OCTOBER 2013

Focus on Germany

59

Prosecutor’s Office. A large amount of the corruption allegations that were prosecuted in the last years in Germany, but also internationally, stem from issues that started with a regular tax audit in a German subsidiary or headquarter. A rigid set of processes and controls

is

mandatory to avoid unhappy surprises post-closing.

So far, Germany has managed to remain largel

unaffected by the crisis, even more, it benefits from an influx

of highly-skilled work force from other European countries shaken by the crisis

can a company become the subject of a criminal prosecution? What penalties could they face for failure to comply?

In Germany, only individuals and not companies can be the subject of a criminal offence. There are discussions under way to change that. Presently, companies are so-called “affected parties” (Betroffene) in the criminal enforcement procedures against the individual. In this capacity if the crime was directed by a representative of the company (normally its management) or if the crime was a result of at least a negligent lack of

supervision by management

employees (Leitungspersonen), then the company may face administrative fines. The administrative fines can have a

therefore

penal character (Buße) or serve the purpose to ensure the disgorgement of any illicitly made profits (Vorteilsabschöpfung). The penalties for the fines with a penal character are capped a EUR 10 million. The amount of the disgorgement is not capped and is calculated on the basis of the full amount of the benefits received (Bruttomethode) as a consequence of the violation.

do you see dangers for the German economy with the European debt crisis remaining largely unresolved for many years?

So far, Germany has managed to remain largely unaffected by the crisis, even more, it benefits from an influx of highly-skilled work force from other European countries shaken by the crisis and by an increased competiveness through low interest rates. Absent a worst-case scenario where the Eurozone would break-up in an uncoordinated melt-down, I believe that the stability of our regulatory environment, our highly skilled work force, and culture of innovation and austerity, should help German businesses to remain on the winning side of the game. LM

Benno Schwarz is a partner in the Munich office of Gibson, Dunn & Crutcher, LLP. He is also a member of the firm’s White Collar Defense and Investigations Practice and its International Corporate Transactions Practice Group. Having been admitted as a lawyer in 1993, Mr. Schwarz has more than 20 years of experience advising foreign investors on

investments into Germany.

Additionally, Mr. Schwarz specializes in advising companies in the context of complex multi-jurisdictional

internal

investigations into compliance violations. Mr. Schwarz regularly publishes articles and speaks on conferences about issues of compliance.

Contact Details:

Benno Schwarz Gibson, Dunn & Crutcher LLP Widenmayerstrasse 10, 80538 Munich Tel +49 89 189 33-210 Fax +49 89 189 33-310 Email: BSchwarz@gibsondunn.com Website: www.gibsondunn.com

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