98/742/JHA: Joint Action 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
Date: 1998-12-22
Institutions: Council of the European Union
Subjects: corruption, organised crime, penalty, private sector, restriction on competition, single market

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(Acts adopted pursuant to Title VI of the Treaty on European Union)

JOINT ACTION

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

(98/742/JHA)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on European Union, and in
particular Articles K.1(7) and K.3(2)(b) thereof,

Having regard to the report of the High-level Group on
Organised Crime, which was approved by the European
Council meeting in Amsterdam on 16 and 17 June 1997,
and more particularly Recommendation No 6 of
the
Action Plan to combat organised crime of 28 April
1997 (1), which provides for the development of a compre-
hensive policy against corruption,

Whereas the Member States attach particular importance
to combating corruption in the private sector on an inter-
national level;

Having regard to the conclusions of the Conference on
achieving a corruption free environment - the EU Contri-
bution (Brussels, April 1998),

Having regard to the Council Resolution of 21 December
1998 on the prevention of organised crime with reference
to the establishment of a comprehensive strategy for
combating it (2),

Member States of the European Union, adopted by the
Council on 26 May 1997 (5);

Whereas this Joint Action is not aimed at corruption
already covered by the instruments referred to;

Having regard to the communication of 21 May 1997
from the Commission to the European Parliament and
the Council on a Union policy against corruption,

Whereas corruption distorts fair competition and under-
mines the principles of openness and freedom of markets,
and in particular the smooth functioning of the internal
market, and also militates against transparency and open-
ness in international trade;

Whereas, for the purpose of this Joint Action, it is of
importance that
is
covered in a sufficiently broad way by national law of
Member States;

‘breach of duties'

the concept of

Having examined the views of
the European Parlia-
ment (6), following consultation carried out by the Pres-
idency in accordance with Article K.6 of the Treaty,

HAS ADOPTED THIS JOINT ACTION:

Whereas the Member States stress the fact that prevention
is no less important than repression in an integrated
approach to corruption in the private sector;

Article 1

Definitions

Having regard to the Protocol, adopted by the Council on
27 September 1996, to the Convention on the protection
of the European Communities’ financial interests (3), to
the Second Protocol, adopted by the Council on 19 June
1997, to the Convention on the protection of the Euro-
interests (4) and to the
pean Communities’
Convention on the fight against corruption involving offi-
the European Communities or officials of
cials of

financial

(1) OJ C 251, 15. 8. 1997, p. 1.
(2) OJ C 408, 29. 12. 1998, p. 1.
(3) OJ C 313, 23. 10. 1996, p. 2.
(4) OJ C 221, 19. 7. 1997, p. 11.

For the purposes of this Joint Action:

— ‘person' means 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' means 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,

(5) OJ C 195, 25. 6. 1997, p. 2.
(6) OJ C 371, 8. 12. 1997, p. 193.

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— ‘breach of duty' shall be understood in accordance
with national law. The concept of breach of duty in
national law should cover as a minimum any disloyal
behaviour constituting a breach of a statutory duty, or,
as the case may be, a breach of professional regula-
tions or instructions, which apply within the business
of a ‘person' as defined in the first indent.

Article 2

Passive corruption in the private sector

1.
For the purposes of this Joint Action, 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, shall constitute
passive corruption in the private sector.

Subject to Article 4(2), each Member State shall take
2.
the necessary measures to ensure that conduct of the type
referred to in paragraph 1 is made a criminal offence.
These measures shall at least cover such conduct which
involves, or could involve, the distortion of competition,
as a minimum within the common market, and which
results, or might result, in economic damage to others by
the improper award or improper execution of a contract.

Article 3

Active corruption in the private sector

For the purposes of this Joint Action, the deliberate
1.
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, shall constitute
active corruption in the private sector.

2.
Subject to Article 4(2), each Member State shall take
the necessary measures to ensure that conduct of the type
referred to in paragraph 1 is made a criminal offence.
These measures shall at least cover such conduct which
involves, or could involve, the distortion of competition,
as a minimum within the common market, and which
results, or might result, in economic damage to others by
the improper award or improper execution of a contract.

Article 4

Penalties

Each Member State shall take the necessary measures
1.
to ensure that the conduct referred to in Articles 2 and 3,
and the acting as an accessory in or instigator of such
conduct, 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.

2. However, for minor cases of active or passive corrup-
tion, in the private sector, a Member State may provide for
penalties of a different kind from those referred to in
paragraph 1.

Article 5

Liability of legal persons

Each Member State shall take the necessary measures
1.
to ensure that legal persons can be held liable for active
corruption of the type referred to in Article 3 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, or

— an authority to take decisions on behalf of the legal

person, or

— an authority to exercise control within the legal

person,

as well as for involvement as accessories or instigators in
the commission of such an offence.

2. Apart from the cases already provided for in para-
graph 1, each Member State shall
take the necessary
measures to ensure that a legal person can be held liable
where the lack of supervision or control by a person
referred to in paragraph 1 has made possible the commis-
sion of an act of active corruption of the type referred to
in Article 3 for the benefit of that legal person by a
person under its authority.

3.
Liability of a legal person under paragraphs 1 and 2
shall not exclude criminal proceedings against natural
persons who are involved as perpetrators, instigators or
accessories in the active corruption.

Article 6

Sanctions for legal persons

1.
Each Member State shall take the necessary measures
to ensure that a legal person held liable pursuant to
Article 5(1) is punishable by effective, proportionate and
dissuasive sanctions, which shall include criminal or non-
criminal fines and may include other sanctions such as:

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(a) exclusion from entitlement to public benefits or aid;

(b) temporary or permanent disqualification from the

practice of commercial activities;

(c) placing under judicial supervision;

(d) a judicial winding-up order.

2.
Each Member State shall take the necessary measures
to ensure that a legal person held liable pursuant to
Article 5(2) is punishable by effective, proportionate and
dissuasive sanctions or measures.

Article 7

Jurisdiction

1.
Each Member State shall take the necessary measures
to establish its jurisdiction with regard to the offences
referred to in Articles 2 and 3 where the offence has been
committed:

(a)

in whole or in part within its territory; or

(b) by one of its nationals, provided that the law of that
Member State may require the conduct to be punish-
able also in the country where it occurred; or

(c) for the benefit of a legal person operating in the
private sector that has its head office in the territory of
that Member State.

2. Any Member State may decide that it will not apply,
or will apply only in specific cases or circumstances, the
jurisdiction rule set out in:

— paragraph 1(b),
— paragraph 1(c).

3. Member States shall inform the General Secretariat
of the Council accordingly where they decide to apply
paragraph 2, where appropriate with an indication of the

specific cases or circumstances in which the decision
applies.

4. Any Member State which, under its law, does not
extradite its own nationals shall take the necessary meas-
jurisdiction with regard to the
ures
offences referred to in Articles 2 and 3, when committed
by its own nationals outside its territory.

to establish its

Article 8

Implementation of the Joint Action

1.
Each Member State shall, within two years after the
entry into force of this Joint Action, bring forward appro-
this Joint Action for
priate proposals to implement
consideration by the competent authorities with a view to
their adoption.

2.
The Council will assess, on the basis of appropriate
information, the fulfilment by Member States of their
obligations under this Joint Action within three years
after its entry into force.

Article 9

This Joint Action shall be published in the Official
Journal.

Article 10

This Joint Action shall enter into force on the date of its
publication in the Official Journal.

Done at Brussels, 22 December 1998.

For the Council

The President

C. EINEM