Corruption is not just an issue for politicians or public officials; it can also pose significant criminal law risks for entrepreneurs. Nor does the initiative necessarily have to come from the entrepreneur. In practice, a public official may make the award of a public contract conditional upon the entrepreneur making a payment or providing some other form of advantage. If the entrepreneur agrees to such a demand, they will generally be committing a criminal offence.
This article provides an overview of the key corruption offences under the Austrian Criminal Code (StGB). It explains the individual offences and outlines the situations in which entrepreneurs may face issues under criminal anti-corruption law, as well as the points they should bear in mind when dealing with public officials and business partners.
Corruption in the Public Sector
Who Is Covered by the Definition of a Public Official?
The anti-corruption provisions of the Austrian Criminal Code (StGB) do not apply only to traditional public officials. The statutory definition of an office holder is considerably broader. It includes, among others, individuals who perform legislative, administrative or judicial functions on behalf of the federal government, the provinces or municipalities.
Officers and employees of certain state-owned or state-controlled companies may also qualify as office holders. This includes, in particular, companies in which federal, provincial or municipal authorities hold, directly or indirectly, an ownership interest of at least 50%, or which they otherwise effectively control. Individuals performing equivalent functions on behalf of foreign states or international organisations may also fall within the definition of an office holder.
Acceptance of Bribes (Section 304 StGB) and Bribery (Section 307 StGB)
A typical example of corruption occurs when an office holder requests, accepts or agrees to accept an advantage in return for performing or omitting an official act in breach of their duties. This conduct constitutes the offence of acceptance of bribes under section 304 of the Austrian Criminal Code (StGB).
The counterpart to this offence is bribery under section 307 StGB. A person commits this offence if they offer, promise or grant an advantage to an office holder in return for the improper performance or omission of an official act. It is not necessary for the payment to actually be made or for the official act to be carried out.
Example: An entrepreneur applies for a public contract. The office holder responsible for the procurement demands a payment to be made to themselves or to a person close to them and, in return, ensures that the entrepreneur’s company is favoured over other bidders in breach of the applicable procurement rules. If the entrepreneur agrees to this demand, they may be criminally liable for bribery. The office holder, in turn, may be liable for acceptance of bribes.
Distinction from Abuse of Office: The improper award of a public contract may also constitute abuse of official authority under section 302 StGB, which does not require the granting of an advantage. For further information, please see our article on abuse of office.
Acceptance of Advantages (Section 305 StGB) and Granting of Advantages (Section 307a StGB)
Not every advantage provided to an office holder that is relevant under criminal law is connected with the improper performance or omission of an official act. The granting of advantages in return for the proper performance or omission of an official act may also constitute a criminal offence.
Under section 305 StGB, an office holder commits a criminal offence if they request an advantage in return for the proper performance of an official act, or accept or agree to accept an undue advantage in return for such an act. The corresponding provision applicable to the person offering, promising or granting the advantage is set out in section 307a StGB.
Example: An entrepreneur requires an official permit. The office holder responsible for processing the application demands a personal benefit in the form of a cash payment in return for processing the application properly. Even such a payment may constitute a criminal offence.
The law provides for certain exceptions, for example in respect of advantages permitted by law or, subject to strict conditions, customary local or regional tokens of appreciation of low value. However, there is no general exemption allowing office holders to receive small gifts.
Acceptance of Advantages for the Purpose of Influence (Section 306 StGB) and Granting of Advantages for the Purpose of Influence (Section 307b StGB)
Criminal anti-corruption law also covers cases in which no specific official act is agreed upon in return for an advantage. It may be sufficient for a criminal offence to be committed if an office holder requests an advantage or accepts an undue advantage in order to be influenced in the performance of their future official duties.
This conduct is commonly referred to as “feeding”. An entrepreneur who offers, promises or grants an undue advantage in order to influence an office holder in the performance of their official duties may also be criminally liable under section 307b StGB.
Example: An entrepreneur regularly pays the private expenses of a decision-maker at a public authority in order to secure their goodwill in relation to future contract awards or other decisions. Such conduct may constitute a criminal offence even if no agreement has been reached regarding a specific contract.
Prohibited Intervention (Section 308 StGB)
Another form of corruption is prohibited intervention. This offence concerns the improper influence exerted by a third party, in return for payment, over the decision-making of an office holder or arbitrator.
Example: An entrepreneur approaches an intermediary who has good connections at a public authority. In return for a commission, the intermediary promises to ensure that a particular office holder makes a decision in the entrepreneur’s favour in breach of their official duties.
Not every form of introducing contacts or representing interests
Corruption in the Private Sector
Acceptance of Gifts and Bribery Involving Employees or Agents (Section 309 StGB)
Corruption offences are not limited to dealings with office holders. Bribery may also constitute a criminal offence in the context of private business relationships.
Under section 309 StGB, an employee or agent of a company commits a criminal offence if, in the course of business, they request, accept or agree to accept an advantage in return for performing or omitting a legal act in breach of their duties. Conversely, the person who offers, promises or grants such an advantage is also criminally liable.
