Fighting Corruption

Tackling White-Collar Crime and Punishment

Symbolbild, Schwarzgeld – 20120228_PD3750
Companies found guilty of economic crimes face disqualification from the award of public contracts for up to five years. Source: Picture Alliance

A new bill proposed by German Economics Minister Brigitte Zypries will make it harder for companies fined for corruption to be eligible for public contracts, news agency Reuters reported Wednesday.

According to the “law establishing a competition register,” which the government is currently debating, companies found guilty of economic crimes and slapped with a fine of at least €2,500 ($2,633) will be excluded from all public contracts worth €30,000 or more for three to five years.

Additionally, firms charged with serious violations such as money laundering, fraud, terrorist financing or tax evasion, among others, would be permanently disqualified.

“The purpose of the bill is to ensure that public contracts and concessions are awarded only to companies that have not committed significant legal violations,” the draft says.

Infringement of labor laws, such as failing to pay minimum wage, or anti-competitive agreements would also be included in the database and may lead offenders to be excluded from being awarded contracts, but not systematically. Companies would be given the possibility to be removed from the list by providing credible “self-policing measures” such as internal controls and preventative procedures.

The proposed national corruption database, due to come into force by 2019, would also centralize existing state-level corruption registries, which are less effectual since companies can operate in various states and easily escape local scrutiny.

There is a lot of money at stake. Between them, local authorities, state agencies and the federal government annually award contracts worth €280 billion to €300 billion, or about 10 percent of Germany’s economic output.

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