Draft German corporate crime bill limits attorney-client privilege, boosts internal probes

Germany has not had a formal law against corporate crimes, instead relying on a patchwork of administrative laws to prosecute corporate entities. Perhaps instigated by the diesel emission scandal at Volkswagen AG, the country’s Ministry of Justice has recently released a comprehensive corporate crime bill.

Morgan Lewis, in a client note, sets out the basics of the draft bill. It introduces sanctions against companies for crimes committed by management; incentives for internal investigations; and revisions of current laws for search and seizure, Specifically, the bill:

• Authorities agencies to initiate probes agains companies for corporate crime, and they have full authority to do so. Companies will be subject to sanctions if management committed the crime or could have prevented or impaired the commission of the crime.
• Courts will be able to reduce corporate sanctions by as much as 50 percent if the company has conducted an internal investigation. Under this provision, companies can avoid dissolution and avoid disclosure of a conviction, says the law firm.
• Attorney-client privilege will be restricted to when the company is the actual suspect of a criminal investigation. This formalizes existing practice, and means that prosecutors will have a wider scope to seize materials from a company’s law firm.

The bill must be reviewed by other agencies and stakeholders before it becomes law.