1. Material changes
1.1. Breach of trust
With effect from 1 January 2016, the offence "breach of trust" in sec 153 of the Austrian Criminal Code ("ACC") has been fundamentally revised. At first glance, sec 153 of the ACC is not a very complex provision. It states, quite simply, that whoever knowingly abuses the authority conferred to him or her shall be liable, if he or she intends to cause and eventually causes financial harm to his or her principal (eg the company). Thus, sec 153 ACC has three prerequisites: (i) an abuse of authority, (ii) financial harm and (iii) criminal intent. With the reform of sec 153 ACC the Austrian legislator finally addressed the concern that the scope of what constitutes an "abuse of authority" is not always easy to assess:
- As regards the decisions in which decision-makers have discretion and room for deciding between alternative options, the reform introduced the so called "Business Judgement Rule" ("BJR") into the Austrian Stock Corporation Act (AktG) and the Limited Liability Companies Act (GmbHG). The rule applies to management and supervisory board members and became effective at the beginning of 2016. The BJR establishes a "safe harbour" for management and supervisory boards from criminal liability for their actions when taking business decisions, provided that the following conditions are met (i) board members must act free from conflicts of interest, (ii) a decision must be based on all (material) information reasonably available and (iii) board members must have (justifiably) believed that the decision was in the best interests of the company.
- Further, the reform clarified that even if the decision was not made in accordance with the requirements of the BJR, criminal liability can only arise if the decision-maker abused his discretion in an unacceptable manner.
- Please note that the reform only protects board members and managing directors who actually have the discretion to choose between alternative options. This is not the case if the law or the articles of the company require specific conduct. For instance, whether to seek approval of the supervisory board or the shareholders' approval for an important matter or whether to file for the opening of insolvency is not a question left to the discretion of management.
Furthermore, the value thresholds for the qualification of the sentence in sec 153 ACC have been raised from an initial EUR 3,000 / EUR 50,000 up to EUR 5,000 / EUR 300,000.
Although this statutory clarification should lead to a limitation of the scope of breach of trust, relevant case law is not yet available. Also it is still unclear, whether the shareholders' approval to a certain act provide the management board members with valid protection from potential criminal liability.
2. Procedural changes
2.1. Introduction of a bank account registry
In August 2016, Austria enacted the Bank Account Registry and Bank Account Inspection Act (Kontenregister- und Konteneinschaugesetz) which introduced a central registry for bank accounts and deposits within Austria. This registry includes inter alia information about the account holder, trustors, economic owners, the bank account itself and the competent credit institution. Credit institutions have to provide this information on a regularly basis to the Austrian finance minister who is competent for the bank account registry.
Since 5 October 2016 public prosecutors, the criminal courts, the financial crime authorities, the Federal Fiscal Court (Bundesfinanzgericht) and the fiscal authorities generally have access to the registry, in criminal cases even without prior court approval. It is to be expected that this new right will greatly facilitate white collar crime investigations.
2.2. Introduction of the new leniency programme
In 2011, the Austrian legislator introduced a leniency programme in Austrian Criminal Law for potential principal witnesses. In order to evaluate the effectiveness and practical impact of the leniency programme, it was limited to six years and expired on 31 December 2016. On 15/22 December 2016, the Austrian parliament prolonged the leniency programme, with some major amendments, for another five years until 31 December 2021. It entered into force on 1 January 2017.
Although this revised leniency programme constitutes some major improvements with respect to legal certainty for a possible principal witness, some risks remain.
2.3. Strengthening of the attorney-client privilege
In 2016, the Austrian legislator strengthened the attorney-client privilege by prohibiting prosecution authorities from seizing attorney-client privileged communication located outside of an attorney's office.
According to the new sec 157 of the Austrian Code of Criminal Procedure ("ACCP"), which entered into force on 1 November 2016, any documents or information disclosed (i) to the attorney by the defendant; or (ii) from the attorney to the defendant; and (iii) for the purpose of obtaining or giving legal advice or developing a defense strategy may not be seized, regardless of whether the information is in the possession of the attorney or the defendant himself.
2.4. Improvements to Defendants' Rights
Pursuant to sec 59 of the ACCP, which entered into force on 1 November 2016, the contact between an attorney and his or her defendant may no longer be monitored and may be limited only in certain cases.
In addition, the authorities are explicitly requested to wait on the arrival of an attorney in case of a (planned) interrogation pursuant to the newly introduced sec 164 para 2 ACCP. The defendant must further be granted enough time to consult with his or her attorney prior to the interrogation and the attorney will be permitted to ask "additional questions" not only at the end of the hearing, but after each thematically separate "section" of the interrogation. The attorney will also be permitted to record "statements" regarding the course of the interrogation.
3. Case law
3.1. Anti-Corruption Law: Clarification of the Austrian Supreme Court
In June 2016, the Austrian Supreme Court had to decide on the closing of preliminary investigations against (kindergarten and school) principals in connection with possible corruption-related offences (cf. OGH 06.06.2016, 17 Os 8/16d). The Austrian Supreme Court took this as an opportunity to address certain aspects of the anti-bribery provisions for the public sector. These provisions prohibit the offering or granting of a bribe to a public official or a "third party" in order to influence (i) an act in breach of a public official's duties, (ii) an act in accordance with a public official's duties, and (iii) the future conduct of the public official in matters not yet known and/or (iv) in order to induce the public official to use his or her influence with another public official.
First, the Austrian Supreme Court ruled that the "third party" can also be the authority represented by the relevant public official, thus making clear that granting an advantage to a public authority may constitute bribery, ie a donation to a police station. However, the Austrian Supreme Court clarified that there is no "advantage" within the meaning of the anti-bribery provisions, if the beneficiary is legally entitled to the advantage and the public official/the authority acts within private-sector administration (Privatwirtschaftsverwaltung). Such a legal entitlement requires an exchange ratio between the advantage given to the public official/the authority and the advantage granted by the public official/the authority.
3.2. Law on the Responsibility of Associations: Confirmation of the Constitutional Court
The Law on the Responsibility of Associations (Verbandsverantwortlichkeitsgesetz, "VbVG") which came into force in 2006 provides that a company can be held criminally liable for criminal acts committed by their employees and decision-makers. If the perpetrator is considered a "decision-maker" then the company is liable if (i) the act is committed in the interest of the company; or if (ii) the offence occurs due to negligence of the decision-maker in carrying out the company's duties. For acts committed by other employees the company is only liable if, in addition to the above, there has been an act of negligence in relation to the supervision of that employee by a decision-maker.
In December 2016, the Austrian Constitutional Court addressed the various arguments in legal literature that the criminal liability of legal entities is unconstitutional by confirming the constitutionality of the VbVG (cf. VfGH 02.12.2016, G 497/2015-26, G 679/2015-20).