NÃRR STIEFENHOFER LUTZ / Legal Matter 29.10.2009 Dissemination of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer / publisher is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Dr. Christian Pelz calls the recent Federal Supreme Court judgement on liability of internal auditors a 'thunderbolt for German compliance officers: This judgement has caused alarm'. With these clear words, the specialist in criminal and tax law opened his address to this year's Compliance Day of the international law firm Nörr Stiefenhofer Lutz in Munich. Since the publication of the judgement (File No. 5 StR 394/08) in the summer, the Nörr lawyer is dealing with the possible consequences. Pelz briefly informed approx. 180 in-house lawyers and compliance practitioners in the Kempinski-Hotel about the effects on their daily work. But there was more for the guests. Seven prominent lecturers spoke about innovations in the most varied areas of compliance. The spectrum ranged from employee data-protection and whistle-blowing through cartel law and fictitious self-employment to the effects of the EU REACH Regulation (registration, evaluation, authorisation and restriction of chemicals) for companies in their day-to-day business. Legal Theory fails to keep Pace with Compliance Practice In autumn 2006, the Nörr Partner Prof. Dr. Thomas Klindt, head of the compliance practice at the law firm, initiated the successful series which took place this year for the fourth time. 'Legal research on the subject of compliance is not keeping pace with the increasing significance of the subject in practice' emphasised the expert for product safety and technology law at the opening of the seminar - exchange among practitioners is therefore all the more important. The guests accepted this offer. In particular, the Federal Supreme Court judgement, commented upon by Rechtsanwalt Pelz, triggered discussions on the margin of the conference. There was widespread agreement that the highest German criminal judges took the opportunity of a case of fraud in Berlin to reveal, in an 'obiter dictum', their views on the tasks of compliance officers. The consequences for compliance officers according to criminal law expert Pelz: They must, according to the judges, prevent all legal violations taking place in the company - in particular criminal offences. They are therefore in the position of a guarantor and as such can themselves be criminally liable by omission - a far too great extension of their responsibility according to the expert. 'They practically already have one foot in jail' concluded Pelz to the approval of the listeners in the hall. Unclear Definitions of Compliance result in Liability Risks As the cause for the comprehensive liability, the lawyer identified the unclear definitions of compliance. 'The court was guided only by the comments in the literature, with the addition of the marketing claim of many companies that they are compliant in all areas'. The term 'compliance' has been displayed like a banner in recent years while the scope of the work of those responsible has only seldom been clearly defined. Many of the guests agreed. But Pelz also discovered something good in the judgement: 'It compels us to develop compliance to reconsider its function'. A similar transition as that in compliance itself is being experienced at present in European chemical law, as Nörr lawyer Martin A. Ahlhaus explained. The 'REACH'-Directive of the Commission revises the legal obligations of manufacturers, importers and dealers completely. 'Not only chemical firms are affected' declared the public law expert. 'Whoever imports DVD players or sells text markers can very rapidly be covered by the REACH obligations'. Many companies, in Ahlhaus' experience, are unaware that the new regulations apply to them too. A classic case for the compliance department. REACH as Challenge for Communications Departments The 'first deliveries have already been detained by the customs due to defective accompanying papers' according to the Nörr Stiefenhofer Lutz lawyer. The issue will also ultimately be significant for the communications departments of firms affected, the consumer can immediately demand information on the substances in the products sold. Time presses. Already since last year, firms are threatened with prohibitions on bringing goods to the market if they do not conform to REACH. At the end of 2010, a further intensification will take place. 'This issue will be severely felt by many companies' said Ahlhaus. 'In the internet there is already a form letter from the Federal Environmental Office in circulation with which consumers can demand information from the companies'. Günther Dorn, leading government director in the Bavarian State Office for Data Protection came across as significantly more business-friendly than the federal authorities. He understands the desire for data screening to combat corruption. It is often as 'between the devil and the deep blue sea'. He explained on the basis of the newly introduced § 32 Federal Data Protection Act what legal possibilities to compare data exist and what must be observed thereby. He also allowed himself a side-swipe at the legislator 'I would wish clear rules for practitioners instead of weak consideration provisions. The politicians must get off the fence'. Dorn encouraged the company representatives to make their views on the Employee Data Protection Act heard. 