Manager Liability – From A Criminal Law Perspective
I – Introduction
Acting in an entrepreneurial context is always accompanied by a bundle of duties and risks, of which management bodies of companies in particular are aware. Criminal liability is obvious in those cases in which criminal offences are realised through independent action. For example, the manager of a company is liable to prosecution for falsification of documents within the meaning of section 267, paragraph 1, variant 1 of the Criminal Code, if he or she independently creates false documents in order to deceive legal transactions. However, cases in which the manager does not act himself prove to be problematic.
II – Why are there attribution rules for management bodies?
The company as a legal entity cannot be held criminally responsible for lack of capacity to act. If the legislator had ignored the need to regulate this circumstance, this would lead to impunity despite the fact that the offence had been committed. In the course of corporate criminal law, however, this liability gap is closed in that, in case of doubt, such offences are also attributed to the management bodies via section 14 of the Criminal Code, which were committed in the operational context by another person. In the context of administrative offences, section 9 of the Administrative Offences Act applies accordingly. The attribution of criminal responsibility at management level means that the manager is always exposed to a liability risk, the web of which is at the same time complex.
1 – Special personal characteristics, § 14 Criminal Code or § 28 Criminal Code
There are offences which can only be committed by a specific group of offenders. This is a so-called special personal characteristic. An example of this is the offence under section 266a of the Criminal Code, which criminalises the withholding or embezzlement of remuneration by an employer. Only the employer can be a perpetrator of this offence, not just anyone. However, since a company is only capable of acting through its organs, the imputation is transferred to the management organs according to section 14 of the Criminal Code.
2 – Horizontal imputation within the meaning of section 25(2) of the Criminal Code
If the manager acts together with another person and both persons have their own contribution to the offence, which results from a joint plan, the punishment as co-perpetrator according to section 25, paragraph 2 of the Criminal Code is obvious.
3 – Vertical attribution within the meaning of section 25, paragraph 1, alternative 2 of the Criminal Code.
The more the company grows, the more areas of responsibility are necessarily implemented in the company. Smooth processes and synergies can only be guaranteed if the company uses employees among whom areas of responsibility can be divided. Due to the division of labor, criminal offences are often not committed by the manager, but by an employee.
Indirect perpetration is located in section 25, paragraph 1, alternative 2 of the Criminal Code. By definition, the indirect perpetrator is the one who commits the offence through another. I.e., the “other” is used as a tool for the realization of the offence. This act is attributed to the indirect perpetrator as the “backer”. This is particularly the case if the person behind exploits the offence deficit of the person in front (e.g., an error) and has the course of events in his hands through superior and planned steering will. An example of this would be the following situation: The managing director orders the employees – under the pretext that this has been legally clarified – to (falsely) change tax-relevant information. The employees follow the order under the belief that this is actually legally correct and do not know that the information is false. In this case, they are subject to a mistake under § 16 paragraph 1 sentence 1 of the Criminal Code by analogy. In this case, the managing director is liable to prosecution for tax evasion in indirect perpetration pursuant to section 25, paragraph 1, alternative 2 of the Criminal Code, section 370, paragraph 1 of the Tax Code.
In addition to that and even if it’s disputed from another front, case law also regulates: Even if the employee acts fully responsibly, in case of doubt the act is attributed to the management body via section 25, paragraph 1, alternative 2 of the Criminal Code in the sense of indirect perpetration (cf. BGHSt 40, 218; BGHSt 45, 270). The reason for this is the assumption that employees generally always carry out instructions from the managing director and that a “normative perpetration by virtue of organisational rule” becomes established in the company. The manager should not be able to hide behind his employees as executing persons.
4 – Omission
Criminal liability by omission always comes into consideration if the managing director has a guarantor position within the meaning of section 13 of the Criminal Code. As a rule, this guarantor position results from the position of the managing director – in case of doubt by inference. An omission exists if the managing director had a guarantor obligation and did not undertake a legally required action that would have prevented the realization of the offence. If the managing director is aware that an employee is committing a criminal offence in a business context, he must take the necessary action to prevent the offence.
5 – Negligence
The same applies to negligence as to omission. If the managing person has a legal duty to act and the care required in traffic is disregarded, the managing body is liable to prosecution.
6 – Transfer of tasks to a third party
By transferring tasks to a third party – which is only possible under narrow conditions – duties but not criminal responsibility are relinquished. On the contrary, the managing director even has the duty to supervise the employee to ensure that he or she performs his or her duties correctly, cf. section 130 of the Administrative Offences Act.
III – Conclusion
The position as managing body of a company entails some risks. The manager must be aware that not only his own actions – but also those of his employees and other subordinates – can be attributed to him to his disadvantage if it is a criminal offence or an administrative offence. The implementation of a compliance concept is necessary for the prevention of criminal offences in the operational context. In any case, it is always advisable to seek appropriate advice from lawyers or the like in order to avoid misunderstandings and counteract unnecessary risks.
Written by Linda Naomi Henschel
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