Breach of trust as sanctioned under section 153 of the Austrian Criminal Code and active corruption in the form of bribery punishable under section 307 of the Criminal Code, the granting of advantages under section 307a of the Criminal Code or the granting of advantages to influence decision-making under section 307b of the Criminal Code are among the most common offences in white collar crime and corruption law. Often enough, the question will arise as to how these provisions relate to each other, or to be more specific, as to whether active corruption within the meaning of sections 307, 307a and b of the Criminal Code also includes the abuse of authority which is linked with the facts constituting breach of trust. The Supreme Court looked into this matter, ruling that active corruption does not necessarily also constitute a breach of trust. Rather, when assessing related conduct, the protective purpose of the legal provisions covering each of the offences must be used as a yardstick, and one must thus determine whether one or both elements are present (Supreme Court ruling 17 Os 8/18g). Below, the offences and the protective purpose of the provisions sanctioning them will be discussed in more detail, with a view to explaining and illustrating the relation between breach of trust and active corruption.
1. Breach of trust and the related protective purpose:
A person who knowingly abuses his[1] authority to dispose of another person's assets or to oblige another person, thereby causing pecuniary damage to the other person, commits breach of trust punishable under section 153 of the Austrian Criminal Code. Criminal liability for breach of trust therefore presupposes an abuse of authority on the part of the authorised person, resulting in pecuniary damage for the person granting authority. The offence requires the existence of power ofrepresentation or authority which enables the grantee to dispose of the assets of the grantor or to oblige the grantor. This power of representation may arise from law (e.g. the statutory power of representation parents have for their child), an official order (e.g. court-appointed conservators or adult guardians) or a legal transaction (e.g. procura holders or authorised agents). The most relevant examples in criminal law relating to white collar crime are the statutory powers of representation held by managing directors of limited-liability companies or executive board members of stock corporations.
Abuse of authority will lead to breach of trust if the authorised person, who is allowed to act on behalf of the grantor of authority in external relations, disregards rules serving to protect the grantor's assets in an unjustifiable manner in internal relations. Relevant rules can often be found in civil or corporate law. Typically, such cases would concern outflows of assets from a company which were initiated by the managing director of a limited-liability company or a member of the executive board of a stock corporation for which the company does not receive anything of value in return. Examples include the settlement of fictitious or inflated invoices at the expense of the company.
If, on the other hand, the authorised person breaches rules which do not serve to protect the assets of the grantor of authority but other purposes, this does not qualify as an offence within the meaning of section 153 of the Criminal Code. For example, if a member of the executive board pays a bribe to a public official, this would be sanctioned under corruption law, but leads to an (albeit non-pecuniary) advantage for the company.
In order for the elements of breach of trust to be present, the abuse of authority committed by the authorised person must be committed knowingly. Hence, qualified intent is thus required here, which means that it is not sufficient for the authorised person to merely seriously consider the possibility of an abuse of authority.
However, it is sufficient if the authorised person seriously considers it possible for the grantor of authority to sustain pecuniary damage as a result of the abuse of authority and accepts this.
2. Offences of active corruption and the related protective purpose:
A person who offers, promises or grants an advantage to a public official or arbitrator for performing or refraining from an official act in breach of duty is liable to prosecution for bribery pursuant to section 307 of the Criminal Code.
By contrast, offering, promising or granting an advantage to a public official or arbitrator for the dutiful performance or non-performance of an official act constitutes bribery pursuant to section 307a of the Criminal Code, which is punishable by a lesser penalty. It should also be noted that, if an advantage is granted for the dutiful performance of an official act, criminal liability can only be foregone under certain circumstances. As set out in more detail in section 305 par. 4 of the Criminal Code, this is the case if no "undue" advantage is involved, for example in case of what are only very minor advantages.
