On July 22, 2015, France’s Finance Minister, Michel Sapin, presented the framework of a bill which would create a new anti-corruption authority and introduce U.S.-style monitorships into French law. This new legislation represents a reaction to international pressure brought to bear against the French government for its perceived laissez-faire enforcement of corruption, and a response to the severe sanctions imposed by the U.S. Department of Justice (“DOJ”) against French companies. In view of the forthcoming legislation, French companies (and international companies doing business in France) would do well to prepare and implement an effective anti-corruption compliance program to mitigate enforcement risk and avoid sanctions.
Analysis
Corruption is currently a criminal offense under French law. However, unlike regimes in the U.S. and many other jurisdictions, there is currently no legal requirement for businesses to adopt internal measures to prevent corruption. Moreover, France’s Central Service for the Prevention of Corruption (Service Central de Prévention de la Corruption, or “SCPC”), created in 1993, has a very limited enforcement role — it has no investigative or prosecutorial powers and can only make recommendations on matters involving alleged corruption.
International Pressure on France’s Anti-Corruption Enforcement Efforts
In October 2012,[1] the Organisation for Economic Co-operation and Development (“OECD”) declared that France was not in compliance with the OECD Anti-Bribery Convention and expressed serious concerns with France’s enforcement approach. In its 2014 follow-up report,[2] the OECD reported that the situation had not materially improved and that France “still falls far short of … expectations,” having neglected or mishandled the implementation of the OECD’s prior recommendations. Among other things, France has been the target of significant criticism from the international community for perceived weak and infrequent prosecutions resulting in a significant increase in acquittals, dismissals and case closures in recent years. According to a new report from Transparency International published last month,[3] which classifies member countries of the OECD Anti-Bribery Convention into four groups ranked by enforcement environment, only four of 41 member countries are considered to have made a robust commitment to actively investigate and prosecute companies that bribe foreign officials. France has perennially ranked in the next-to-lowest tier, reserved for countries with “limited enforcement”; foremost among the reasons cited in the latest report is France’s execessive lenience in applying sanctions.
U.S. DOJ Enforcement Actions against French Companies
The extraterritorial reach of the U.S. Foreign Corrupt Practices Act (“FCPA”) has enabled prosecutors and regulators to sanction foreign companies and individuals for corruption on a global scale. France has been the subject of particular U.S. enforcement scrutiny, with three of the ten largest FCPA enforcement actions involving French companies. No other country of origin appears more than twice in the top ten cases. In reaction to these cases, the SCPC recently published guidelines to help companies implement and develop effective policies to prevent corruption, and the French government has decided to enact a new law creating a new anti-corruption authority.
2015 French Guidelines for the Reinforcement of Prevention of Corruption in Commercial Transactions
In March 2015, the SCPC published guidelines with the aim of establishing compliance systems designed to conform to the highest international anti-corruption standards in order to prevent and detect corruption in commercial transactions at both national and transnational levels. The French guidelines are premised on six principles similar to those reflected in the guidelines of the U.S. and other OECD nations: (i) management commitment at the highest level to “zero tolerance”; (ii) ongoing risk assessments; (iii) establishment of an anti-corruption compliance program (e.g., drafting of a written policy, designation of a compliance officer, and implementation of an internal whistle-blowing system); (iv) internal and external control mechanisms; (v) communication, training and monitoring of the anti-corruption compliance program and (vi) establishing a sanctions policy with appropriate disciplinary proceedings. The SCPC recommends that all organizations enact an effective policy to prevent corruption, especially since foreign anti-corruption laws with extraterritorial reach are increasingly being adopted and multilateral development banks are requiring ever-greater demonstrations of anti-corruption compliance in connection with financing. However, these recommendations are not currently legally binding in France and additional legislative action is required.
New French Bill: New Anti-Corruption Authority and US-Style Monitorships
In July 2015, France’s Finance Minister proposed the creation of a new anti-corruption authority and the French legal equivalent of U.S. monitorships through a new bill to be enacted in 2016 (the “Loi Sapin II”). This new Anti-Corruption Agency (which would replace the current SCPC which has no investigative power) would dictate the compliance policies of companies, impose administrative sanctions for corporate governance and compliance failings, and offer protection to whistleblowers. It remains unclear whether this new agency would also act either directly or indirectly as a monitor for companies or if all monitorship responsibilities would be entrusted to the French courts. Regardless of the source, such monitorship would aim at ensuring that a sanctioned company modifies its policy and behavior with regard to corruption and bribery. The bill would also implement into French law the fourth Anti-Money Laundering Directive promulgated by the European Parliament on May 20, 2015, under which bribery is a predicate offense.
Conclusion
The Loi Sapin II, which is part of a broader legislative package addressing transparency in economic activities, will be presented to the Council of Ministers this autumn, deliberated in the National Assembly in early 2016, and should enter into force in the course of next year. Much debate and discussion will take place prior to enactment of the new law; however, it is likely that most, if not all, of the proposed measures will ultimately take effect in one form or another. Following the investigations and sanctions of French companies by the U.S. DOJ, France has now shown its willingness to adopt its own anti-corruption framework and agency in order to prevent, detect and sanction corruption effectively. This new initiative should permit France to reclaim more autonomy in its enforcement efforts and relieve the international pressure French authorities have confronted for a considerable time. Regardless of the final outcome of the new anti-corruption legislation, it is incumbent on French companies to prepare for this new regime in order to avoid unwanted enforcement scrutiny. To that end, the most critical area of focus is the design and implementation of compliance programs that will effectively monitor, detect and remediate corruption in commercial transactions. 1 OECD, Phase 3 Report on Implementing the OECD Anti-Bribery Convention in France (Oct. 2012), available at http://www.oecd.org/daf/anti-bribery/Francephase3reportEN.pdf. 2 OECD, France: Follow-up to the Phase 3 Report & Recommendations (Dec. 2014), available at http://www.oecd.org/daf/anti-bribery/France-Phase-3-Written-Follow-up-ENG.pdf. 3 Transparency International, Exporting Corruption—Progress Report 2015: Assessing Enforcement of the OECD Convention on Combatting Foreign Bribery (Aug. 2015), available at http://issuu.com/transparencyinternational/docs/ 2015_exportingcorruption_oecdprogre/1.
