The responsibility for investigation of corporate conduct lies with regulatory and prosecuting authorities (depending on the subject of investigation). Regulatory authorities have the power to investigate – within their scope – corporate conduct (e.g., the Hellenic Competition Commission for cartel offences), but responsibility for criminal prosecution of corporate conduct always lies with the Prosecutor’s Office (the Prosecutor) and any findings related to criminal offences are forwarded to the Prosecutor to decide on further proceedings.
The Prosecutor is responsible for initiating and supervising investigations that may be performed by other agencies, for example, the Financial and Economic Crime Agency (SDOE). In recent years the SDOE has become the agency that primarily investigates cases of large-scale fraud, tax evasion, corruption and money laundering. The SDOE operates under direct supervision of the Ministry of Finance, hence it plays a very important role in all investigations with financial and economic characteristics, including corporate practices. Apart from the regular tax reviews, investigations are supervised by the Prosecutor. Other special departments include police departments (e.g., organised crime or cybercrime), and they are bound by the rules of police conduct and the general provisions of the Greek Code of Criminal Procedure. All agencies have powers of investigation but need to follow the general rules of this Code. For example, the SDOE has the right to perform searches and seizures of documents but needs the presence of a prosecutor, magistrate or judge for a raid or to seize documents and data containing privileged information. However, agencies such as the SDOE and the Financial Intelligence Unit (FIU) do not need any authorisation to obtain tax records and bank account information when conducting an investigation. Special judicial authorisation is always needed to obtain the content of confidential correspondence.
In 2013, the Prosecutor against Corruption was established. This is a higher-ranking prosecutor (with the Court of Appeal in Athens) with all powers of the Prosecutor and the ability to gain access to all kinds of records and information (as well as lifting privilege) with very quick proceedings and minimum requirements.
In January 2015, a Minister for combating corruption was included in the Cabinet. The Minister is responsible for supervising and coordinating enforcement agencies such as the Financial and Economic Crime Unit (SDOE), the Internal Auditors of the Ministries, the Internal Audit Service of Public Administration, the Internal Audit Service of Public Constructions, etc. The Minister sets the guidelines for combating corruption, sets strategic targets for all involved agencies and initiates investigation through any of the supervised agencies.
A company is obliged in principle to cooperate with the authorities, at least in terms of providing requested information and documentation, etc. In the majority of cases the authorities will send a written request to a company to forward certain information or documents. Failure to comply with such a request usually has no direct consequences (unless otherwise provided for by law) but may lead to an unfavourable report by the authorities or an on-site search and seizure to obtain requested material.
In all cases the company may object to handing over certain documents or material (e.g., privileged commercial information or correspondence) and refer to the Prosecutor to resolve the issue. In practice, when an on-site search is in progress the company does not have the power to refuse to hand over any material but may raise its objections as to the nature of the material taken (e.g., privileged information) when signing on the confiscation documents, in which case the material is sealed and taken by the agency pending resolution of the issue by the judicial authorities.
On some occasions (depending on the scope and nature of investigation) the company may be requested to submit its views in respect of the issues under investigation or to offer evidence to its defence (of any type: witnesses, bank records, correspondence, etc.) contesting the views of the investigating authority (usually included in a draft report).
There is no general rule or obligation for self-reporting. A series of legislative measures have been passed to enable enforcement agencies to detect misconduct with or without the cooperation of the companies. It is in this respect that accounting officers are obliged to report any type of suspicious activity (related to tax evasion, money laundering, etc.) if there are indications of misconduct.
There are, however, special provisions for self-reporting in numerous laws and regulations that stipulate self-reporting of internal wrongdoing and cover most aspects of business activity. In some fields or industries, provisions for self-reporting are more stringent (e.g., banking and financial services), while in other fields there is no explicit provision for self-reporting (most commercial activities in the private sector); however, rules for reporting criminal acts to the authorities (as a general legal obligation) may apply, and this might, to some extent, lead to a kind of ‘self-reporting’.
There are specific industries or fields where self-reporting is a prerequisite to get the benefit of leniency measures or for immunity provisions to apply. Such provisions apply in cases of violations of competition law, exposure of corrupt practices of public officials, organised crime and terrorism.
