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Trends and climate
Trends Have there been any recent changes in the enforcement of anti-corruption regulations? In terms of fighting corruption, France is generally considered to be lagging behind the trend. In 2012 the Organisation for Economic Cooperation and Development raised serious concerns regarding the lack of bribery convictions in France and stated that France should intensify its efforts to combat corruption.
Concerning recent transnational cases prosecuted in France, in September 2012 the Paris Criminal District Court fined Safran €500,000 for paying bribes to Nigerian officials to secure a contract to produce national ID cards. However, the ruling was overturned by the Paris Court of Appeal on January 2015 as an "insufficiently grounded" offence.
In July 2013 the Paris Criminal District Court acquitted Total for alleged corruption of foreign public officials in the United Nations’ oil for food programme in Iraq. After the French public prosecutor appealed the ruling, the Paris Court of Appeal overturned the previous ruling and ordered Total to pay €750,000 in February 2016.
Legislative activity Are there plans for any changes to the law in this area? Yes, the legal framework is about to change radically. France is examining new draft legislation on the fight against corruption, the so-called ‘Loi Sapin II’. After discussions before Parliament, the draft law was adopted by the Senate on July 8 2016 and will be examined by the French Senate in Autumn 2016.
Authorities Which authorities are responsible for investigating bribery and corruption in your jurisdiction? The public prosecutor – who is generally responsible for investigating criminal offences – as well as the Central Service for the Prevention of Corruption (SCPC) (which is attached to the Ministry of Justice) which was created on January 29 2013. This administrative body has four missions:
- centralisation and exploitation of information in relation to the detection and prevention of corruption (eg, the publication of annual activity reports);
- provision of guidance to the administration and judicial authorities (in which respect the SCPC can be asked for opinions in relation to corruption cases);
- implementation of awareness-raising measures about anti-corruption, including participation in working groups with trade organisations or assistance to the development of deontological codes; and
- international cooperation, which implies participation in several international forums and international working groups.
In 2014 the SCPC urged the legislature to tighten applicable regulations concerning the fight against corruption and suggested a French Bribery Act inspired by the UK Bribery Act.
The new draft legislation (Loi Sapin II) is a direct response to the SCPC’s appeal.
The new draft legislation foresees the creation of a national anti-corruption agency that will replace the SCPC. The agency would be in charge of sorting out the reports made by whistleblowers and carrying out related appropriate investigations. This would be a substantial change in the anti-corruption regulatory landscape, as the SCPC has had no investigation powers. It would also be responsible for monitoring the implementation of specific compliance programmes – which is also a new obligation under the draft legislation. In the initial version of the draft law, it was expected that the national anti-corruption agency would be invested with penalising powers. However, in the latest draft, the senate has removed this provision so that such powers will be dealt with by the courts.
Domestic law What are the key legislative and regulatory provisions relating to bribery and corruption in your jurisdiction? The Criminal Code distinguishes between active and passive corruption:
- Articles 433-1 and following of the Criminal Code criminalise active corruption when a person, either directly or indirectly, unlawfully induces or attempts to induce a public official to accept a bribe by proffering an offer, promise, donation, gift or reward.
- Articles 432-11 and following punish passive corruption, which is characterised as when a public official, either directly or indirectly, solicits a bribe by requesting or accepting without right any offer, promise, donation, gift and advantage by another person.
- Articles 445-1 and following provide for the same rule in the private sector for commercial bribery.
One fundamental point is that the penalties concerning corruption are assorted under the law with ancillary provisions, which contain in particular the debarment of up to five years from public tenders. Economically speaking, this debarment risk is much more mitigated for a business than the penalties.
International conventions What international anti-corruption conventions apply in your jurisdiction? France is a signatory of the Organisation for Economic Cooperation and Development Anti-bribery Convention 1997 and the United Nations Convention Against Corruption 2005. France is also a party to the Council of Europe Criminal Law Convention on Corruption and the Council of Europe Civil Law Convention on Corruption, both ratified in 2008. In 1949 France became a founding member of the Council of Europe Group of States Against Corruption.
