In recent years, many international and non-profit organizations, such as the OECD, have reported the inadequacy of the current enforcement of anti-bribery laws in France and encouraged the country to pursue its efforts to sanction corruption practices.
Under the international pressure, the French Ministry of Economics and Finance recently announced that it will soon present the so-called “Loi Sapin II pour la transparence de la vie économique” bill (“Sapin II” ) that would significantly strengthen and improve upon the current French anti-bribery system.
Sapin II has not been published yet and will be presented to the French Government on the 23rd of March 2016, before it can be examined by the French Parliament. However, the French government has already disclosed the principal innovations that the Sapin II Bill proposes. The changes suggested are broadly inspired by the systems already in place in the UK and US.
In a nutshell, this bill would impose a legal obligation on large companies to prevent bribery, introduce a new criminal penalty of “mandatory compliance” in case of conviction on grounds of bribery and the possibility of entering into criminal settlements with the authorities.
The adoption of Sapin II could mean significant changes into French anti-bribery laws and wouldsupport the enforcement of the current French anti-corruption legislation based on the following measures :
The introduction of a binding obligation to prevent corruption
Under the current system in France, legal entities have no obligation to implement compliance or anti-corruption programs and the failure to prevent bribery is not sanctioned in itself.
Under Sapin II, all companies with 500 employees or more, and all groups with 500 employees or more, recording a turnover of a minimum of 100 million euros (“bound entities”), would be obligated to implement effective internal procedures to prevent and identify any act of corruption committed in France or abroad by one of their employees.
This obligation to prevent bribery would imply in particular the implementation of :
- a compliance program including anti-corruption rules and procedures;
- an internal whistleblowing process;
- a risk-based approach to contractual relationships based on the geographical scope of the contract and the business sector;
- internal audit and control procedures on contracting parties (intermediaries, commercial agents, partners, suppliers etc.);
- internal or external accounting control procedures; and
- training programs for employees and staff as well as disciplinary sanctions.
Compliance with this new obligation to prevent corruption will be regularly controlled by a new authority called Agence Nationale de Prévention et de Détection de la Corruption (" ANPDC ").
The creation of the Agence Nationale de Prévention et de Détection de la Corruption
Sapin II intends to replace the current Service Central de Prévention de la Corruption (SCPC). Its purpose is to publish guidance on good anti-corruption practices, by creating the new ANPDC, which will be granted with concrete investigation and sanction prerogatives.
Under the new bill, the new ANPDC would have the power to:
- Publish specific guidelines for companies regarding the implementation of anti-corruption procedures. The SCPC already does this, but its guidelines are not legally binding. The ANPDC would control the effective compliance of its guidelines and would have the power to sanction any entity whose anti-corruption procedures are not deemed to be effective enough;
- Conduct extended investigations : the ANPDC would have the power to call on any person, request the communication of any document or conduct onsite searches in order to verify that bound entities comply with their obligation to prevent corruption;
- Impose administrative sanctions : the Sanctions Committee of the ANPDC would have the power to impose administrative fines up to 200,000 euros on individuals, and 1 million euros on legal entities whose internal procedures are deemed as being insufficient in preventing corruption practices;
- Protect whistle-blowers: the ANPDC would be in charge of gathering and analysing the information disclosed by whistle-blowers and would have the power to initiate legal action against the defaulting entity in order to protect the identity of the whistle-blowers.
The creation of an additional criminal penalty of “mandatory compliance” in case of criminal conviction on grounds of corruption
Under Sapin II, any legal entity convicted by a French criminal court on the grounds of corruption could be subject to an additional criminal penalty of “mandatory compliance”, inspired by the US system.
This new penalty aims to impose an obligation for the convicted entity to implement, at its own expense, and within a maximum of three years, effective anti-corruption procedures, in line with the guidelines published by the ANPDC. Fulfilment of this obligation would be monitored by the ANPDC.
The failure to comply with this obligation would itself be criminally sanctioned by a two year custodial sentence and a 400,000 euro fine for individuals or a 2 million euro fine for defaulting legal entities.
The possibility for prosecuted entities to enter into a criminal settlement with the authorities
Under the current system in France, there is no such possibility to enter into a “Deferred Prosecution Agreement” (“DPA”) with the prosecuting authorities as is the case in the US and UK systems.
To date, French law only provides for a specific guilty plea agreement procedure (“Comparution sur reconnaissance préalable de culpabilité” (“CRPC”)). However, contrary to the US and UK DPAs in which the charges are dropped in exchange for fulfilment of several obligations, including the payment of a fine and compliance commitments, the current CRPC still imposes a final conviction, although the amount of the fine can be reduced.
This distinction can have a critical impact on legal entities as any legal entity finally convicted in France on grounds of bribery (further to a CRPC or not) is subject to a five year prohibition on submitting public tenders and participating in public procurement procedures.
One of the major innovations of Sapin II seems to be the introduction into French law of the possibility for certain legal entities prosecuted in France on grounds of corruption, to enter into a criminal settlement (“Convention de compensation d’intérêt public”) with the French authorities, similar to the DPAs which exist in the US and the UK.
Under Sapin II, criminal charges could be dropped by the prosecution in exchange of the payment by prosecuted entities of a fine capped at 30% of their average turnover over the past three years (which may seem extremely high), and compliance commitments, monitored by the ANPDC. Once an agreement is reached with the prosecuting authorities, the settlement would have to be ratified by a judge.
To date, the future of this bill is still uncertain as the French government will need to obtain the approval of the French Parliament in order to pass this bill.
Besides, it is worth noting that two previous bills of law on “the vigilance duty of holding and instructing companies” had previously been presented before the French Parliament in 2013 and more recently in November 2015, which were intended to create an extended duty of vigilance binding on holding and/or instructing companies to prevent their affiliates to commit offences such as bribery. Both bills have so far been rejected by the Parliament.
After careful review of all the above fact it is clear to see that the content and prospect of Sapin II is still rather uncertain, but it would be fair to say that major change in French anti-corruption legislation is on the horizon.