In any of these procedures the authorities can choose to impose lesser penalties or grant complete immunity. These provisions may apply to corporate entities only, to individuals only, or entities and individuals alike. Considering that in the majority of cases involving serious corporate misconduct the authorities may impose administrative penalties and measures affecting the company’s ability to continue and develop its activities, as a rule participation in a leniency programme is considered the better option for a company and implicated individuals.
It is noted that where leniency or immunity measures are provided for (e.g., cartel offences, corrupt practices or money laundering) the extent to which they apply depends on the type of information provided to the authorities. As a rule, effective and complete exposure of illegal practices may lead to lesser penalties or immunity from criminal prosecution or administrative sanctions. Immunity is usually provided for when reporting of illegal practices is of such significance that it contributes substantially to the exposure of illegal activity or perpetrators.
ii Internal investigations
A business may conduct its own internal investigation on any occasion. Whether the results should be shared with the authorities depends on the results and the nature of the case, since there is no general rule for self-reporting – with the exception of certain aspects of business activities usually related to regulatory rather than criminal provisions.
If there is evidence of serious wrongdoing, the company may be left with no choice but to refer all gathered information to the authorities. It is important to keep in mind on all occasions that any report to the authorities by the company, especially in relation to its employees or clients, should be done carefully to avoid any possibility of it being held liable for filing false accusations. It is not expected, of course, that a case be presented to the authorities proven beyond any doubt, but care should be taken to forward information that indicates with some certainty that serious misconduct has taken place.
When conducting an internal investigation, a company typically examines documents and interviews witnesses. It is also quite common to retrieve and evaluate records of any type (electronic evidence, financial transactions and payment schemes, etc.) and whatever else may be useful for establishing the facts of a case. If there are serious signs of misconduct, the employee is usually notified in case he or she wishes to have counsel present; it is for the employee to decide upon the presence of counsel.
Attorney-client privilege may be asserted at any time. It is not always easy, however, to determine what falls under this protection. Apart from the obvious privileged information (e.g., correspondence between an attorney and his or her client) there are other forms of communication (e.g., memos, drafts of letters or other documented material) that may contain privileged information. In such cases, the company should indicate to the authorities that this is indeed privileged information. The company is not expected to waive its rights or privileges (especially the attorney-client privilege) as part of its cooperation with the authorities. The company may, however, choose to waive its rights in whole or in part with respect to such privileges if it becomes necessary for the purposes of its defence in regulatory or criminal procedures. For documents and material protected by special legislation (e.g., patents) the company is entitled to deny access or give limited access or request that the material be handled by the competent authorities in accordance with special legal provisions.
In investigations that come to the attention of authorities with certain powers awarded to them by law (e.g., the Prosecutor against Corruption) withholding information may not be possible due to special legal provisions.
Cases reported by employees to the company (internal control, compliance or other) and employees reporting directly to the authorities should be differentiated. When dealing with employees reporting suspicions of illegal activity to the company the latter has a variety of options and usually handles it in accordance with its own internal control regulations. In such cases it is important for the company to acquire as much information as possible while trying to avoid exposing the source of information to get reliable evidence. This is also good practice when trying to establish that the employee’s reported suspicions are substantiated and not the result of other motives.
The company may decide to refer the matter to the internal controls or make ad hoc internal enquiries to decide whether the employee’s report is substantiated; if it is, it must then decide whether what has been reported should be looked into further or referred to the authorities. During this process the company may decide not to involve the reporting employee – especially if it can corroborate his or her information through other sources or documentation, which is usually the case when said employee is not involved in the illegal activity. When the employee is involved in such activity the company faces more challenges in deciding how to use the information provided because, on the one hand, it needs this information to assess the seriousness of the situation but, on the other hand, has to evaluate the impact of the employee’s conduct to date.
When the employee reports his or her suspicions directly to the authorities (without prior notice to the company’s compliance department) the company’s options are limited and will necessarily be determined by the conduct of the authorities; nevertheless, the company should try to acquire all necessary information with respect to the employee’s involvement in the reported activity. Whether the reporting employee should or could remain with the company is something to be decided after reviewing all available information and depends a great deal on the particulars of each case.
