The Wirecard case makes it clear that no company is protected from criminal activities by management and executives. A GmbH managing director can be prosecuted in many ways and by violating duties cause high damage. Delayed insolvency, misappropriation of funds entrusted to us, bribery of contractual partners, bribery by accepting advantages or fraud are common cases.
In the event of tortious acts, such as criminal offences, injured parties have a claim for damages against the managing director. Also violation of antitrust law can justify a claim for damages. These include, in particular, price agreements with competitors or unlawful restrictions on competition in vertical agreements with retailers, for example price targets.
However, the lack of assets or the insolvency of the managing director often stand in the way of an effective enforcement of a claim for damages. Because a GmbH managing director who is guilty of corruption or another offense under the criminal law provisions of the Criminal Code must expect the confiscation of his assets, fines or penalties and procedural costs. Despite his personal liability, there is often nothing more to get from the managing director for injured parties.
However, the company for which the manager acted is also liable for damages for the damage caused by the manager's actions under certain conditions:
Liability for breach of duty by the managing director
A GmbH managing director is initially liable to his own company for damages if he breaches his duty of care. This is clearly regulated in the GmbH law and also applies to the GmbH & Co. KG. This liability of the managing director with his private assets according to the GmbH law exists, however, only in the internal relationship to society. Third parties, i.e. contractual partners of the company, who have been harmed by a criminal offense by the managing director, cannot invoke the violation of the duty of care towards the company. The statutory claim for damages according to the GmbH law is only available to the company and must be asserted by the general meeting.
However, there are situations in which the company must accept liability for a breach of duty by the management towards the injured party. The company is responsible for any damage that the manager causes to a third party through an action carried out by the manager within the framework of the duties assigned to him as manager. In other words: The company must be responsible with its GmbH assets if the managing director causes damage. This applies in particular if the shareholders' meeting was aware of his actions. The shareholders' meeting and all shareholders are therefore well advised to always make sure that all managing directors - including managing directors - as their employees always act with the care of a prudent businessman.
This liability of the GmbH does not mean any contractual claims for damages that aggrieved companies have against the company due to the breach of contractual obligations. For example, the landlord of business premises can demand that the renting company pay the rent and repair damage. This is clear. But in such cases, the GmbH managing director has not committed any tort. The liability of the GmbH for the actions of the managing director refers to cases in which this managing director commits a tortious act, in particular a criminal offense or an antitrust violation, and thereby causes damage to a third party. The company cannot then claim that it did not want the management to commit a crime. This excuse doesn't work. Because the BGB orders a civil law liability of the company, in which the managing director causes damage to third parties.
Bribery by GmbH directors
Cases of corruption in business dealings (§ 299 StGB), also known as corruption and bribery, are more common. If, for example, the managing director of a GmbH decides to give a customer’s buyer special advantages, such as monetary payments or participation in luxury events, so that his GmbH can benefit from unfair preferential treatment in the award of contracts, this is not just acting against fair competition . It is a clear case of commercial corruption in the form of bribery and therefore a criminal offence. Corruption also works the other way around as bribery: If a managing director allows himself to be paid in the course of business transactions so that he places an order with a company and concludes a contract with it, he is also liable to prosecution.
It is important to note that bribery cannot be committed negligently. If the GmbH managing director understandably assumed that the "extra payment" was a commission for an agency service, he was only acting negligently and is not liable to prosecution. Accordingly, managing directors are not liable for damages. Bribery always requires intentional action, after which the managing director at least accepted that there could be bribery in business transactions. If he himself accepts funds for the award of contracts or unfair preferential treatment, he is always acting intentionally.
While only the person acting can make himself personally liable to prosecution, other managing directors are threatened that they are jointly liable for damages. A claim for damages due to a breach of duty by a managing director always applies to all other managing directors, but only against the company and not against third parties. However, injured parties can seize any claims for damages by the company against one of its managing directors by way of execution if they enforce their claims for damages against the company.
antitrust violations
In the area of antitrust law, the risk of violations is also high. The courts in the EU are increasingly dealing with antitrust claims for damages. Even if violations of antitrust law in Germany - apart from the case of bid fraud in procurement procedures - are not punishable, antitrust law gives companies that paid excessive prices as a result of price agreements between competitors a statutory claim for damages. The injured parties are regularly dependent on the corresponding procedures of the Federal Cartel Office or the European Commission being completed. But as long as these procedures are running, none occurs Limitation of the claim for damages according to § 33 GWB. The liability extends to all damages that have occurred as a result of anti-trust behavior, in particular the sale at prices that were increased due to the anti-trust laws. The damage that occurs and the associated risk of liability can be considerable.
Even where a violation of antitrust law does not cause any damage and therefore does not justify a claim for damages, there is a considerable risk for the GmbH's assets. When specifying resale prices for retailers, for example, it is usually difficult or impossible to prove damage. In addition to the claim for damages, the company that has committed a violation of antitrust law by its managing director is also threatened with fines due to the violation of antitrust law. Antitrust compliance, i.e. internal regulations and training courses on compliance with antitrust law and competition law, should therefore be capitalized and implemented in every society.
Risk of liability of the company in case of crime – civil liability towards third parties
If the GmbH shareholders are confronted with criminal acts by the management and a claim for compensation for the damage caused by the violation of legal regulations, the horror is regularly great. The GmbH shareholders will dismiss and dismiss the respective managing director with immediate effect by a resolution in the shareholders' meeting. In practice, the new management is faced with the great challenge of "cleaning up", i.e. pursuing the claims for damages that have been asserted and examining and also asserting each of the company's own claims for damages against the former management. This regularly requires the involvement of external consultants and is time-consuming and costly. The shareholders will also find themselves exposed to the accusation that the machinations of the GmbH managers have remained hidden from them.
Companies that want to assert claims for damages against a GmbH due to tortious acts by its management must first prove the criminal offense or the violation of antitrust law. Only then is the managing director liable. This liability is transferred to the GmbH in accordance with § 31 BGB. It is therefore always first of all to check whether there is an unlawful act on the part of the managing director that justifies his obligation to pay damages in order to then be able to assert this against the company.
It does not matter whether the managing director wanted to act "with the best of intentions" and whether the transaction brought an advantage for the company or the other company. The mere fact that a payment or an advantage was made (bribery) or he accepted a payment (bribery) justifies criminal liability. The GmbH managing director can therefore not refer to the positive effects of his entrepreneurial decisions. Criminal offenses are never covered by the so-called Business Judgment Rule, i.e. the entrepreneurial discretion of the management.
In addition, a payment will regularly be “priced into” the price or the remuneration, so that the financial loss is also seen here. Accordingly, managing directors are liable for damages. In addition, in the case of bribery or corruption in commercial transactions, the contract is immoral and therefore ineffective. The aggrieved company can therefore demand repayment of the remuneration paid as compensation. If a contract is ineffective, there is no right to keep a payment. A usual remuneration can then be demanded; however, this may fall far short of the originally agreed payment. In this respect, too, there is a high liability risk that can also lead to the insolvency of the company concerned.
Summary
If a company has been the victim of crime or antitrust violations by its own management or that of another company, it should always investigate claims for damages. If there are indications that the GmbH managing director of the other company acted illegally, claims for damages can be directed not only against him, but also against the other company.
