COMMITTEES OF INQUIRY – THE STRONG BUT SHORT ARM OF PARLIAMENTS
Lawmakers as investigators? What appears to be a caricature of the separation of powers principle is in fact commonplace when it comes to major public scandals in business. Corporates have to deal not only with domestic and foreign prosecution offices, regulatory and supervisory authorities and civil claimants. On top of all that, they also have to directly deal with parliaments. Since last October, a committee of inquiry of Germany’s Bundestag has been holding hearings into the Wirecard scandal. Before that, German MPs had focused on cum/ex transactions and the emissions scandal.
Criminal, regulatory and civil proceedings at home and abroad typically begin in parallel with such committee hearings, but they can also be instigated and fuelled by the media dimension of parliamentary fact-finding. The brief imprisonment of the head of a German trade union company to compel his testimony before a committee of inquiry and the resignation of a renowned chief executive of Wells Fargo following his testimony hearing before the US Senate Banking Committee have not been forgotten. Most recently, EY auditors have become the target of the German Wirecard committee.
In many places, a parliament’s right to investigate on a case-by-case basis is a core element of democracy and the rule of law. In Germany, it is granted by constitutional law and exercised by committees, which may be established by both the German Bundestag and the sixteen state parliaments. Their work is a specific instrument of parliamentary control.
Jul-Sep 2021 issue
Hengeler Mueller