Nowadays, compliance is indispensable for Companies whilst participating in economic life. Compliance encompasses strategies and measures in order to prevent and detect violations in the corporate sector, such as corruption, insider trading and money laundering as well as violations of foreign trade rules, antitrust law, of data protection regulations and tax evasion.
Corporate Compliance means the abidance of rules within a company, not only including laws and other public provisions but also guidelines, voluntarily introduced by the corporations themselves. The conformity of the company can be documented by a certification of its Compliance Management Systems (CMS) applying ISO or other standards of certification.
The CMS comprehends all measures, structures and proceedings established in a corporation in order to avoid breaches of internal or external rules. As one major element, the introduction of a Code of Conduct is strongly recommended. The Code of Conduct gives guidance to employees of the corporation in order to avoid malpractice in business activities by its own employees or the business partners. It insures a responsible, ethically correct and upright business practice from the company’s employees. Meeting these expectations also has an impact on the relation to third parties such as business partners, suppliers and public media, as the reputation of the company may otherwise suffer. In this concern, the CMS can be used as an efficient control instrument within in the company.
Additionally, the introduction of a CMS can have a considerable legal significance. On May 9, 2017, the German Federal Supreme Court ruled, that an efficient CMS should be reflected in the sentencing of a company as a mitigating circumstance (BGH, Urt. v. 09.05.2017 1 StR 265/16). In this decision, for the first time, a concrete liability prevention and sanction reduction was awarded to a company for having a CMS in place. In that regard, not only the implementation of a compliance system, but also its control and optimization can lead to a reduction of fines against companies (Section 30 OWiG).
In another case, a former CFO of a large DAX corporation was convicted by the regional court of Munich for a misconduct in regard to compliance into the millions (LG München I, Urt. v. 10.12.2013 – 5 HKO 1387/10).
Furthermore, a CMS can have other positive effects. According to an application decree of the Federal Ministry of Finance, the presence of a system established to comply with tax obligations can give an indication, that a tax evasion was not committed intentionally nor negligently (BMF-letter from 23.5.2016, IV A 3 – S 0324/15 /10001).
When a company faces an exclusion from public tenders, the implementation or optimization of a CMS together with other measures, within a so-called self-cleaning process, may lead to an avoidance or a readmission in accordance to Section 125 of the act against restraints of competition (GWB).
In the 2018 coalition agreement, the parties agreed on the revision of the law of sanctions against companies including a new regulation of internal investigations and sanctions-reducing considerations concerning compliance management systems.
A certification of the CMS is essential for showing and documenting the company’s compliance. For a successful certification, the company has to meet the requirements of ISO or other certification standards. For a certification, an independent body confirms that the CMS has been tested, the requirements of the relevant standards were met and the system and its effectiveness are subjects to permanent control.
Compared to the duty of legality control under corporate law the scope of the duty of prevention is lower, since only the danger of corporate crimes and misdemeanors needs to be addressed. Current criminal and penalty proceedings of German and foreign law enforcement agencies related to the economic activity of national and international corporations show the need for external criminal advice regarding the introduction and optimization of existing compliance structures in companies as well.
The compliance advice includes the assessment of the question whether whistleblower systems and the establishment of an ombudsman system within the company should be implemented to give employees the option of reporting irregularities without the fear of future disadvantages. Regularly, the introduction of a compliance office is crucial for monitoring and securing the conformity with important rules.
To avoid a potential fault of organization, Juergen Klengel offers a comprehensive, specialized and a tailor-made advice on the structuring and implementation of compliance systems as well as on the optimization of Compliance Management Systems. He develops individual organization, control and monitoring structures for every company, to protect the management, the employees and the company itself. As a long-term economic criminal lawyer, he represents the clients professionally towards all concerned supervisory and investigation authorities.