France: New French Anti-Corruption Law: Companies Doing Business In France Must Beware

On November 8, 2016, France modernized its anti-corruption enforcement regime and adopted the Law on Transparency, the Fight against Corruption and Modernization of Economic Life (known in France as "Sapin II," named after Michel Sapin, the current minister of finance). Sapin II went into effect November 10, 2016.

Sapin II is France's response to international criticism of its perceived hands-off attitude toward anti-corruption enforcement, which has caused the U.S. Department of Justice (DOJ) and other law enforcement and regulatory agencies to seek $1 billion in fines against French companies Alcatel, Alstom, Technip, and Total. To revitalize French enforcement of French law over French companies, citizens, and non-French entities doing business in France, Sapin II institutes aggressive new preventive measures and strengthens and increases the government's tools to fight corruption.

The main provisions of the law include:

  • Expanded jurisdiction to enable French authorities to prosecute acts of corruption committed abroad by any company that carries on business or part of its business in France,
  • Creation of a new anti-corruption agency to monitor corporate implementation of the now-mandatory anti-corruption compliance programs,
  • Mandatory compliance programs for companies with over 500 employees and €100 million in revenue,
  • Expansion of whistleblower protections, and
  • Deferred prosecution agreements, similar to those used by the DOJ, allowing prosecutors to fine companies for wrongdoing without a criminal conviction.

Expanded Jurisdiction

Sapin II widened the reach of French enforcement activity. In the old anti-corruption landscape, French authorities had jurisdiction over offenses committed outside France only if the victim or perpetrator was French, the conduct at issue was an offense in both France and the country where the conduct occurred, and either a victim filed a complaint with the French authorities or the foreign government officially denounced the conduct.

The new law has removed these restrictions, opening the door for French investigations and prosecutions for misconduct committed outside France. Even foreign companies that operate only part of their business in France can be prosecuted under Sapin II for corrupt activities abroad.

Anti-Corruption Agency

Sapin II creates a French anti-corruption agency, the Agence Française Anticorruption (AFA), under the authority of the French minister of justice. This agency will be helmed by a presidentially appointed leader and will have a six-member Sanctions Commission to determine whether to impose certain financial penalties against those who violate the new compliance requirements.

The AFA's predecessor, the Central Service for the Prevention of Corruption (SCPC), had limited power and could only provide recommendations on creating effective compliance programs. In contrast, the AFA can require companies to implement compliance programs, sanction noncompliance with the law and supervise corporate monitorships. Notably, the AFA may request documents from companies that it suspects are not following their compliance obligations. The AFA, however, will not have authority to initiate bribery investigations or to impose criminal penalties. Violations of the law will be referred to French prosecutors to decide whether to commence a criminal action. The AFA will have the power to publish information relating to the prevention and detection of corruption and report on its enforcement activities annually.

Compliance Obligations

On May 1, 2017, Sapin II's compliance obligations become effective. Companies with over 500 employees and revenues of at least €100 million will be required to adopt compliance policies and procedures. This requirement aims to impose a burden on control persons within the companies to shoulder the responsibility of preventing corruption.

These compliance measures include promulgating an ethics code, internal whistleblowing procedures, risk assessment mechanisms, accounting controls, third-party due diligence processes, employee training, reporting chains and procedures for internal reporting of suspected illicit activity, and a disciplinary action policy. If companies fail to meet these compliance obligations, the AFA's Sanctions Commission can impose fines, per breach, of up to €200,000 against individuals and €1 million against entities; issue warnings or injunctions ordering companies to adopt adequate compliance programs; and publish the decisions.

Whistleblower Protections

Sapin II extends whistleblower protection to any disinterested person who in good faith reports a violation of the law to his or her employers or to the relevant judicial or administrative authorities. The whistleblower's identity will remain confidential, and that person is protected from retaliation. The law punishes individuals with up to one year in prison and a fine of up to €15,000 if they retaliate against whistleblowers or attempt to prevent them from making a report. Those who disclose a whistleblower's identity can face up to two years in prison and a fine of up to €30,000. This is important because to qualify as a whistleblower, the person must first report the violation to his/her supervisor; thus, retaliation is a legitimate concern. If the supervisor does not act on the information, then the whistleblower can go to the relevant government authorities.

A shortcoming of the whistleblower policy is that the law lacks financial incentives. Sapin II does not offer financial remuneration as a "carrot" for blowing the whistle, as is done in the United States.

Deferred Prosecution Agreements (DPAs)

DPAs were a heavily debated provision of the law. In fact, although DPAs were included in the March 2016 version of the original bill, the Conseil d'Etat (France's highest administrative court) advised the French Parliament to remove the DPA provisions from the bill. After discussion within the legislative body, the language was removed but subsequently reinstated.

Under the law, companies seeking a DPA must agree to the stipulated facts but will not have to admit guilt. The penalties any company may face under a DPA are capped at 30 percent of its three-year average earnings, and the company can be required to hire an outside monitor to ensure it adheres to the law's compliance rules. Before final execution, the DPA will be reviewed publically in a court hearing.

Impact of Sapin II

French anti-bribery legislation prior to the passage of Sapin II was well-developed. Generally, the pre-existing laws prohibit bribery, domestic or foreign, in the public and private sectors. Facilitation payments are prohibited, as is the maintenance of improper books and records. The main challenge that Sapin II attempts to address is the structural gap in the anti-corruption regime that prevents proper enforcement of these laws.

As Sapin II is now officially in force, smaller companies not already subject to other international anti-corruption laws such as the FCPA and UK Bribery Act will now have to prioritize the creation and implementation of a compliance program to effectively monitor, detect and remediate corrupt activity in France and abroad. Further, even larger companies with robust compliance regimes will need to be aware of the potential individual liability that their executives face in the event of their companies' failure to comply with the law. A thorough assessment of the effectiveness of their compliance programs will be necessary to avoid sanctions by the French authorities.

Sapin II's broadened jurisdictional scope also brings many companies into the fold. Companies that were immune from French enforcement – such as foreign companies that perform some business in France – may now be in the crosshairs of the AFA and French prosecutors. As a result, the key takeaway here is that many more companies conducting business in France and abroad are now subject to the requirements, obligations, and sanctions of Sapin II, and those companies should re-evaluate their anti-corruption policies and procedures.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Reed Smith (Worldwide)
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Reed Smith (Worldwide)
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions