Anti-Corruption in France

* By Eric Lasry , Sara Koski and Clotilde Guyot-Rechard (Baker McKenzie France)

 

1.      Domestic bribery (private to public)

1.1       Legal framework

Bribery of French public officials is regulated under the French Criminal Code, Articles 433-1, 1 (active bribery, i.e., committed by the person bribing a public official) and 432-11, 1 (passive bribery, i.e., committed by the public official who is bribed).

1.2       Definition of bribery

Bribery may be committed by both public officials who solicit or accept a bribe and private individuals who try to corrupt a public official.

Bribery refers to proffering, without any right, at any moment, directly or indirectly, offers, promises, gifts, presents or any advantages, to induce a public official to perform or not to perform (or to reward a public official for having performed or for not having performed) any act within his or her occupation, position or office, or facilitated by his or her occupation, position or office. The person receiving or requesting the bribe is liable for passive bribery, whereas the person offering the bribe is liable for active bribery.

1.3       Definition of public official

A “public official” means any person: (i) holding a public elected office; (ii) vested with public authority; or (iii) discharging a public service mission. A “person discharging a public service mission” refers to a person who, although not entrusted with public authority, discharges a public service mission on either a temporary or permanent basis. This may notably, but not exclusively, include anyone working for a state-controlled company or who, although working in a private sector company, carries out a public service mission.

1.4       Consequences of bribery

(a)        For the individuals involved in case of active or passive bribery

The French Criminal Code establishes the same penalties for public officials and for individuals who corrupt public officials (Articles 433- 1, 1; 433-22 and 433-23; 432-11, 1; and 432-17). The penalties are the following:

  • Up to 10 years in jail
  • Fine of up to EUR 1 million (alternatively, the amount of the fine may also be set at twice the proceeds of the offense)
  • Prohibition (for up to five years) from exercising civil, civic and family rights
  • Prohibition (for up to 10 years or permanently) from exercising public functions or from exercising the activity within which the offense was committed
  • Prohibition (for up to 15 years or permanently) from exercising a commercial or industrial profession, or to direct or control, directly or indirectly, an industrial or commercial company
  • Confiscation of the amount or the object received by the offender
  • Publication of the decision

The custodial sentence may be reduced by half if the offender informs the administrative and judicial authority of the offense and in doing so causes the offense to be discontinued or the other offenders or accomplices to be identified (Articles 433-2-1 and 432-11-1 of the French Criminal Code).

(b)        For the company/legal entity in case of active bribery

The French Criminal Code establishes the following penalties (Article 433-25):

  • Fines of up to EUR 5 million (alternatively, the amount of the fine may also be set at twice the proceeds of the offense)
  • Prohibition (for up to five years) from operating, directly or indirectly, one or several professional or social activities within which the offense was committed
  • Being placed under judicial supervision (for up to five years)
  • Closing down (for up to five years) the legal entity’s facilities used to commit the offense
  • Debarment from public procurement (for up to five years)
  • Prohibition (for up to five years) from proceeding with a public tender offer or from making an initial public offering
  • Prohibition (for up to five years) from issuing a check or using a payment card
  • Confiscation of the object that has been used in or intended for use in committing the offense, or the proceeds of the offense
  • Publication of the decision

A Law of 9 November 2016 (No. 2016-1691) relating to transparency, fight against bribery and modernization of the economy (the “Sapin II Law”), introduced in Article 41-1-2 of the French Criminal Procedure Code a new criminal settlement procedure (convention judiciaire d’intérêt public). This criminal settlement procedure is inspired by the FCPA-type deferred prosecution agreements and allows companies suspected notably of corruption or certain related offenses to avoid prosecution by entering into an out-of-court settlement agreement upon proposal of the public prosecutor and validated by a French court. The agreement will require either both or any of the following:

(i) Payment of a fine (limited to 30% the company’s three-year trailing average annual revenue and determined based on the proceeds of the offense), increased by damages to the victim and certain expenses incurred by the new French Anti- Corruption Agency within its mission (see section 6)

(ii) Implementation of an internal compliance program to be overseen by the French Anti-Corruption Agency for three years

Any such fine and/or compliance program must be approved by a judge in a public hearing. The settlement agreement as well as the fine amount must be published on the website of the Anti-Corruption Agency. In exchange, charges will be dropped and the company will not be required to make any admission of liability. Such deferred prosecution agreement are reserved for corporate entities, while individual offenders will remain subject to criminal sanctions even if the company enters into a deferred prosecution agreement.