It should be noted that the granting of such an advantage may also constitute criminal participation in the offence of breach of trust under section 153 StGB.
Example: A purchasing manager demands a personal commission from a supplier in return for giving the supplier’s products preferential treatment in a procurement process, contrary to the interests of the company. If the supplier agrees to this arrangement, they may be criminally liable under section 309 StGB and may also be liable for participation in breach of trust under section 153 StGB.
Indirect Granting of Advantages and Evasion Schemes
An advantage does not have to be conferred directly on the office holder or decision-maker within a company. Payments made to third parties may also be relevant under criminal anti-corruption law. This may be the case, for example, where an entrepreneur makes a donation to an association at the request of an office holder with whom the office holder has a close connection, or where a payment is channelled through an intermediary. Such arrangements may be used to conceal the granting of an advantage. What matters is whether the benefit is causally connected to the exercise of official functions or the performance of the relevant legal act.
What Are the Consequences of Corruption?
Corruption offences can carry substantial prison sentences. The applicable penalty depends on the specific offence and, in particular, on the value of the advantage offered or promised. In cases of bribery and acceptance of bribes, the maximum prison sentence can be up to 15 years where the value of the advantage exceeds EUR 300,000. For other corruption offences, the increased penalty ranges can extend to up to ten or five years’ imprisonment, depending on the offence.
In addition, the company itself may also incur criminal liability. Under the Austrian Corporate Liability Act (Verbandsverantwortlichkeitsgesetz, VbVG), a financial penalty may be imposed on a company if an offence is committed, under the statutory conditions, by a decision-maker or an employee in connection with the company’s business activities. The personal criminal liability of the individuals involved and the company’s liability may arise concurrently.
In addition to the criminal penalties, corruption allegations can have significant economic consequences. These may include reputational damage, the loss of business partners and potential restrictions on participation in public procurement procedures.
What Should Entrepreneurs Do If They Face Corruption Allegations?
Entrepreneurs facing corruption allegations should seek advice from a criminal defence lawyer at an early stage. The first step is to establish the specific allegations being made and the evidence on which the suspicion is based. On this basis, it is possible to assess whether the allegations are legally sustainable and what defence options are available.
A lawyer can assess the allegations from a legal perspective, identify circumstances that may support the defence and develop an appropriate defence strategy. In particular, the aim may be to challenge the evidence against the accused at the investigation stage and secure the discontinuation of the criminal proceedings.
Early involvement of a defence lawyer also helps ensure that the rights of the accused are protected from the outset. Particularly during police questioning or a search of premises, it is important to know one’s rights and to ensure that investigative measures are carried out within the limits of the law.
Facing Corruption Allegations? Take the Right Steps at an Early Stage.
If you or your company are under investigation for a corruption offence, seeking legal advice at an early stage is essential. Mag. Markus Weisser, a criminal defence lawyer specialising in corruption offences, can assist you in assessing the allegations and developing an appropriate defence strategy.
Contact us to arrange a confidential initial consultation. We provide legal advice and representation at all stages of criminal proceedings, from the investigation stage through to court proceedings, in Vienna and throughout Austria.
Markus Weisser
Attorney at law
Mag. Markus Weisser is a lawyer and criminal defence attorney based in Vienna. He advises and represents business leaders and entrepreneurs facing criminal allegations relating to white-collar crime and corruption offences.
FAQ
Can Active Bribery Also Constitute the Offence of Breach of Trust?
Yes, but not necessarily. The offence of breach of trust may be relevant where a managing director or another person entrusted with authority over assets knowingly abuses their authority to dispose of another person’s assets and thereby causes financial loss to the company.
If the purpose of the bribe is to secure an economic benefit for the company and the associated financial transaction is commercially justifiable, the conduct will generally not constitute breach of trust. The decisive factors are whether the specific conduct results in financial loss and whether there has been an abuse of authority.
Is Active Repentance Possible in Corruption Cases?
No. Active repentance (tätige Reue) is not available for corruption offences. Once the offence has been completed, it is therefore generally no longer possible to eliminate criminal liability through subsequent restitution or other voluntary acts.
However, under certain conditions, the crown witness provisions (Kronzeugenregelung) pursuant to section 209a of the Austrian Code of Criminal Procedure (StPO) may apply. To qualify, the offender must voluntarily approach the public prosecutor’s office or the criminal police, make a remorseful confession concerning their own involvement in the offence and disclose new facts or evidence that substantially contribute to the investigation of further criminal offences.
If the statutory requirements are met, the public prosecutor may provisionally refrain from prosecuting the offender.
Can a Bribe Paid to a Third Party Also Constitute a Criminal Offence?
Yes. An advantage does not have to be conferred directly on the office holder or company employee themselves. The anti-corruption provisions also cover advantages granted to third parties.
This may be the case, for example, where an entrepreneur makes a payment to a person close to an office holder, a family member or an organisation designated by the office holder in order to influence a particular decision. Such an indirect grant of an advantage may also fulfil the elements of the offence of bribery.
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