Who investigates corrupt judges and prosecutors?

Wirecard. Cum-Ex. The diesel exhaust scandal. The list of economic scandals in Germany is long. But in many cases it is not possible to check whether the judiciary has dealt with the scandals sufficiently. Because Germany is one of the few countries without corporate criminal law: Public prosecutors can therefore only investigate against individual managers and not against companies. Often enough they resort to shaky auxiliary structures and also have to treat fraud worth billions as an administrative offense - which stipulates a maximum fine of 10 million euros.

There have long been calls for corporate criminal law with which companies can be directly punished. This could hinder a previous practice in which public prosecutors had to haggle with the corporations concerned about the amount of fines. You need to balance the interests of the company with those of crime victims, as well as the public interest in law enforcement - a conflict of interest that now happens often enough behind the scenes. However, the implementation of corporate criminal law fails due to resistance from business.

Documents from a bribery scandal by the Ferrostaal company, which are available to CORRECTIV, show that the judiciary negotiated fines together with the company concerned, as in the bazaar. In doing so, she made sure not to cause excessive financial damage to the group. A company lawyer ran open doors to the public prosecutor's office with her suggestion to leave certain countries outside in order to protect the local business.

Our reporter Frederik Richter informs you in the newsletter and on our social media channels about research and the latest developments around bribery and money laundering.
Our reporter Frederik Richter informs you in the newsletter and on our social media channels about research and the latest developments around bribery and money laundering.

From 2009 to 2011, the Munich public prosecutor's office investigated the bribery affair of the Essen-based industrial group Ferrostaal. The company sells German industrial products all over the world. At the end of 2011, the Munich Regional Court convicted two of its managers for bribery in submarine deals. Ferrostaal cooperated with the investigators and helped clear up the affair in-house. The group then introduced a robust internal system to avoid bribery from now on. Since the processing of the scandal, which was completed in 2011, no more irregularities have come to light.

During the investigation, the lawyers commissioned by the Group kept the Group's Supervisory Board up to date with the latest findings from the investigators and the progress of the discussions about the expected sentence. The contact between the group and the public prosecutors was particularly close in this case because private law firms and auditors helped the public prosecutor's office to investigate the group at Ferrostaal's expense.

In the conversations it was always about the expected punishment. In the end, Ferrostaal paid just under 150 million euros. The penalty was composed as follows: A fine of 10 million euros on the basis of the law on administrative offenses. In addition, the district court decided to skim off profits from the criminal submarine business, according to the Munich court, in the amount of 139 million euros.

"A holiday discount."

In the end, many of those involved no longer knew how the result had actually come about. They were just happy that there was an agreement. During the two-year investigation, the profit skimming fluctuated between 120 million and 278 million euros. The public prosecutor's office also lost track of things in the meantime: "When asked, the public prosecutors present said they did not know how the sum of 195 million euros was composed," said a note about a conversation with the investigators from November 2011.

CORRECTIV also has secret tape recordings of Ferrostaal's supervisory board meetings from the time the scandal was cleared up. When one of the supervisory board members could not understand the currently discussed sentence, he put it this way: “Maybe it's a summer discount. A holiday discount. "

The ambiguity persisted until the end when the court imposed the fine. According to a participant in a supervisory board meeting, the senior public prosecutor said he did not understand “all this arithmetic”. But he will not stand in the way if the company is to an agreement with the court. The public prosecutor's testimony is not directly available. However, there is no reason to assume that the corporation's lawyer gave it to his client in a falsified manner, and it corresponds to the tenor of a large number of minutes of conversations and oral presentations.

Corruption is a secret
Read in our book how German corporations refined their bribery methods in the 2000s and 2010s - so that corruption remains undetected to this day. Order now

The Munich public prosecutor said on request that the calculation of the penalty results from the judgment of the Munich Regional Court and is understandable. It is no longer possible to understand whether the quoted statements were so. Hardly any judicial authority has cleared up as many economic scandals as the Munich investigators in recent years and decades. Starting with the bribe scandals at Siemens, MAN and Ferrostaal to the current investigations into Wirecard.

To date, the legal basis for dealing with corporate scandals has not changed significantly. "The general norm, according to which companies are sanctioned for the crimes of their employees, is paragraph 30 of the law on administrative offenses and it is 60 years old," says Michael Kubiciel, professor of criminal law at the University of Augsburg.

The documents and tape recordings of the Ferrostaal case suggest that the company was able to have a say in its own punishment. In autumn 2011, for example, a supervisory board described how the group tried to press the penalty against the justice system in Munich with reference to its financial situation. “The last figure for profit skimming discussed in Munich is 178 million. In the meantime we have prepared and presented figures (...) on how we can survive and we have made it clear that we cannot afford a profit skimming and a fine of 150 or 180 million euros. "

After further discussions, “we have reached a figure of 139 million euros, to be paid in three installments. We are optimistic that this can be negotiated further downwards. "

Aware of the burden on the group

In the end, this did not succeed. It is a corporation's right, and from the point of view of its owners, an obligation, to stand up for the lowest possible penalty in court. And the public prosecutor's office seemed anxious not to impose too much on Ferrostaal. A public prosecutor “expressly stated that the company was aware of the burden of the preliminary investigation. The public prosecutor's office is not about destroying a company like Ferrostaal. "

So it says in a note about a conversation with the public prosecutor's office in Munich. Here, too, the authority refers to the court on request. It was important to the presiding judge that the fine should not destroy the existence of the party. The court also took into account Ferrostaal's considerable costs for the internal investigation. In fact, these reached a double-digit million amount.