Specific offences and restrictions
Offences What are the key corruption and bribery offences in your jurisdiction? Criminal Law punishes active and passive corruption of foreign and domestic public officials, as well as private commercial corruption. The offence is defined as unlawfully proffering, directly or indirectly, any offer, promise, donation, gift or reward to induce a public official to either carry out or refrain from carrying out any action linked with his or her functions or duties (Article 433-1 of the Criminal Code).
It is also an offence for the public official to directly or indirectly solicit or accept such offers, promises, donations, gifts or rewards (Article 432-11).
The offence is also defined in the private and commercial sector as the act of directly or indirectly making offers, promises, gifts, presents or other advantages to a person who is not a public official but holds or occupies a management position or any occupation for a private person, whether natural or legal, or for any other body, in order to obtain the performance or non-performance of an action in relation with his or her occupation or position.
Hospitality restrictions Are specific restrictions in place regarding the provision of hospitality (eg, gifts, travel expenses, meals and entertainment)? If so, what are the details? The Criminal Code does not provide specific rules on the provision of hospitality, but rather prohibits any kind of offer, promise, gift, present or other advantage that would serve as a bribe.
However, there are specific rules for certain industries (eg, the pharmaceutical industry). Article L4113-6 of the Public Health Code prohibits companies which manufacture or market medicinal products from offering any benefits, either directly or indirectly, in cash or in kind, to healthcare professionals, medical practitioners, students or associations representing them.
However, the guidelines of the Pharmaceutical Companies Association specify that pharmaceutical companies can offer small benefits for an amount lower than €30 per year and per healthcare practitioner for the purposes of marketing their products.
Facilitation payments What are the rules relating to facilitation payments? There are no specific rules in relation to facilitation payments. Contrary to the US Foreign Corrupt Practices Act, there is no derogation regarding facilitation payments in France, and they are therefore prohibited.
Scope of liability Can both individuals and companies be held liable under anti-corruption rules in your jurisdiction? Yes, the Criminal Code allows both individuals and companies to be convicted of corruption.
In respect of companies, Article 121-2 of the code specifically provides that corporate entities can be held liable for offences committed on their behalf by their organisation or representatives.
The corporate criminal liability does not exclude the possibility of prosecuting an individual for the same offence. Therefore, a managing director can be held liable for acts committed within his or her company.
Can agents or facilitating parties be held liable for bribery offences and if so, under what circumstances? Article 121-6 and Article 121-7 of the Criminal Code provide that an accomplice of the offence is as punishable as the perpetrator, with the same penalties.
Pursuant to Article 121-6, an ‘accomplice’ is defined as the person who knowingly, by aiding and abetting, facilitates the offence’s preparation or commission and also as any person who, by means of a gift, promise, threat, order or abuse of authority or powers, provokes the commission of a criminal act or gives instructions to commit it.
Foreign companies Can foreign companies be prosecuted for corruption in your jurisdiction? Pursuant to Article 113-2 of the Criminal Code, a criminal offence is considered to be committed on French territory when one of its constituting elements took place in France. Therefore, in theory, any company, regardless of its nationality, can be prosecuted in France if the act of corruption took place in France.
However, in practice, France is often criticised for being lax regarding fighting transnational corruption cases and foreign companies are rarely prosecuted by the French public prosecutor. In the past 15 years, there has been only one example of a conviction by the Paris Court of Appeal (Total, February 2016).
Whistleblowing and self-reporting
Whistleblowing Are whistleblowers protected in your jurisdiction? First, applicable regulation does not impose any obligation (on companies) to have a whistleblowing system in place. However, companies can implement such a system if they wish.
The implementation of a whistleblowing process in French companies is subject to:
- prior consultation of the work council of the company (if applicable);
- prior notification of the employees on an individual basis; and
- notification to the Data Protection Authority.
Notification to the Data Protection Authority can take the form of a standard notification or simplified notification – which is easy and fast to obtain, provided that the system is subject to specific conditions, such as restrictions on the handling of anonymous reports or limitations on the scope of the whistleblowing system, which should be limited to:
- finance, accounting and banking (for financial institutions);
- the fight against corruption, antitrust law, discrimination and work harassment;
- compliance with health, hygiene and safety in the workplace; and
- protection of the environment.
