Sponsorship to a badminton club considered as bribery
In a recent judgment by the Court of Aarhus, an administrative manager in the Municipality of Aarhus and a municipal supplier were given suspended sentences with a community service condition for having accepted and paid bribes. The bribery involved i.a. the award of a sponsorship to a badminton club, having a total value of DKK 210,000. Participation in a golf trip to Sweden, on the other hand, was held to serve a business purpose and, therefore, did not amount to bribery. The judgment shows which specific elements are taken into account by the courts when assessing whether hospitality and supplier-sponsored events constitute bribery. Read our analysis of and comments on the judgment, which is the latest in a series of decisions dealing with bribery of Danish officials.
The case in brief
On 3 July 2020, the Court of Aarhus delivered judgment in an action brought against a former administrative manager in the Municipality of Aarhus, who had been charged with accepting bribes from two municipal suppliers, T1 A/S and T2 A/S.
In the first and fourth counts, the administrative manager was charged with violation of section 144 of the Danish Criminal Code by having accepted or demanded bribes.
On the first count, the manager was charged with causing T1 A/S to pay a sponsorship of DKK 217,500 (changed to DKK 210,000 during the proceedings) to a badminton club in the period from 2010 to 2016, and with accepting - on five occasions from 2012 to 2015 - concert tickets and dinner invitations for himself and his wife as well as festival tickets, including meals, for three consecutive years, representing a total value of not less than DKK 8,400 (our calculation).
On the fourth count, the manager was charged with accepting a bribe from T2 A/S in 2013, consisting of an invitation to a golf trip to Sweden, including meals, having a value of at least DKK 2,200.
The suppliers were charged with violation of section 122 of the Danish Criminal Code by having offered the manager a bribe to induce him to use his influence to ensure that they were given orders and/or offered favourable business terms.
The administrative manager was also charged with violation of section 280(1) of the Danish Criminal Code on fraudulent abuse of powers.
The prosecution service’s claims
The prosecution claimed i.a. that:
- The manager should be sentenced to 6 months’ unconditional imprisonment.
- T1 A/S should be ordered to pay a fine of DKK 1-2 million. The manager of T1 A/S should be sentenced to 4 months’ unconditional imprisonment.
- T2 A/S should be ordered to pay a fine of no less than DKK 25,000. The two managers of T2 A/S should be sentenced to 10-20 days’ suspended imprisonment.
All of the defendants pleaded not guilty.
The Court’s findings
In the first count, the Court was satisfied that the administrative manager had received sponsorships for the badminton club, concert tickets, dinners and festival tickets, and that “the services received, having regard to their nature and extent, were capable of influencing [the administrative manager] in his safeguarding of the Municipal’s interests in relation to [T1 A/S], or at least capable of creating uncertainty among the public as to [the administrative manager’s] proper safeguarding of the Municipal’s interests.
The Court found it irrelevant that the sponsorships were given to the badminton club (and not the administrative manager personally). The reason was that the manger had a particular interest in the club as a result of his long-standing affiliation with the club, i.a. as member of its board. The Court held that the services received by the administrative manager (including the sponsorships) constituted an undue advantage within the meaning of section 144 of the Danish Criminal Code, and therefore found him guilty of accepting bribes.
Further, the Court found T1 A/S and its manager guilty of offering the bribes. For this purpose, the Court found it important i.a. that the economic value of the cooperation between the Municipality and T1 A/S was significant, and that the administrative manager had controlling influence over the contracts concluded between the Municipality and T1 A/S. Further, the Court attached importance to the extent, value and nature of the relevant services, which were rendered over several years. In assessing the fine to be imposed on T1 A/S, which was set at DKK 100,000, the Court noted that the fine level had to be sizeable, adding that the suppliers’ financial situation had not been disclosed during the proceedings.
In the fourth count, the Court was satisfied that the administrative manager had accepted and participated in a golf trip paid by T2 A/S.
In the Court’s opinion, the trip did not amount to bribery, however. In this respect, the Court noted that the trip was a one-time occurrence, and that both the administrative manager and the two managers in T2 A/S had explained that “the trip was an opportunity for them to discuss and exchange experience in relation to a digital platform to be made available to the Municipality by T2 A/S in return for input from users
”. The Court also held it as established that there was nothing “extravagant” about the trip, and that it took place in Sweden for practical reasons, since an administrative manager from the Municipality of Bornholm also participated. Finally, the Court noted that it could not be ruled out that the trip served a relevant business purpose. Both the administrative manager and T2 A/S were therefore acquitted of the count.
The fact that the administrative manager’s participation in the golf trip could conflict with administrative provisions on acceptance of gifts did not change the Court’s finding.
The judgment deals with a specific case, which had been investigated for several years. It shows that the Danish Criminal Code provisions on bribery can also be extended to sponsorships to a sports club, notwithstanding that the Danish rules on bribery, based on their wording, apply only to persons who perform a “public function or office with a Danish, foreign or international organisation
In this specific case, the Court found it important that the administrative manager had a special affiliation to the badminton club. However, other types of affiliation may also be relevant and should therefore be taken into account when assessing similar cases.
The judgment also shows which elements are deemed relevant by the courts in setting the limits for supplier-sponsored events, hospitality and entertainment for business purposes.
In this case, the administrative manager was acquitted of accepting a bribe in connection with a golf trip to Sweden. As explained, the Court put forward a number of arguments which will probably be given different weight in different situations. We consider the business purpose to be an important criterion. Also, the fact that the event served a specific purpose will be a relevant parameter when assessing similar situations. Finally, the estimated value of the event for the participant is obviously important.
In line with recent case law on bribery of Danish officials, the judgment shows that both the official and the business operator will be punished by imprisonment. The most severe sentence will be imposed on the official, however.
We believe that the fine of DKK 100,000 which was imposed on T1 A/S served a specific purpose. It is noteworthy, however, since the fine claimed by the prosecution was in the range of DKK 1-2 million. It shows that the prosecution and the courts may disagree as to which financial consequences an offence should have for the relevant business.
Simpler rules and guidelines on corporate criminal liability are among Kromann Reumert’s priorities, representing an area in which we provide advice on daily basis.
Read the Court’s own summary of the judgment