The risk of being faced with charges of criminal activity under
French law, and especially business criminal law, has become an
increased and particularly serious possibility for companies, their
senior managers, and their employees. Such risk presents a
potential challenge for both companies and individuals and can
affect their proprietary interests and lead to imprisonment for
individuals. The impact of criminal charges can also prove
particularly detrimental to the operation and reputation of a
company.
The increasing criminalization of society in general and of the
corporate world in particular contributes to accentuating this risk
of criminal charges. Understanding and anticipating such risk has,
therefore, become a necessity for any French company.
An Increasing Criminalization
The consequences of criminal proceedings, which can involve police
custody, an indictment, a search of premises, or even a public
hearing, are already particularly traumatic for any company.
Furthermore, a conviction can lead to prison sentences for the
senior managers and/or employees of the firm, the inability to do
business or bid on public contracts, and fines the amounts of which
are quintupled for companies. Criminal damages can be considerable,
so it is vital that any company assess its risk in advance.
Legislative developments regarding the criminal liability of
companies are trending toward harsher consequences for criminal
activities. The same applies for French case law, which has shown
broader judicial interpretation of the applicable laws and
regulations. With regard to harassment, for example, the
legislature has significantly increased the penalties relating to
this offense; penalties have doubled since the passage of French
law n°2012-954 on August 6, 2012. 1 Further, the
criminal court has extended the scope of its authority by holding
that the mere "possibility" of a victim's poor
working conditions was sufficient to prove the offense.
2 Proof of a victim's poor working conditions,
therefore, does not need to be demonstrated, as article 222-33-2 of
the French Criminal Code seemed to indicate.
This expansion of the regulations and their judicial
interpretation tends to create uncertainty as to the scope of the
criminal risk. However, the shift toward unpredictability is in
blatant contradiction of the fundamental legal principle of
well-defined consequences for offenses and a strict interpretation
of French criminal law.
Prevention, therefore, proves essential and even becomes an
obligation for any French company, given that judges are
increasingly holding management responsible for not taking steps to
avoid the criminal risk.
A Necessary Anticipation
The implementation of internal risk management procedures is an
efficient means to stop the commission of offenses and the
subsequent criminal charges. The purpose here is to identify and
then process the criminal risk.
Identifying and Prioritizing the Risks. Senior
managers must, depending on the business sector of the company, ask
themselves the right questions: Is the training of the most
exposed operational members efficient? Are they trained on
crisis management? Are the associates sufficiently protected
against psychosocial risks? Is it unadvised, and thus even by way
of an act that is not normative, to use such or such material? Does
a corruption risk exist in the business exchanges, or even in the
contractual relationships established? In numerous matters, an
answer to these questions would have helped avoid the commission of
an offense in the first place.
Thus, the performance of a criminal audit to identify the risk
areas is recommended. The legal, human, or even political
consequences will then be assessed and prioritized depending on
their seriousness and their recurrence.
Informing and Training on Risk Prevention. A
company and its staff will be most effectively protected by
ensuring compliance with the mandatory legal provisions and
avoidance of criminally sanctioned activities.
This compliance effort must be made in the form of specific
training actions related to the business sector. Companies are
subjected to an increasing number of regulations and technical
standards and must constantly adapt themselves to these
developments. The financial and strategic stake is decisive here.
Legal monitoring is therefore indispensable to anticipate the
regulatory modifications and enable the company to develop new
industrial strategies. Such monitoring must cover in particular the
French (AFNOR), European Community (CEN), and international (ISO)
standards and integrate the non-normative acts. With regards to
manslaughter, judges have not hesitated to condemn entities that
had not complied with the recommendations made in simple circular
letters.
More general training on the proper attitude to have in the event
of a criminal charge is also very useful. It appears that an
increasing number of companies are indicted, in particular on the
grounds of "complicity," for having reacted badly when
faced with offenses committed within their organizations. However,
this behavior is generally related primarily to the ignorance of
these issues. Appropriate training on the manner of responding to a
search of premises, of cooperating in the event of a requisition,
and of answering the investigating judge can help prevent unwanted
criminal proceedings.
Creating an Awareness and a Culture of Risk. As
the criminally sanctioned behaviors often deal with ethics, a
breach thereof is susceptible to affecting the image and earnings
of the company. Compliance with the laws and regulations in all
countries where it has operations is therefore an operational
priority, ranking on the same level as searching for technological
and commercial performance.
The objective here is to create a "culture of risk," in
particular through the adoption of an ethics charter or a code of
good conduct. Greatly expanded in the United States, this practice
has been developing in Europe and France. Numerous companies
publicize a collection of guiding principles and values with which
they wish to comply and promote their activities to comply with the
regulations and adopt an irreproachable behavior from an ethical
standpoint. Most of these documents involve themes relating to the
protection against psychosocial risks that may affect staff, the
protection of clients, the proper conduct of business, and
compliance with the rules of safety, health, and environmental
protection. While considered a unilateral undertaking of the
employer or incorporated into the employment agreement, the legal
value of these documents depends on their content and on their
form.
Delegating and Managing Risks. Positioning risk
management at the appropriate hierarchical level in the company is
also a valuable means of prevention. In business law, the
criminally sanctioned offense is often due to the absence of
monitoring or negligence in implementing proper prevention
procedures.
The delegation of authority enables companies to ensure that the
correct person is responsible for the performance of the monitoring
and prevention obligations, which may be accomplished more
efficiently by him or her than by the managing director, who may be
too distanced on a day-to-day basis from the operational
management. Such delegation encourages a greater responsibility of
the staff and also enables the managing director to better control
the compliance of the employees with the applicable regulations.
Moreover, delegation becomes an obligation when the managing
director does not have the ability to ensure a compliance with
these obligations him/herself, pursuant to the legislation
governing the activities of the company. The fact of not delegating
his/her powers would then be representative of an "aggravating
circumstance" before the courts.
Delegation can be implemented in all matters, except when
prohibited by law. French case law imposes certain conditions that
must be met in order for the delegation of authority to have an
exonerating effect on parties' criminal liability. In
particular, a delegation must be precise and limited. It may also
apply only to an individual who has the necessary competence,
means, and authority and who must have expressly accepted such
authority. A delegation can, in these conditions, protect the
managing director on the condition that he or she was not
personally involved in the offense.
Conclusion
The increased criminal risk to which companies are exposed is
obvious. Senior managers must, so as to avoid it, adopt a proactive
prevention policy. The actions described can be performed in
connection therewith, so as to mitigate this risk, both with regard
to the probability of its occurrence and the seriousness of its
consequences.
Footnotes
1.French Official Journal (Journal Officiel) edition of August 7, 2012.
2 Cass. Crim, December 6, 2011, n°10-82.266: JurisData n°2011-030093.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.