In its 2012 annual report, published in July 2013, the French anti-corruption agency, the Service Central de Prévention de la Corruption (Central Office for the Prevention of Corruption, or "SCPC"), issued several significant recommendations following a thorough analysis of the risks faced by companies in relation to corruption issues. In particular, SCPC called for the enactment under French law of an obligation for companies to implement an anti-corruption program, which would be similar to the requirement imposed on businesses under the 2010 UK Bribery Act.
What is SCPC?
SCPC is an inter-ministerial agency, which is part of the French government and which was formally attached to the French Ministry of Justice. This agency was created by the Law no. 93- 122 of 29 January 1993 on the prevention of corruption and the transparency of business and public procedures. SCPC's main role is to collect, and use for prevention purposes, information regarding corruption-related offences. In this respect, SCPC publishes an annual report providing detailed statistics on condemnations for these offences. This annual report often contains proposals for legislative reforms made to the Government in order to improve the means available to prevent fraud and fight against corruption in France.
In addition, requests for opinions may also be submitted to SCPC by administrative and judicial authorities, in response to which SCPC drafts technical notes. Furthermore, SCPC plays a significant role in training various audiences (police, judges and public prosecutors, business organisations) in relation to corruption prevention. In this respect, SCPC cooperates with businesses and assists them with the setting up of anti-corruption compliance programs and whistleblowing systems.
Finally, SCPC has a rising role on the international scene as the representative institution of France on corruption issues. SCPC participates in numerous working groups dedicated to the prevention and fight against corruption (notably the Group of States against corruption under the aegis of the Council of Europe, also known as GRECO; United Nations Office against Drugs and Crime; OECD; G20; World Bank…).
That being said, SCPC has no investigation or enforcement power. In particular, SCPC cannot take any sanction against any entity or individual. Yet, should SCPC's agents become aware of the perpetration of an offence, they should provide this information to the Public Prosecutor pursuant to Article 40, paragraph 2, of the French Code of Criminal Procedure.
Situation of corruption in France
SCPC reports that in 2012, 193 new corruption cases were investigated by French Public Prosecutors, among which only 29.5% led to prosecution. The main reasons why less than a third of these cases were prosecuted are that either the investigation concluded that no offence had been committed or there was not sufficient evidence of the perpetration of the offences.
Concerning final sentences (i.e. against which no appeal is possible), the 2012 report notes a significant rise in the number of condemnations for corruption-related offences (159 in 2011, against 115 in 2010 and 120 in 2009).
This being said, SCPC explains that no final sentence was entered into in 2011 with respect to the corruption of foreign officers. Only on one occasion was a corporation held criminally liable for such offence: in 2012, a major French group was sentenced to pay a fine of 500,000 Euros for corruption of foreign officers. This first-instance decision, which was widely publicised, is nevertheless the subject of an appeal. The lack of final condemnations (especially against corporations), when compared with the role of France in international trade, was strongly criticized by OECD when performing its Phase 3 assessment of corruption in France in the scope of the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Furthermore, if the maximum sanctions incurred for the perpetrator of corruption acts may appear to be high in theory (for example, 10 years of prison and a 150,000 Euros fine for individuals giving a bribe and a 750,000 Euros fine for legal entities), in practice the average amount of fines remains low (850 Euros for active corruption in 2011) and prison sentences are rarely ordered. SCPC underlines that the fine incurred in reality is often much lower than the profit that the perpetrator may hope to earn through corruption.
Hence, SCPC considers that the sanctions of corruption in France are not dissuasive enough and lack effectiveness in practice. SCPC thus recommends increasing the sanctions incurred for corruption-related offences.
SCPC's assessment of risks incurred by businesses in relation to corruption issues
SCPC has studied the anti-corruption systems put in place by the 40 most important companies listed on the Paris Stock Exchange ("CAC 40 companies"). This analysis is based on public documentation, as well as information voluntarily communicated by these firms in response to questions asked by SCPC. SCPC states that the fact that a significant number of these companies have already implemented such a program is encouraging, even though smaller companies may not have done so yet. In any case, SCPC's view is that there is room for improvement even for CAC 40 companies, as SCPC characterises the compliance systems implemented by some of them as insufficient.
Furthermore, SCPC acknowledges that for French businesses, complying with the various international and national anti-corruption legislations and guidelines that may apply to or affect them could be a challenge. In this respect, in its 2012 report, SCPC dedicates specific attention to presenting the Foreign Corrupt Practices Acts (the "FCPA", which was enacted in 1977 in the US) and the 2010 UK Bribery Act (in force since July 2011 in the UK). SCPC underlines the extra-territorial dimension of both these legislations and the significance of the sanctions provided for in those texts. SCPC also highlights that under the 2010 UK Bribery Act, a corporation may be held criminally liable for not having implemented an adequate anti-corruption compliance program, whereas under the FCPA, such a program may lead to a reduction of the amount of the fine sanctioning corruption acts. SCPC also briefly refers to the law enacted in Italy on 30 November 2012, which notably increased the sanctions incurred for acts of corruption.
SCPC thus seeks to underline the various risks and costs that corruption issues may represent for French businesses: not only the criminal sanctions incurred by companies and their managers for committing bribery and corruption, but also all costs associated with investigations and proceedings in relation to these facts, damage to the image etc.