1.5       Political contributions

Contributions to political parties are regulated by Law No. 88-227, of 11 March 1988, as amended.. In general terms, contributions to political parties are only allowed for natural persons and may not exceed EUR 7,500 per year. Contributions by legal entities to political parties have been prohibited since 1995.

1.6       Limitations applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)

The French Criminal Code does not establish quantitative or qualitative limitations on hospitality expenses.
It should be noted that there are no de minimis amounts, no safe harbors and no official rulings available that establish when or under which circumstances an act of hospitality might be deemed a bribe.
Any advantage given with a corrupt intent is considered a bribe under French law. Even small payments may be considered bribes if circumstances reveal improper intent. Also, the repeated offering of gifts of small value may indicate a corrupt intent.
Any advantages, irrespective of the context in which they are given, ought to be reasonable and proportionate, consistent with customary practices, for the sole benefit of the intended beneficiary (i.e., not extended to persons other than the business person directly concerned), not meant to obtain anything in return, justified by a valid business reason and legally acceptable for the beneficiary. In practice, what matters to the courts is whether the advantage has been offered in order to induce the public official to accomplish (or refrain from accomplishing) or to reward him for accomplishing (or for having refrained from accomplishing) an act of his or her function. Otherwise stated, a quid pro quo arrangement is prohibited.
Whether a hospitality expense could be considered a bribe will need to be determined on a case-by-case basis, taking into account all the facts and circumstances surrounding the case.

2.      Domestic bribery (private to private)

2.1       Legal framework

Bribery is regulated under the French Criminal Code, Articles 445-1 (active bribery, i.e., committed by the person bribing a public official) and 445-2 (passive bribery, i.e., committed by the person offering a bribe).

2.2       Definition of private bribery

Bribery pertains to proffering, without any right, at any moment, directly or indirectly, offers, promises, gifts, presents or any other advantage, to a person who is not a public official and who, within a professional or social activity, occupies a management position or works for any person or organization, to get such private party to perform or not perform (or for having performed or not performed) an act within his or her activity or occupation, or facilitated by his or her activity or occupation, in violation of his or her legal, contractual or professional obligations. Requesting or accepting such advantages is further constitutive of the criminal offense of passive corruption of a private party, whereas the person offering the bribe is liable for active bribery of a private party.

2.3       Consequences of private bribery

(a)        For individuals involved in cases of active or passive bribery (Articles 445-1, 445-2 and 445-3 of the French Criminal Code):

  • Up to five years in jail
  • Fines of up to EUR 500,000 (alternatively, the amount of the fine may also be set at twice the proceeds of the offense)
  • Prohibition (for up to five years) from exercising civic, civil and family rights
  • Prohibition (for up to five years or permanently) from exercising public functions or from exercising the activity within which the offense was committed
  • Prohibition (for up to 15 years or permanently) from exercising a commercial or industrial profession, from directing or controlling, directly or indirectly, an industrial or commercial company
  • Confiscation of the object that has been used in or intended for use in committing the offense, or the proceeds of the offense
  • Publication of the decision

(b)       For the company/legal entity in cases of active or passive bribery (Article 445-4 of the French Criminal Code):

  • Fines of up to EUR 2.5 million (alternatively, the amount of the fine may also be set at twice the proceeds of the offense)
  • Prohibition (for up to five years) from operating, directly or indirectly, one or several professional or social activities within which the offense was committed
  • Being placed under judicial supervision (for up to five years)
  • Closing (for up to five years) the establishment that was used to commit the offense
  • Debarment from public procurement (for up to five years)
  • Prohibition (for up to five years) from proceeding with a public tender offer or from making an initial public offering
  • Prohibition (for up to five years) from issuing a check or using a payment card
  • Confiscation of the object that has been used in or intended for use in committing the offense, or the proceeds of the offense
  • Publication of the decision
  • Implementation of a compliance program

The Sapin II Law introduced in the French Criminal Code under Article 131-39-2 a new sanction requiring a compliance program to be implemented. The measures required to be adopted are the same as those set out under section 5.2.1 here below. The implementation is controlled by the public prosecutor and monitored by the French Anti- Corruption Agency, reporting to the public prosecutor, during a maximum of five years.