Whistle-blowers may be considered as witnesses in the public interest, which results in complete protection from criminal prosecution with respect to offences such as disclosure of privileged information or filing a false complaint relating to the information the whistle-blower provides to the authorities.
i Corporate liability
A company ‘acts’ through the individuals that have been vested with such power and authority. Typically, these individuals are either the managing director, the CEO or the manager (depending on the company and its infrastructure). Some laws provide specifically for the persons who may be held responsible ex officio for a company’s actions (e.g., under tax law and regulations, and in environmental offences) or the conditions under which a company may be held liable for the actions of its employees (e.g., money-laundering laws and regulations, and corruption practices).
Criminal liability is an exception when referring to a legal entity (a company) because of the fact that under Greek law, only an individual may be liable for a criminal act. However, constant harmonisation with international corporate standards, and the need to adjust internal legislation to align with European and international instruments, has led to provisions for liability of entities in the form of administrative measures and fines, etc.
As regards joint representation by counsel, this is not prohibited, in principle, but it may be incompatible with other provisions in respect of regulations for lawyer’s conduct or handling of privileged information.
Corporate conduct may be punishable in certain cases. In most provisions (e.g., anti-corruption, anti-money laundering, anti-cartel legislation) company conduct is punishable when linked with positive gains or advantages in relation to this conduct. In other words, the company is liable as an entity – notwithstanding individual liability of employees – when there is some type of profit, gain or advantage to the company. Severity of punishment in these cases (in the form of administrative penalties or fines) usually depends on the type of profit or gain, as well as the annual turnover of the company.
The type of sanctions that may be imposed against a business depends on the activity of the company, the industry it belongs to, its size, any prior misconduct, the type and seriousness of the act, etc. Sanctions against businesses are provided for in a variety of laws in respect of negligent or deliberate misconduct and may be roughly classified in the following categories:
- a fines, which are sometimes of fixed amounts (for certain types of misconduct) or calculated in relation to the severity of the act and the size of the company;
- b suspension of the company’s ability to participate in public tenders or request public funding – repeated misconduct may lead to a permanent ban;
- c suspension of the company’s activity for a period of time depending on the severity of the act; and
- d revocation of a company’s licence – usually for repeated offences.
All these sanctions may be imposed by competent authorities (depending on the company’s purpose and industry), including the Revenue Service and the Hellenic Capital Market Commission (for companies in the capital market), the Ministry of Finance and the Ministry of Development.
On some occasions sanctions can be imposed cumulatively (e.g., a fine and suspension of activity or ban from public tenders or public funding). It is also not unusual to have more sanctions imposed as a result of provisions of more laws or regulations, especially in financial or economic offences (e.g., a tax offence may be related or combined with violations of anti-money laundering regulations).
iii Compliance programmes
The existence of a compliance programme is necessary in some industries, in the sense that there are minimum legal requirements in certain types of activities that form a compliance programme. These activities are mainly banking, finance and development through public funding. Apart from the fields or industries where a compliance programme is a necessity (e.g., banks) most upper or high-level businesses have developed compliance programmes to enable them to detect and handle misconduct within the company. Having a compliance programme in force is in principle helpful to a company to prove that the company complies with the minimum requirements of internal control and is also interested in promoting good corporate practice and business ethics. A compliance programme being in force enables a company to respond efficiently to requests by the authorities and show that there is real interest in resolving issues.
iv Prosecution of individuals
The company’s conduct in cases of individual liability very much depends on the type of misconduct (negligent or deliberate), the seriousness of the actions, the position of the individual, etc. It is customary for a company to coordinate with the individual’s counsel when his or her action occurred as a result of his or her position in the company (e.g., administrative proceedings or criminal proceedings against a managing director for an environmental offence). Termination of an employee’s contract is something that the company has to decide after reviewing the whole case and the consequences for the entity. In cases where the employee has acted against the company’s best interests and the actions are the reason the government seeks his or her liability, the company may have no option but to terminate the contract to protect its interests, privileged information, etc. In the end it is a strategic decision for the company to take unless, of course, the particulars of the case are such that there is no option other than to terminate the employee. This is especially the case when the company’s employee is involved in large-scale and serious violations of his or her duties, has deliberately acted against the company’s interests, or engaged in fraudulent activity against the company itself, clients or the public.
i Extraterritorial jurisdiction
The Greek state, as a matter of practice, applies its laws to companies for conduct within the country or for acts that have effects within the country. It is in this respect that the Greek authorities seek to impose the law on companies either registered in Greece or active in the Greek economy (e.g., companies with registered offices in other countries that have agencies or subsidiaries in Greece).