Public officials always act in breach of duty within the meaning of section 307 of the Criminal Code if they act contrary to specific official duties when performing or refraining from official business. For example, this would be the case if a public official issued a favourable official decision after having received a bribe although the requirements for such a decision are not met.
However, if the public official to whom the advantage is granted complies with his specific official duties, the only criminal liability to be considered is for bribery under section 307a of the Criminal Code. This is e.g. the case when all requirements for a favourable official decision are met and the public official demands a pecuniary benefit in return for acting accordingly.
Both sections 307 and 307a of the Criminal Code require a connection between the advantage granted on the one hand and the official business (in breach of duty or in compliance with duty) on the other. If such a connection does not exist and an advantage is not granted for a specific official act, but in order to influence the public official’s (future) activities, this is (only) punishable under section 307b of the Criminal Code.
The following applies to all three offences (i.e. those punishable under sections 307, 307a and 307b of the Criminal Code):
A public official is defined as anyone who performs legislative, administrative or judicial duties for a regional authority, an entity under public law, a state or an international organisation, either in an executive function or as an employee. An arbitrator is defined any decision-maker who is a member of an arbitral tribunal within the meaning of the Code of Civil Procedure.
Performing (or refraining from) an official act includes any activity of a public official in the fulfilment of the tasks assigned to him, regardless of whether he is acting in the field of public administration (e.g. issuing an official decision) or private sector administration (e.g. signing a contract).
Advantages within the meaning of corruption law are tangible and intangible benefits that (may) lead to an improvement in the economic, legal, social or professional position of the public official. Apart from the traditional payment of money, examples include vouchers, covering the costs of office parties (tangible benefits) or election support (intangible benefit).
Sections 307 as well as 307a and b of the Criminal Code require at least conditional intent with regard to all elements of the offence. This is the case if the presence of the elements (in particular the status of a public official and the granting of an advantage) is at least seriously considered possible and the offender accepts this.
The protective purposes of sections 307, 307a and b of the Criminal Code include keeping the conduct of official business clean, ethical and corruption-free. By contrast, the relevant provisions under criminal law do not protect the assets of those who bribe.
3. How breach of trust and active corruption relate:
The different protective purposes of section 153 of the Criminal Code on the one hand (protection of the assets of the person granting authority) and sections 307, 307a and b of the Criminal Code on the other (keeping the conduct of official business clean, ethical and corruption-free) mean that active corruption does not automatically constitute breach of trust.
However, there are numerous cases in which both active corruption and breach of trust do occur in combination and the perpetrator is liable to prosecution under both provisions. This is particularly the case if the act of corruption also infringes internal policies or instructions which aim to protect the assets of the beneficial owner or if the general principle that every authorised person is obliged to provide the greatest possible benefit to the person granting authority is not complied with. The best example of is found in active corruption causing an outflow of assets for which there is no adequate service in return.
However, if something which has an overall positive effect on the assets of the person granting authority is given in return for a payment made to a public official in the context of active corruption, criminal liability for breach of trust will not generally be applicable. This would e.g. be the case if a public official is granted an advantage in return for signing a contract when such a contract represents a favourable legal transaction for the grantor (also when considered in relation to the payment made). However, payments made knowingly for illegal purposes may also constitute breach of trust, even if they appear to be economically advantageous at first sight (Siemens case law, "slush funds"). Therefore, such payments must always be assessed on a case-by-case basis to see if rules serving to protect the assets of the grantor of authority have been infringed.
It is also conceivable that the person granting authority could tolerate or even order the payment of an illegal bribe. That person would then be a co-perpetrator to the corruption offence committed by the authorised person, but would not be committing breach of trust.
What has been said about how breach of trust on the one hand and sections 307 and 307a of the Criminal Code on the other relate to each other must be applied mutatis mutandis when assessing criminal liability for breach of trust and/or bribing employees or agents in the private sector, which is sanctioned by section 309 of the Criminal Code.
If you have any questions, please do not hesitate to contact the KWR white collar crime law team.