net taxes (product taxes less product subsidies) are added globally to arrive at an assessment of the GDP at market prices’. Source: Destatis
The planning approval procedure under mining law is used for the approval procedure of a general operating plan for projects which require an environmental impact assessment (§§ 52(2a), in conjunction with 57 a of the BBergG).
There are different definitions and methodological approaches at the international as well as at the national level as to what subsidies are and how they are calculated. According to the definition of the German government’s subsidy report, this report considers federal subsidies for private companies and economic sectors (ie grants as cash payments and tax breaks as special tax exemptions) which are relevant to the budget. Subsidies at the federal level can be viewed via the subsidy reports of the federal states (see Appendix 5 of the German government subsidy report).
In compliance with § 68(1), Water Resources Act (WHG), the excavation of landowners’ natural resources such as gravel, sand, marl, clay, loam, peat and stone in wet extraction operations requires a planning approval procedure. The reason for this is that groundwater is exposed in wet extraction, resulting in above-ground water. The planning approval procedure is implemented by lower-level water authorities.

The procedural steps of the planning approval procedure are governed by the general provisions of §§ 72 to 78 of the Administrative Procedures Act (VerwVfG). Within the meaning of § 68(3), nos. 1 and 2 of the WHG, the plan may only be established or approved if an impairment of the common good is not to be expected and other requirements of the WHG as well as other public-law provisions are fulfilled.