Second, the existing legal framework does not contemplate a legal status for whistleblowers. However, an employee who uses the whistleblowing system in good faith is offered protection under Article L1132-3-3 of the Labour Code and cannot be terminated or disciplined for providing information about a criminal offence. The employee cannot be punished even if the reported information turns out to be false.
In general, any retaliation against an employee based on his or her reporting will be considered as not having real and serious grounds and will result in the employee claiming damages from the company.
Both the absence of whistleblower status and French cultural specificities can be seen as major obstacles that have caused ethical hotlines to be disregarded by French employees. This is about to change with the draft legislation on corruption (Loi Sapin II) which intends to create a clear legal status for whistleblowers. They would also be eligible for free legal assistance under the foreseen status.
Self-reporting Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed? Because of cultural differences with the common law system in the United Kingdom, the French legal system is not keen on encouraging self-reporting. It is therefore unusual for companies to voluntarily report an offence to the French public prosecutors or regulatory authorities.
The only field where French law has allowed leniency programmes is in antitrust matters. Like in the United States, companies in France can report cartel activity to the French authorities in order to avoid or reduce penalties. Under the French system, the company which is the first to report cartel activity that the authority is not already aware of can benefit from total immunity. Other companies which wish to report illegal activity and cooperate with the French authorities can be offered a fine reduction.
In relation to corruption, there is no such leniency programme in the existing legal framework, nor is one contemplated. This topic has not been part of the discussion for the new legislation on corruption.
Dispute resolution and risk management
Pre-court settlements Is it possible for anti-corruption cases to be settled before trial by means of plea bargaining or settlement agreements? In the existing legal framework, there is no possibility of off-setting agreements in corruption cases. Article 495-7 and following, the Law of March 9 2004 (Loi Perben II) introduced a mechanism based on the US plea bargaining system. According to the French plea bargaining system, a defendant can admit his or her guilt in exchange for a lesser penalty to be registered on his or her criminal record. However, in France this procedure tends to be used for minor offences (eg, traffic offences).
The new draft legislation is due to completely change the landscape: it contemplates the possibility of off-setting agreements in case of prosecution for corruption. According to the draft legislation, French companies which would be convicted for corruption can negotiate with the public prosecutor in order to pay an agreed fine instead of being criminally pursued. This represents a legal revolution in France, as it opens the way to negotiating fines with the public prosecutor, similar to the United States and United Kingdom.
Inspired by the common law model, the introduction of this off setting agreement would break the French secular tradition with, on the one hand, the interests of the defendant, and on the other hand, judicial investigation.
Defences Are any types of payment procedure exempt from liability under the corruption regulations in your jurisdiction? No, there is no type of payment procedure exemption under French law.
What other defences are available and who can qualify? There are no general defences in French regulations on corruption. However, the defendant can challenge the material element of the offence and the intent of committing the offence. Article 121-3 of the Criminal Code requires the intent of the defendant as a legal basis for the conviction.
Another defence that can be used by companies is that the bribe was not made by an organisation or representative of the company, since such condition is required by the law.
Contrary to the UK Bribery Act, there is no such defence for companies as that based on the implementation of an adequate compliance programme. However, the French draft legislation foresees the possibility of imposing an obligation on companies to implement a compliance programme. That being said, the draft legislation targets only companies with at least 500 employees and a yearly turnover above €1 million. It is unclear whether these criteria will be alternative or cumulative. It is also unclear whether the draft legislation will contain guidelines similar to those set out by the UK Bribery Act.
Risk management What compliance procedures and policies can a company put in place to assist in the creation of safe harbours? Generally, it is recommended that companies be attentive to:
- any potential red flag (eg, requests for commissions to be paid in a third-party country in cash or untraceable funds, the desire to keep third-party representation secret and heavy reliance on political or governments contacts); and
- the process for record keeping and accounting – particularly any vague, non-specific description for payments made in entries, documents concealing the true identity of a representative or an agent, unrecorded accounts or transactions and travel and expense forms with incomplete information that are used to obtain cash for improper payments.
