Corruption in the private sector

1) OBJECTIVE

To lay down some harmonised definitions in order to combat more effectively corruption in the private sector on an international level, placing particular emphasis on prevention.

2) ACT

Joint Action 98/742/JHA of 22 December 1998 adopted by the Council on the basis of Article K.3 of the Treaty on European Union, on corruption in the private sector [Official Journal L 358, 31.12.1998].

3) SUMMARY

In the context of the development of an overall corruption-prevention policy as provided for in the Action Plan to combat organised crime of 28 April 1997, the Joint Action sets down some common definitions for the policy of combating corruption in the private sector at Member State level (Article 1):

• "person": any employee or other person when directing or working in any capacity for or on behalf of a natural or legal person operating in the private sector;
• "legal person": any entity having such status under the applicable national law, except for States or other public bodies acting in the exercise of State authority and for public international organisations;
• "breach of duty": to be understood in accordance with national law to cover as a minimum any disloyal behaviour constituting a breach of a statutory duty, or, as the case may be, a breach of professional regulations or instructions, which apply within the business of a "person" as defined in the first indent.

The deliberate action of a person who, in the course of his business activities, directly or through an intermediary, requests or receives an undue advantage of any kind whatsoever, or accepts the promise of such an advantage, for himself or for a third party, for him to perform or refrain from performing an act, in breach of his duties, constitutes passive corruption in the private sector (Article 2).

The deliberate action of whosoever promises, offers or gives, directly or through an intermediary, an undue advantage of any kind whatsoever to a person, for himself or for a third party, in the course of the business activities of that person in order that the person should perform or refrain from performing an act, in breach of his duties, constitutes active corruption in the private sector (Article 3).

Active and passive corruption must be made criminal offences at least where they involve, or could involve, the distortion of competition within the common market or where they result, or might result, in economic damage to others by the improper award or improper execution of a contract.

Each Member State must take the necessary measures to ensure that active and passive corruption, and the acting as an accessory in or instigator of corruption, are punishable by effective, proportionate and dissuasive criminal penalties, including, at least in serious cases, penalties involving deprivation of liberty which can give rise to extradition (Article 4). However, for minor cases, Member States may provide for penalties of a different kind.

Each Member State must take the necessary measures to ensure that legal persons can be held liable for active corruption committed for their benefit by any person, acting either individually or as part of an organ of the legal person, who has a leading position within the legal person, based on:

• a power of representation of the legal person;
• an authority to take decisions on behalf of the legal person;
• an authority to exercise control within the legal person (Article 5).

Member States must also ensure that a legal person can be held liable where lack of supervision or control has made possible the commission of an act of active corruption by a person as described above for the benefit of the legal person.

Each Member State must take the necessary measures to ensure that a legal person held liable is punishable by effective, proportionate and dissuasive penalties, including criminal or non-criminal fines and possibly other penalties such as:

• exclusion from entitlement to public benefits or aid;
• temporary or permanent disqualification from the practice of commercial activities;
• placing under judicial supervision;
• a judicial winding-up order (Article 6).

Each Member State must take the necessary measures to establish its jurisdiction with regard to the active and passive corruption in the private sector where an offence has been committed:

• in whole or in part within its territory;
• by one of its nationals;
• for the benefit of a legal person operating in the private sector (Article 7).

Member States may choose to apply or not the last two jurisdiction rules.

Last updated: 07.09.2005