Failure to adopt the compliance program is sanctioned by up to two years in jail and a fine of EUR 50,000 for individuals. For legal entities, the amount of the fine is equal to the fine applicable to the offense that gave rise to the requirement to implement the compliance program. All other sanctions available for this original offense can also be decided against the company in case of failure to adopt the compliance program.

2.4       Limitations applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)

The Criminal Code does not establish quantitative or qualitative limitations on hospitality expenses.

It should be noted that there are no de minimis amounts, no safe harbors and no official rulings available that define as to when or under which circumstances an act of hospitality might be deemed to constitute a bribe. Any advantage given with a corrupt intent is considered a bribe under French law. Even small payments may be considered bribes if circumstances reveal improper intent. Also, the repeated offering of gifts of small value may indicate a corrupt intent.

Any advantages, irrespective of the context in which they are given, ought to be reasonable and proportionate, consistent with customary practices, for the sole benefit of the intended beneficiary (i.e., not extended to persons other than the business person directly concerned), not meant to obtain anything in return, justified by a valid business reason and legally acceptable for the beneficiary. In practice, what matters to the courts is whether the advantage has been offered in order to induce the private party to accomplish (or refrain from accomplishing) or to reward him for accomplishing (or for having refrained from accomplishing) an act of his or her function. Otherwise stated, a quid pro quo arrangement is prohibited.

Whether a hospitality expense could be considered a bribe will need to be determined on a case-by-case basis, taking into account all the facts and circumstances surrounding the case.

3.      Corruption of foreign public officials and officials of international public organisations

3.1       Legal framework

Bribery of foreign public officials and officials of international public organizations is regulated under the French Criminal Code, Articles 435-1 (passive bribery, i.e., committed by the public official who is bribed) and 435-3 (active bribery, i.e., committed by the person bribing a public official).

The Sapin II Law allows French public prosecutors greater flexibility in pursuing bribery of foreign public officials. In particular, under Article 435-6-2 of the French Criminal Code, French law applies to the above offenses when committed abroad by a French person, a person ordinarily residing in France or by a person (legal person or individual) carrying out part of its business on the French territory.

3.2       Definition of corruption of foreign public officials and officials of international public organizations

Bribery pertains to proffering, without any right, at any moment, directly or indirectly, offers, promises, gifts, presents or any other advantage, to a person who is a public official: (i) in a foreign country; or (ii) in an international public organization, to perform or not perform (or for having performed or not performed) any act within his or her occupation or position, or office, or facilitated by his or her occupation, position or office. Requesting or accepting such advantages is further constitutive of a criminal offense of passive corruption of a foreign public official or an official of an international public organization.

3.3       Definition of foreign public official and officials of international public organisations

For the purposes of this offense, “foreign public official” means any of the following:

  • Any person who has a legislative, administrative or judicial function in a foreign country, whether by appointment or by election
  • Any person who works in a public company or public body
  • Any public servant or officer of a public international organization

More specifically, a foreign public official refers to any person: (i) holding a public elected office; (ii) vested with public authority; or (iii) discharging a public service mission in a foreign country or in a public international organization.

3.4       Consequences of bribery of foreign public officials and officials of international public organisations

(a)      For the individuals involved in cases of active or passive bribery (Articles 435-1, 435-3 and 435-14 of the French Criminal Code):

  • Up to 10 years in jail
  • Fines of up to EUR 1 million (alternatively, the amount of the fine may also be set at twice the proceeds of the offense)
  • Prohibition (for up to five years) from exercising civic, civil and family rights
  • Prohibition (for up to five years) from exercising a public function or from exercising a professional or social activity within which the offense was committed
  • Publication of the decision
  • Confiscation of the object that was used in or intended for use in committing the offense, or the proceeds of the offense
  • For foreigners, prohibition (for up to 10 years or permanently) from staying on French territory

The custodial sentence may be reduced by half if the offender informs the administrative and judicial authority of the offense and in doing so causes the offense to be discontinued or the other offenders or accomplices to be identified (Articles 435-6-1 of the French Criminal Code)..

(b)        For the company / legal entity in the event of active bribery (Article 435-15 of the French Criminal Code):

  • Fines of up to EUR 5 million (alternatively, the amount of the fine may also be set at double of the proceeds of the offense)
  • Prohibition (for up to five years) from operating, directly or indirectly, one or several professional or social activities within which the offense was committed
  • Being placed under judicial supervision (for up to five years)
  • Closing (for up to five years) of the establishment that was used to commit the offense
  • Debarment from public procurement (for up to five years)
  • Prohibition (for up to five years) from proceeding to with a public tender offer or from making an initial public offering
  • Prohibition (for up to five years) from issuing a check or using a payment card
  • Confiscation of the object that has been used in or intended for use in committing the offense, or the proceeds of the offense
  • Publication of the decision
  • Implementation of a compliance program (see section 2.3 (b))

3.5       Limitations applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others)

The French Criminal Code does not establish quantitative or qualitative limitations on hospitality expenses.

