Corruption in the private sector: framework decision

1) OBJECTIVE

To establish a common definition of corruption in the private sector and the penalties applicable; to recognise that it is reprehensible for a moral or legal person to offer an undue advantage in the course of business activities.

2) PROPOSAL

Initiative of the Kingdom of Denmark with a view to the adoption of Council Framework Decision on combating corruption in the private sector [Official Journal C 184, 02.08.2002].

3) SUMMARY

Given the increase in cross border trade in goods and services, Denmark is presenting an initiative to combat more effectively all kinds of corruption (active and passive) which distorts business activities.

Already at the Tampere European Council, the Member States had recognised the supreme importance of defining common offences and penalties in connection with certain types of criminal acts, including corruption (point 48 of the conclusions).

In May 1997, the Member States adopted a Convention on the fight against corruption involving officials of the European Communities or officials of the Member States of the European Union. The Convention has not yet been ratified by some Member States.

Moreover, the Council of Europe adopted a Criminal Law Convention on corruption, which has been open for signature since 27 January 1999.

When adopting joint action 98/742/JHA on corruption in the private sector, the Council declared that the joint action was only a first step in the fight against that type of criminal act. The initiative comes as a response to the Member States’ determination to find a clear definition to both active and passive corruption.

The Member States are to take all the necessary measures to ensure that the following intentional conduct when it is committed in the course of business activities:

• Promising, offering or giving an undue advantage to any person directing or who directs or works for a private sector entity in order that the person should perform or refrain from performing any act in breach of that person’s duties (active corruption);
• Requesting or receiving an undue advantage for oneself or for a third party while directing or working for a private-sector entity (passive corruption).

In the Member States, the above acts must be punishable by a maximum penalty between at least one and three years of imprisonment. Provision must be made for other measures, namely, temporarily disqualifying a person from carrying on a business or disqualifying a person from being a founding member, manager or director of a company (in the case of repeated offences).

Each Member State will have jurisdiction with regard to the following offences committed:

• By its nationals or residents (moreover, if the Member State refuses to extradite its nationals, it must take measures to establish its jurisdiction with regard to offences committed by one of its nationals outside its territory) ;
• Within its territory;
• On behalf of a legal person with its headquarters within its territory.

Inciting and aiding and abetting the above offences will also constitute offences.

Member States are to adopt the necessary provisions to establish the liability of legal persons who benefit from the unlawful conduct of a moral person with a power of representation or authority to take decisions on behalf of the legal person.

Likewise, the legal person can be held liable where lack of supervision or control on its part made possible the commission of a criminal offence.

Here, provision is made to subject the legal person to penalties, namely: temporary or permanent disqualification from the practice of commercial activities, placing under judicial supervision, etc.

No later than two years following the adoption of this Framework Decision, the Member States will adopt the necessary measures to implement it and they will communicate them to the General Secretariat of the Council and the Commission.

Joint action 98/742/JHA is repealed by this Decision Framework.