EU: Council adopts position on holistic anti-corruption legislation
As we reported in an earlier blogpost (available here), the EU Commission recently submitted a proposal for a directive to harmonise and update existing EU rules governing the definition and penalties in respect of corruption offences. The proposed rules would apply to both the private and the public sector and would not only make the UN Convention against corruption mandatory under EU law, but go even beyond these standards.
On 14 June 2024, the Council adopted its position on this proposal. The key changes brought with the Council’s position are summarised below.
Prevention of corruption
The proposed directive would require Member States to ensure that one or more bodies are specialised in the prevention of corruption. In its position, the Council has now seemingly narrowed the definition of what constitutes “prevention of corruption”, as it for instance no longer includes “deterrence against corruption related acts” in that definition. However, at the same time, the Council has expressed that the so-called phenomenon of “window dressing” should be tackled, in which a legal person has compliance programmes only for cosmetic purposes as a circumstance to be considered by the judge when sanctioning a legal person.
Corruption offences
As explained in our previous blog post, this proposal does not only concern bribery, but also includes the following offences:
- embezzlement/misappropriation;
- trading in influence;
- abuse of functions;
- obstruction of justice; and
- illicit enrichment;
The Council kept the distinction between acts of active and passive bribery in both the public and private sector very clear.
In respect of misappropriation, the Council specified that such offence shall be punishable when the financial interests of the public or private entity concerned are damaged, irrespective of whether the advantage is awarded to the person committing the offence or to another person. The offence of abuse of functions no longer concerns persons directing or working for a private sector entity but applies to public officials.
Penalties and liability for natural persons and legal entities
As outlined in our previous blog post, the proposal introduces liability for legal persons. Member States will be required to ensure that legal persons can be held liable for offences committed for their benefit by a person holding a leading position, irrespective of whether that person acts individually or as part of an organ of that legal person. Member States must take the necessary measures to ensure that these criminal offences are punishable by imprisonment. The maximum terms, as initially provided in the Commission’s proposal, have been narrowed down by the Council and now are as follows:
| Natural Persons | Legal persons | |
| Bribery in the public sector |
a maximum term of imprisonment of at least 4 years where the act to be performed by the official is in breach of that official’s duties
a maximum term of imprisonment of at least 3 years where the act to be performed by the official is not in breach of that official’s duties |
E.g.
criminal or non-criminal fines, the maximum of which is:
at least 5% (for bribery and misappropriation) or at least 3% (for trading in influence, obstruction of justice and illicit enrichment) of the total worldwide turnover in the business year preceding the decision imposing the fine or in the business year preceding the decision to impose the fine, or alternatively, an amount of EUR 40 million (for bribery and misappropriation) and EUR 24 million (for trading in influence, obstruction of justice and illicit enrichment)
exclusion from public benefits, aid and public tenders;
disqualification from the practice of business activities;
withdrawal of authorisation to pursue activities that resulted in or enabled the relevant offence;
judicial winding-up;
closure;
etc. |
| Bribery in the private sector | a maximum term of imprisonment of at least 3 years | |
| Obstruction of justice | a maximum term of imprisonment of at least 4 years | |
| Misappropriation/Embezzlement | a maximum term of imprisonment of at least 5 years (but Member States can provide that conduct does not constitute a criminal offence if the offence involves damage/an advantage of less than EUR 10,000) | |
| Trading in influence | a maximum term of imprisonment of at least 3 years | |
| Abuse of functions | N/A | |
| Illicit enrichment | a maximum term of imprisonment of at least 2 years | |
| Potential addition penalties |
E.g.
fines;
removal/suspension/re-assignment from public office;
disqualification from holding a public office/public service function;
disqualification from holding office in a state-owned legal person and/or from the exercise of commercial activities in the context of which the offence was committed;
withdrawal of authorisation to pursue activities in the context of the relevant offence; exclusion from access to public funding; etc. |
The above-described penalties are subject to aggravating and mitigating circumstances. The Council clarifies that the aggravating circumstances are to be considered only to the extent that such circumstances do not already form part of the constituent element of the criminal offences. It also explains that the implementation of measures to prevent corruption constitutes a mitigating circumstance to the extent that it does not form a ground for exclusion of liability.
Anti-corruption bodies
The Council’s position introduces clarifications in respect of the institutional and administrative autonomy of the Member States. In particular, as per the Council’s position, Member States will not be obliged to create new bodies or organisational units and can decide to entrust existing bodies with the repression and prevention of corruption. The criteria that these anti-corruption bodies must meet to be recognized as such are now outlined less meticulously.
Next steps
The Council will commence negotiations with the European Parliament, which drafted its position in February 2024, in order to agree on the final legislative text. Once the legal act is adopted, Member States will be required to transpose the directive within a maximum of, as per Council’s position, 36 months, instead of the 18-month time framework initially provided by the Commission.
Practical implications
Under the proposed directive, failing to prevent bribery and corruption could result in severe financial penalties. Companies will need to review and maintain their compliance programs, including relevant training, in light of the new rules, thereby closely monitoring the national transposition in the relevant Member States where they operate to ensure full compliance.
For further information, do reach out to the key contacts mentioned on this page or to your usual Linklaters’ contact.