It should be noted that there are no de minimis amounts, no safe harbors and no official rulings available that define when or under which circumstances an act of hospitality might be deemed to constitute a bribe. Any advantage given with a corrupt intent is considered a bribe under French law. Even small payments may be considered bribes if circumstances reveal improper intent. Also, the repeated offering of gifts of small value may indicate a corrupt intent.

Any advantages, irrespective of the context in which they are given, ought to be reasonable and proportionate, consistent with customary practices, for the sole benefit of the intended beneficiary (i.e., not extended to persons other than the business person directly concerned), not meant to obtain anything in return, justified by a valid business reason and legally acceptable for the beneficiary. In practice, what matters to the courts is whether the advantage has been offered in order to induce the public official to accomplish (or refrain from accomplishing) or to reward him or her for accomplishing (or for having refrained from accomplishing) an act of his or her function.

Otherwise stated, a quid pro quo arrangement is prohibited.

Whether a hospitality expense could be considered bribery will need to be determined on a case-by-case basis, taking into account all the facts and circumstances surrounding the case.

4.      Facilitation payments

The French Criminal Code does not recognize so-called facilitation payments. Facilitation payments must therefore be analyzed on a case-by-case basis, as previously described, followiThe French Criminal Code does not recognize so-called facilitation payments. Facilitation payments must therefore be analysed on a case-by-case basis, as previously described, following the general guidelines for assessing any other hospitality acts or advantages granted to public officials. Any person making facilitation payments may be held liable for bribery since these are intended to influence the beneficiary.

5.      Compliance programmes

5.1       Value of the compliance programme in mitigating/eliminating the criminal liability of legal entities

The French Criminal Code does not specifically recognize a compliance program as an instruments to mitigate or eliminate the liability of legal entities. That being said, based on French market practice, it appears that many companies implement compliance programs. Moreover, the existence or efficiency of a compliance program may be taken into account before initiating legal proceedings or when deciding whether the legal entity was liable for the relevant offense.

5.2       Absence of a compliance program as a crime

Absence of a compliance program does not give rise, under French law, to criminal liability. However, the failure to adopt a compliance program can lead to civil fines pursuant to the new Sapin II Law.

The Anti-Corruption Agency is in charge of overseeing compliance with this obligation and can issue a warning or an injunction directing legal entities and individuals to comply. The Anti-Corruption Agency can also refer the conduct to its Sanctions Commission, which is empowered to impose fines of up to EUR 200,000 for individuals and EUR 1 million for companies.

Finally, under the Sapin II Law, companies both in the public and private sectors having at least 50 employees must adopt appropriate whistleblowing procedures to receive alerts raised by their staff or by external and contingent workforce.

5.3       Elements of a compliance programme

(a)        Legal framework
The Sapin II Law imposes a new obligation to actively manage corruption risks for the following:

  • Companies with at least 500 employees (or companies belonging to a group of companies whose parent company is headquartered in France and whose workforce includes at least 500 employees)
  • Companies with consolidated revenues in excess of EUR 100 million – These conditions are cumulative. Presidents, managing directors, directors and managers of such companies are required to take appropriate measures to prevent and detect, in France and abroad, acts of corruption by adopting a compliance programs comprising specific procedures required by the Sapin II Law (see section 5.3).

The requirements include the implementation of the following measures:

  • An ethics code
  • An internal whistleblowing procedure
  • A regular risk-mapping exercise
  • Assessment procedures for customers, major suppliers and intermediaries
  • Accounting checks
  • Training programs for employees exposed to high risks of corruption and influence peddling
  • Disciplinary sanctions
  • In internal check and assessment system regarding the implemented measures.

The requirement to implement these measures will enter into force on the first day of the sixth month following the promulgation of the law (i.e., 1 June 2017).

(b)        Recommended practice
The Anti-Corruption Agency will issue recommendations aimed at assisting companies required to prevent and detect corruption and certain related offenses by adopting the compliance program. As at the end of January 2017, no such recommendation had yet been made available.