'Advice from practitioners is badly needed there'. While data protection is taken seriously, there is also awareness of the strictures of daily practice, said the official to the applause of the listeners. Comparison of Employee Data is permissible The subject of data protection was also dealt with by Rechtsanwalt Dr. Jyn Schultze-Melling, specialist for IT compliance. He also spoke in favour of pragmatic solutions and explained the binding corporate rules, the American 'safe harbor' principle and the problems with cloud computing for data protection law. Problems arise in particular 'if data leave the circled wagons of Europe'. In Asia and America also, 'the basket in which one has laid one's egg, should be well upholstered' according to Schultze-Melling. The basic requirement for effective IT compliance is, however, the inventory with the help of the responsible technicians. Ultimately, hardly anyone knows were data are at any particular time. 'Now is the time to clear out the attic and to bring IT structures up to date from a data protection point of view' advised the lawyer in view of the amendment to the Data Protection Act which came into force on 01 September. Another current development has its roots on the other hand in a legal amendment which took place somewhat longer ago. In cartel law, increasingly compensation claims are made against companies which participate in price fixing or other cartel law breaches. 'Since 2005, the amended German cartel law contains provisions on claims due to cartels, for example, only a few days ago the first case of the cement transport cartel ended' reported Nörr Partner Dr. Alexander Birnstiel. The dangerous aspect of this development is that the costs for which the cartel participants are responsible are not calculable. Unlike in the case of fines, the amount of damages is not limited and in addition even the witnesses in the cartel proceedings can be claimed against. In official cases in the which the penalty may be a fine, the witnesses are protected as thanks from the authorities for revealing the cartel. Victims of Cartels should think about Compensation Claims 'The dam in this area will very rapidly break' prophesied the cartel expert - alone because the EU Commission itself claims against the members of the lift cartel and intends thereby to create an example. In parallel, companies which deliberately buy up civil law claims against cartel members are being established for the purpose of enforcing these combined claims in court. 'Such claims are already pending in the cement and bleach cartel cases' said Birnstiel. For managers of companies damaged by cartels, action may be required above all after the conclusion of an official cartel proceeding. In order to avoid liability, they should, however, carefully examine whether the company can claim against cartel participants. While this kind of manager liability is rather based on negligence, auditor and tax adviser Andreas Sand considered deliberate misconduct of company executives. With many examples, he showed how managers attempt creatively to damage their own companies. 'To proceed against managing directors internally is really a tightrope act' according to the expert from the Nörr NSL Consulting AG. Sensitivity in dealing with criminal Managers The damage caused yearly by financial crime is more than 10 million EUR according to relevant studies, in 35% of the cases, top management is involved. 'Healthy scepticism and great sensitivity' was the auditor's recommendation to compliance officers. 'A standard approach does not exist'. In the heat of the investigations, however, it should not be forgotten that the auditing and compliance department must also comply with the law. The seminar concluded with a subject which is often neglected - fictitious self-employment. Dietmar Will, Chief Compliance Officer of Audi AG, outlined the company's measures to avoid unwelcome surprises in this area. 'The demarcation between employment and services is much more difficult in practice than is understood in theory' said the lawyer. Instructions, integration in the organisation and separation between freelance and the company's own employees must at all times pass the tests of the tax investigation of illicit working. 'Even the naming of a freelancer in an e-mail out of office notice as a substitute, can be an indication that the department does not maintain the distinction as required' according to Will. Clear rules and comprehensive training of those responsible are used to protect the Ingolstadt company against problems, since otherwise tax investigations, accusations of illicit working and considerable arrears demanded by the social insurers could be the result. In addition: Compliance training can be obtained through the computer. The demo-version 'E-Learning Kartellrecht' of Nörr Stiefenhofer Lutz and Digital Spirit provides an introduction. See under: www.noerr.com/en/desktopdefault.aspx/tabid-35/35_read-21 Dr. Michael Neumann NOERR STIEFENHOFER LUTZ Rechtsanwaelte Steuerberater Wirtschaftspruefer * Partnerschaft Brienner Str. 28 80333 Muenchen / Germany Tel. +49-(0) 89-28 628-226 Mobile: +49-(0) 171-125 14 28 E-Mail: michael.neumann@noerr.com 29.10.2009 |[![CDATA[|[a href="http://www.dgap.de"|]Financial News transmitted by DGAP|[/a|]]]|] ---------------------------------------------------------------------------
DGAP-News: 'Compliance Officers need Scepticism and Sensitivity': 180 Company Representatives at Nörr Stiefenhofer Lutz 'Compliance Day'
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