As part of preventive steps, companies should emphasise training and education, as well as regular dialogue and a consistent message.
Periodic audits and due diligence in acquisitions and distributions are essential. So is the development of third-party safeguards and procedures (eg, appropriate contractual arrangements with third parties on anti-corruption clauses, as well as auditing and monitoring procedures). It is also recommended to develop clear internal policies on gifts, charitable donations and corporate hospitality, as well as to implement whistleblower hotlines and investigate any suspicious activity.
Companies should also keep in mind that due diligence and investigation should be carried out in accordance with the Data Protection Law while processing employees’ personal data.
Finally, the new draft legislation will considerably improve risk management by imposing a compliance programme on all medium to large-sized companies that might include guidelines similar to those set forth by the UK Bribery Act.
Record keeping and reporting
Record keeping and accounting What legislation governs the requirements for record keeping and accounting in your jurisdiction? The rules for record keeping and accounting are set forth by the Commercial Code (Article L123-12 and following).
What are the requirements for record keeping? Article L123-12 of the Commercial Code provides that companies should keep accounting records of all transactions. Transactions will be recorded chronologically. They must carry out an inventory on an annual basis of all company assets and liabilities.
Companies must also draw up annual accounts at the close of the financial year on the basis of the record and the inventory. These annual accounts include:
- the balance sheet, which reflects the patrimonial situation of the company;
- the expenditure account, which shows the income and expenses of the financial year; and
- an annex which includes comments on the information provided by the balance sheet and expenditure account.
These three documents form an indissoluble whole, which is generally referred to as the company’s accounting information (Article R123-183 and following of the Commercial Code).
Companies should retain all accounting records and supporting documentation (ie, invoices and contracts) for a 10-year period (Article L123-22).
The annual financial statements must be submitted to, and approved by, the shareholders and filed at the Registry of the Commercial Court to be made available to the public.
Improper accounting records cannot be used as evidence in case of litigation (Article L123-23).
In addition, managers who have not properly drawn up an inventory, annual accounts and management report at the end of each financial year can be fined €9,000.
Finally, in cases where annual accounts do not provide an accurate image of the company, managers can be fined up to €375,000 and imprisoned for up to five years.
Reporting What are the requirements for companies regarding disclosure of potential violations of anti-corruption regulations? Because of cultural differences with the common law system, the French legal system is not keen on encouraging self-reporting. It is therefore unusual for companies to voluntarily report an offence to the French public prosecutors or regulatory authorities.
The only field where French law has allowed leniency programmes is in antitrust matters. Similar to the United States, companies in France can report cartel activity to the French authorities in order to avoid or reduce penalties. Under the French system, the company which is the first to report cartel activity that the authority is not already aware of can benefit from total immunity. Other companies which wish to report illegal activity and cooperate with the French authorities can be offered a fine reduction.
In relation to corruption, there is no such leniency programme in the current legal framework, nor is one contemplated. This topic has not been part of the discussion for the new legislation on corruption.
Individuals What penalties are available to the courts for violations of corruption laws by individuals? For individuals, the principal penalties for corruption offences are imprisonment of up to 10 years and a fine of up to €1 million or twice the profits drawn from the offence. There is no clear guidance as to how to assess such a profit (Article 433-1 and 432-11 of the Criminal Code).
The other penalties that can be imposed on individuals are:
- loss of civic, civil and family rights;
- disqualification from holding public office or any professional or social activity related to the offence; and
- prohibition against undertaking industrial or commercial activity, including management functions and confiscation of the profits resulting from the corruption (Article 433-22 of the Criminal Code).
Companies or organisations What penalties are available to the courts for violations of corruption laws by companies or organisations? Concerning companies or organisations, the principal penalty is a fine of up to €5 million for corruption (Articles 433-1, 432-11, 433-25 and 131-38 of the Criminal Code).
Other penalties that can be imposed on companies include:
- temporary or definitive prohibition against undertaking an activity related to the infringement;
- judicial supervision;
- debarment from public tenders; and
- confiscation of profits related to the offence (Article 433-25 and 131-39 of the Criminal Code).