The specific procedures required to be implemented under the Sapin II Law reflect the internationally recognized standards or components of a compliance program, which can be roughly divided into: (i) management commitment; (ii) risk assessment; (iii) standards and procedures; (iv) communication and training; and (v) audit and reply mechanism

6.      Regulator with jurisdiction to prosecute corruption

Law No. 2013-1117 of 6 December 2013, relating to the fight against tax fraud and large economic and financial crime, as modified, introduced a new prosecuting authority, the Financial Public Prosecutor, which coordinates the enforcement activities in relation to financial crime at a national level. As regards bribery-related offenses, the Financial Public Prosecutor shares its jurisdiction with the financial section of the Paris Prosecutor’s Office and specialized inter- regional courts. This new prosecuting authority has a fully dedicated team of specialized assistants and judges and has the authority over a new specialized investigation office, the Central Office for the Fight Against Corruption and Financial and Tax Offenses (OCLCIFF). The Sapin II Law broadened the jurisdiction of the Financial Public Prosecutor, whose mission today also covers non-compliance with the obligation to implement a compliance program in cases where this measure is required as a sanction (See above Section 2.2 (b)).

The Sapin II Law creates a French Anti-Corruption Agency (Agence française anticorruption) under the authority of the French Minister of Justice and Minister of Budget, tasked with the mission of aiding the competent authorities to prevent and detect acts of corruption, influence peddling, extortion, misappropriation of public funds, and other related misconduct. It does not, however, have the power to prosecute corruption-related offenses. The Anti-Corruption Agency will, inter alia, (i) adopt recommendations aimed at assisting companies required to prevent and detect corruption and certain related offenses by adopting a compliance program; (ii) review the quality and effectiveness of such compliance programs; (iii) monitor corporate implementation of compliance programs required to be implemented as ancillary sanction or as part of the deferred prosecution agreement; (iv) monitor the implementation of the French “Blocking Statute”83; (v) report potential offenses to the French public prosecutor; and (vi) issue an annual report describing its activities.


83 Created by the Law No. 68-678 of 26 July 1968, which prohibits a person or company in France from providing certain kinds of information to a non- French authority for the use in a judicial or administrative proceeding without going through an internationally approved procedure such as the Hague Convention. – Back


Eric Lasry

Eric Lasry practices in the Mergers & Acquisitions Group of Baker McKenzie in Paris, as well as in the area of corporate compliance.

Eric was instrumental in the development of the Firm’s M&A practice and is founder and co-lead of the Compliance and Risk Management practice in Paris. He has held several management positions within Baker McKenzie. He has served as managing partner of the Paris office and was a member of the Firm’s Global Executive Committee. He also served as chairman of the European Regional Council and of the Policy Committee.

Eric is exceptionally fluent in cross-border transactions. His extensive experience includes advising American and French companies on their strategic corporate transactions. His wide client base includes companies in the information technology, luxury, pharmaceuticals, food and services industries. Within his Compliance and Risk Management practice, Eric advises French and international groups in the context of risk assessments, coordination of internal investigations and implementation of compliance programs both in France and abroad.

eric.lasry@bakermckenzie.com

Tel: +33 1 44 17 53 65

Sara Koski

Sara Koski joined the Corporate and Mergers & Acquisitions Group at Baker McKenzie SCP in 2012, and she is also a member of the Compliance & Risk Management Group. She specializes in corporate law, transactions and compliance, and she intervenes principally in due diligence, drafting of acquisition contracts, internal restructuring within corporate groups and anti-bribery (compliance due diligence, risk assessment, implementation of compliance programs and internal investigations).

Sara holds a post-graduate degree in Anglo- American Business Law and in International Business Law from the University of Paris I – Panthéon-Sorbonne.

sara.koski@bakermckenzie.com

Tel: +33 1 44 17 6451

Clotilde Guyot-Réchard

Clotilde Guyot-Réchard has been practicing in the Dispute Resolution Group of Baker McKenzie in Paris since 2014. She focuses her practice on commercial litigation, insolvency and international arbitration. She holds a Master’s Degree in Private International Law and International Trade Law from the University of Panthéon-Assas, and an LL.M from the University of California, Berkeley.

Before joining Baker McKenzie as an associate, Clotilde was a legal intern in the Dispute Resolution Group of the Firm.

clotilde.guyot-rechard@bakermckenzie.com

Tel: +33 1 44 17 53 58