Imposition of civil or administrative sanctions by the government is mostly done through agencies with jurisdiction over the company because it is seated in Greece or has some type of registered presence in the country.
ii International cooperation
Cooperation with other countries’ law enforcement or prosecutorial authorities has become common practice in large-scale investigations. Special law enforcement agencies such as the SDOE have entered into agreements with similar agencies from other countries, which has enabled a more efficient and fast exchange of information. Agreements between agencies usually follow framework agreements or treaties between countries. In the case of Greece, most aspects of international cooperation are treaty-based.
In the past year or two there has been a studied increase in the cooperation of special prosecuting and investigating task forces with the corresponding authorities in other countries (especially in Germany and Switzerland) by adopting more flexible and quick procedures.
There are two sets of rules applicable to this prosecutorial cooperation. One applies to cooperation with Member States of the EU (in these cases all procedures and functions are simplified and faster). In all other cases, provisions for mutual assistance apply (for investigating acts or request for information).
Extradition of a person to another jurisdiction is possible and not uncommon. In typical extradition proceedings, there is a minimum set of requirements the Greek state examines to accept or reject such requests; rejection of extradition requests is not very common. Examination of the extradition requirements is carried out by a court. Any individual whose extradition is requested may object to his or her extradition and is represented by a lawyer. A decision in favour of extraditing the individual is appealable. As a general rule, Greek citizens are not extradited to other countries.
Between EU Member States extradition proceedings are quicker and more simplified because of the provisions of the European arrest warrant (EAW). The requested individual may still raise objections to his or her surrender to the requesting party, but the review is generally speedier and mainly relates to the typical requirements of an EAW issuance. A decision in favour of the surrender is appealable; Greek citizens may be surrendered to other EU countries following an EAW procedure, unless they are being prosecuted in Greece.
iii Local law considerations
When multiple jurisdictions are implicated, an international instrument or treaty is applicable in the first instance. If the relevant jurisdictions are all EU countries, EU law is applied; this is very similar to Greek law on the basic elements of procedure. If a bilateral or international treaty is in force (in relation to other countries) the provisions of the treaty are primarily applied. Treaties usually have specific provisions on how to handle privileged information or private data, but in some cases Greece reserves the right to refuse to forward requested information if it is against Greek law, or may reserve the right to forward it subject to approval from the competent authority (e.g., dealing with private data protection).
In large-scale investigations involving more jurisdictions, all investigations are usually carried out locally in accordance with Greek law and regulations. Exceptions may apply in cases involving national security or relating to Greece’s diplomatic relations, in which case different rules may be applicable (set out in international or bilateral treaties).
V YEAR IN REVIEW
Major cases now in trial were initiated by internal corporate investigations in Greece and abroad. These cases mostly involve acts of fraud or corruption in relation to defence programmes and supply of medical equipment. The findings of the internal investigations were included in reports, which were given to the prosecuting authorities and became the basis of the (initial) criminal investigations.
VI CONCLUSIONS AND OUTLOOK
Corporate entities face many challenges in their effort to comply with legal provisions and regulatory guidelines with regard to transparency and better corporate practices.
It is expected that leniency or immunity procedures in criminal investigations, although not provided for all types of offences, will have a positive effect in exposing acts of corruption and money laundering. It should be noted that most leniency or immunity procedures focus on the individual and not the corporate entity, which does not have criminal liability under Greek law. This difference between individual liability and corporate liability (always in the form of administrative penalties and fines) directly affects an entity’s ‘willingness’ to proceed with self-reporting when detecting internal wrongdoing.
An entity may face severe sanctions if criminal acts (e.g., corruption and money laundering) committed by individuals result in money gain or benefits for the same. While the individuals may be eligible for lesser sentences or even immunity when cooperating with the authorities, if exposing certain criminal acts, the entity is not, in principle, eligible for a lenient treatment or immunity.
A different approach (e.g., leniency and immunity provisions for entities) would encourage entities to report findings of their internal investigations to the authorities and deal more effectively with individuals involved in possible misconduct.
1 Ilias G Anagnostopoulos is managing partner and Jerina (Gerasimoula) Zapanti is a lawyer at Anagnostopoulos.