EU Directive on combating corruption: negotiations set to begin

Why should I read this?

The current European legal framework on combating corruption is being updated due to its limited scope, which – in its current shape – only covers private sector bribery and rules covered in a few conventions and legal instruments. This has led to an inconsistent application across Member States.

To address this, EU authorities are set to begin negotiations on a new Directive to combat corruption (Directive). It aims to harmonise penalties and enhance corruption prevention by defining criminal offences and sanctions. This update to the current legal framework will, for the first time at an EU level, bring together public and private sector corruption in one legal instrument.

Member States will impose penalties for various corruption-related activities, such as bribery and abuse of function, with criminal liability for both individuals and companies.

If approved, the Directive will standardise national laws, requiring private sector companies with EU-wide operations to align their policies with local laws and consider jurisdictional risks.

What are the offences and penalties?

The following criminal offences are now punishable as crimes on an EU level:

• Intentional bribery, both active and passive, in public and private sectors.
• Intentional misappropriation of entrusted property by public officials or private sector individuals.
• Trading in influence, i.e., the intentional promise, offer, or giving of undue advantages to influence public officials, regardless of the influence’s actual effect.
• Intentional abuse of functions by public officials or private-sector workers to gain undue advantages for themselves or others.
• Intentional obstruction of justice, including using force, threats, or bribes to influence testimony or interfere with judicial and law enforcement duties.
• Public officials’ enrichment from corruption, including the intentional acquisition, possession, or use of property.

Criminal offences that are criminalized under EU law are punishable by a maximum term of imprisonment of at least between two and four years, depending on the offence. Individuals convicted of the offences may face additional non-criminal penalties such as fines, removal from public office, and exclusion from public funding.

Companies are also subject to sanctions in the form of fines, which, depending on the offence, amount to at least 3% to 5% of their total worldwide turnover or at least €24 million or €40 million.

What should I do?

There is time before the proposal is finalised. In the meantime, as a company, review and update your compliance programs, measures and training to align with the new rules. Monitor how these rules will be implemented in the Member States in which you operate to make sure that you fully comply, recognising the unique corruption risks presented in those regions.

Anticipate global updates to anti-corruption legal frameworks as many countries intensify their efforts to prevent and combat corruption.

What else should I know?

The Directive is a significant step towards a more unified legal framework across the EU. Its comprehensive approach will likely lead to more effective prevention and prosecution of corruption-related offences. It can be viewed as a crucial development for enhancing transparency and accountability within the EU. However, it will need diligent implementation and monitoring to make sure that Member States align their national laws and enforcement practices with the new standards. For companies operating across the EU, this means a need for heightened vigilance and adaptation to follow the new rules.

Written by Kirath Bharya (Knowledge).

Further reading

Combating Bribery Worldwide Guide - Anti-Bribery and Corruption Guide