October 12, 2018 / 6:21 AM / 2 months ago

German justice minister committed to tougher sanctions on companies

BERLIN (Reuters) - The German government is committed to introducing tougher sanctions against companies that foster criminal behavior in the wake of Volkswagen’s (VOWG_p.DE) diesel emissions scandal, the country’s justice minister said.

A Volkswagen logo is pictured at Volkswagen's headquarters in Wolfsburg, Germany, April 22, 2016. REUTERS/Hannibal Hanschke/File Photo

In an interview published in Friday’s edition of the Handelsblatt newspaper, Katarina Barley said she had seen a pattern whereby companies try to blame individual managers for any wrongdoing.

“This was very blatant in the diesel scandal, in several companies,” she added, without naming any of the companies.

Barley said individuals will in future still be responsible for any crimes they commit.

“But if there is a visible structure in a company that fosters and covers up criminal behavior, there should be penalties for companies in the future,” she said.

A coalition agreement between Chancellor Angela Merkel’s conservatives and their centre-left SPD partners signed in March included plans to ensure that companies that profit from the wrongdoing of staff members face tougher sanctions.

The agreement said that the maximum penalty for companies generating more than 100 million euros in annual revenues should be raised to 10 percent of annual sales, up from a cap of 10 million euros previously.

While it is unlikely that all plans in the coalition agreement will be implemented, Barley’s comments suggest that the proposal on company sanctions could become law.

Volkswagen in 2015 admitted to using illegal software to cheat emissions tests, sparking a scandal that has cost it more than $27 billion in penalties and fines.

Environmental lobby group DUH, which has been seeking bans on diesel cars in a number of German cities in the wake the VW scandal, told Handelsblatt that Barley, of the SPD party, was not going far enough.

New legislation should require that sanctions against companies are pursued, and it should also allow companies to be sanctioned even if none of their staff members can be made personally liable, DUH managing director Juergen Resch told the paper.

“Our criminal law is being hampered by the fact that only people but not companies can be punished. That is absurd,” he said.

German industry association BDI meanwhile criticized Barley, saying the proposed change in law risked unnecessarily criminalizing companies.

“Existing law already offers ways to sanction both individuals and companies,” Handelsblatt quoted Niels Lau, head of BDI’s legal department, as saying.

Reporting by Thomas Seythal and Maria Sheahan; editing by Jason Neely and Kirsten Donovan

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