But can public prosecutors even assess the financial situation of a company? A comment at one of the supervisory board meetings suggests that at least the Munich Regional Court viewed Ferrostaal's presentations more critically. The company representatives were confronted with the fact that, based on publicly available information, they believed that the group was “in a much better financial situation” than presented by the company.

Solve in another way

The investigators not only agreed with the group's lawyers on the amount. They also discussed together which aspects of the bribery scandal should be included in the notice of the fine. "The participants in the conversation discussed in detail what the design of the fine notice and the associated files would look like, and came to the following agreement," it says in a conversation note.

It was evidently a matter of leaving Ferrostaal's business in certain countries outside in order to avoid negative consequences for the group. "The original idea of ​​(public prosecutor) Mr. Nötzel was to initiate a fine for Algeria, Libya and (inaudible)", a lawyer from Ferrostaal presented at a meeting in September 2011.

Then, however, she discussed with a representative of the judiciary, “whether we cannot solve it in another way, because (Ferrostaal) is currently (active) in Algeria, the operational business there is still going on, so it would not be good to go to one in that case Getting fined, and the other cases in Libya ... that will lead to accusations. "

And further: "With the suggestion to limit the fine ... I ran into an open door with him."

Legal discussions in advance

The Munich Public Prosecutor's Office said: They concentrated on another case of bribery because the investigations there continued to flourish. In large investigations, it is not always possible to completely clear up every aspect. Ferrostaal's interests were not decisive for the decision.

In the case of major economic scandals, discussions about the expected penalty are not uncommon. “Notices of fines are usually negotiated in advance within the framework of legal talks between the defense, the public prosecutor and the court,” said Thomas Kutschaty in an interview with CORRECTIV as part of the research for the book “Corruption as a Secret”.

The SPD politician from Essen tried to introduce corporate criminal law during his time as NRW Minister of Justice. In many ways, Kutschaty believes the legal processes involved in fine proceedings are inadequate for sanctioning corporate scandals. The politician is also of the opinion that fines amounting to a maximum of ten million euros are too low to sanction major economic scandals. "That is not the sufficient response of a state to what has been done injustice."

Rejection by the economy

As early as 2013, the grand coalition decided to examine the introduction of corporate criminal law. Nothing happened for many years. The Justice Department launched a bill this year. Among other things, it should increase the range of punishment. Then the judiciary should be able to impose fines of up to ten percent of the annual turnover in large corporations - instead of just fines of up to 10 million euros as before. The haggling over profit skimming from illegal business could then be a thing of the past. In September, however, another dispute broke out in the grand coalition. Several federal states want to prevent the law in the Federal Council.

Especially the economic wing of the CDU rejects the law. The large business associations defend themselves with arguments such as allegedly higher costs and bureaucratic effort, which is unreasonable during the Corona period. Some even argue that the view of corporations as natural persons who can be investigated breaks with German legal tradition and is unconstitutional.

Professor Kubiciel says corporate criminal law also offers advantages to corporations. You could defend yourself better. And the sanctioning of criminal offenses could be more structured in connection with the asset recovery, which the criminal code already allows.

Secret thanks to a fine

Without corporate criminal law, insights into the work of the judiciary, as offered by Ferrostaal tapes, are likely to remain a rarity. Journalists can observe processes and meet lawyers and investigators alike. However, in principle, the judiciary does not have to provide any information about administrative offenses - unlike in criminal matters.

Angela Reitmaier knows that well enough. For Transparency International, the lawyer observes whether Germany adheres to international agreements on the fight against corruption. Reitmaier would like to read up on how German corporations abroad bribe. She could get in touch with colleagues on site and, together as civil society, make a contribution to solving economic crimes. But the notices of fines against corporations - where investigators, as described above, have left out details in the interests of a company - are under lock and key.

In an interview with CORRECTIV, Reitmaier cites as an example the fine of one billion euros that the Braunschweig public prosecutor's office imposed on the Volkswagen Group in the wake of the diesel scandal. "The biggest fine that has ever been imposed on a corporation in Germany, and the population cannot read the notice of the fine," says Reitmaier.

Incidentally, the Ferrostaal case shows that corporate criminal law also has advantages for corporations. A clear calculation basis makes penalties more predictable - and you can rely on the fact that a judgment really draws a line under the past from the point of view of the judiciary.

The tape recordings show that part of the agreement between Ferrostaal and the Munich judiciary was only recorded orally: the investigators therefore promised that with the fine, the criminal past of the group would be dealt with from the judiciary's point of view. They could not make this promise in writing if new knowledge should emerge - which did not happen either.

The then Supervisory Board of Ferrostaal, who tried to keep business running smoothly, was faced with a problem of its own: In the interests of good corporate governance, no agreements are made, in this case 150 million euros, parts of which are only recorded orally.

Read in our book “The Corruption Secret”, published in September 2020, why the German judiciary rarely clears up cases of bribery. Order here.

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Corruption research has always been a focus of CORRECTIV's work. Our journalist Frederik Richter informs you about our research and the latest developments around bribes and money laundering - both internationally and in Germany.

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Illustration: Mohamed Anwar / jbr

Corruption is a secret

Read in our book how German corporations refined their bribery methods in the 2000s and 2010s - so that corruption remains undetected to this day. Order now

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