SCPC recommends the mandatory implementation and voluntary certification of anticorruption programs
In this context, SCPC urges French businesses to implement anti-corruption compliance programs to limit their exposure to corruption risks. According to SCPC, compliance procedures should be based on the requirements of the strictest anti-corruption legislations, i.e. FCPA, 2010 UK Bribery Act and French law. The main points that should be addressed in such programs concern in particular the anti-corruption directives given by the firm's top management, the implementation of anti-corruption training for employees and disciplinary sanctions against those breaching the company's anti-corruption directives, the protection of whistleblowers, or the organisation of the compliance function within the company…
Furthermore, one ground-breaking proposal by SCPC is to make the implementation of anticorruption compliance programs mandatory, via the enactment in France of a legislation inspired by the 2010 UK Bribery Act: "France could adopt a legislation that would be immediately and extra-territorially applicable based on the model of the above mentioned English and US laws, which would introduce into French law a compliance obligation for companies […]". As a result, French companies could be compelled to take all necessary measures available to prevent corruption, the lack of which would then trigger criminal sanctions. SCPC considers that such legislation would be helpful and even protective for French companies, because it would precisely set out the rules they have to comply with in an international context where several legislations and recommendations may concurrently apply.
SCPC highlights that the same new legislation could attribute an additional mission to SCPC: advising companies with respect to the prevention of corruption. Indeed, SCPC would like the Law of 1993 to be amended so that it explicitly allows companies and individual citizens to refer questions to SCPC, which is not yet possible. It stems clearly from its 2012 report which notes SCPC's wishes to assist businesses with the implementation of preventive systems against corruption.
In this respect, SCPC offers to prepare and publish general guidelines and good practices to help companies implementing efficient anti-corruption compliance programs. SCPC notes that the creation of such documentation would require coordination with business organisations and would also rely on existing international guidelines (such as OECD's Good Practice Guidance on Internal Controls, Ethics and Compliance).
In addition, SCPC advises French businesses to have their anti-corruption systems certified by appropriate organisations. This certification process, led by an independent third party, would aim at giving a written confirmation to businesses that their compliance system is adequate and efficient, and fulfils legal requirements resulting from international conventions and recommendations as well as national legislations.
SCPC acknowledges that the certification is only helpful if the certificating entity is reliable and competent, and that in this respect, standards such as the BS 10500 (created by the British Standard Institution) are a useful tool for both companies and entities certifying compliance programs. In order to encourage the development of certification of anti-corruption programs, SCPC proposes limiting to approved entities the right to issue valid anti-corruption certificates. In France, this type of approval is given by COFRAC (French Committee of Accreditation) and is currently not mandatory with respect to the certification of anti-corruption programs.
SCPC also recommends amending the French blocking statute
SCPC explains that a significant and growing number of French companies are involved in foreign judicial or administrative proceedings, during the course of which they are obliged to cooperate with foreign authorities and directly provide them with confidential documents regarding their internal structure and business model.
In such circumstances, the French blocking statute (resulting from French Law no. 68-678 of 26 July 1968, relating to the communication of economic, commercial, industrial, financial or technical documents and information to foreign individuals or legal entities, as modified by French Law no. 80-538 dated 16 July 1980) is rarely invoked by French companies, even though this text prohibits, subject to criminal sanctions, the communication of information or documents in the scope of foreign proceedings, if performed outside the provisions of The Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters. SCPC believes that French companies may notably fear sanctions from foreign authorities if they do not disclose the requested information and that non-cooperation with these authorities might damage their business reputation.
SCPC reports that in 2011, an innovative procedure was put in place between French and US authorities, with SCPC serving as an intermediary to ensure that documents requested by the US authorities were really useful for the purpose of the US proceedings and did not affect the interests protected by the French blocking statute. SCPC checked with the French ministries concerned on what restrictions to apply to the disclosure of information. SCPC thus advocates in favour of an amendment of the French blocking statute so that SCPC can systematically play such an intermediary role between US authorities (such as the Department of Justice and the Security Exchange Commission) and the French companies in all corruption cases.
SCPC's 2012 report deserves attention at a time when corruption, especially committed in the course of business, is a growing concern for both the French government and the media, and when every week sees a new corruption case (real or imagined) arise. In particular, SCPC's 2012 report echoes some of the recommendations and criticisms put forward by OECD during its recent review of the situation of corruption in France at the end of 2012. In such a context, SCPC's recommendations, or at least some of them, could be perceived by the French legislator as possible solutions worth trying.
In any case, many companies could usefully examine the preliminary indications given by SCPC regarding what constitutes anti-corruption good practices: when presenting its study about CAC 40 companies, SCPC gives concrete and specific examples of anti-corruption practices implemented by those companies. Given its statutory goals, cooperating with SCPC should be a possible path for businesses to follow. Indeed, SCPC appears to be more willing to inform, assist and protect French companies regarding the anti-corruption international environment in which they are operating, rather than merely collect information that could then be used against businesses. Yet, the latter option always remains a possibility, and businesses should be aware that the risk of self-incrimination can never be excluded completely.