1 Legal and enforcement framework
1.1 Which legislative and regulatory provisions govern anti-corruption in your jurisdiction, from a regulatory (preventive) and enforcement (criminal) perspective?
Prevention: Until recently, French law did not expressly require companies to implement preventive measures to combat corruption. Following recommendations by international organisations such as the Organisation for Economic Cooperation and Development (OECD), the Group of States against Corruption (GRECO) and Transparency International, which were critical of the lack of enforcement of anti-corruption laws in France, the French authorities have reinforced the anti-corruption regime in France through:
- a marked increase in the number of prosecutions of corruption offences; and
- the adoption of a new anti-bribery law in December 2016 (the Sapin II Act), which:
- introduced an obligation for French companies and companies headquartered in France (meeting certain criteria, see question 4.1) to implement a compliance programme with the objective of preventing corruption; and
- created a French anti-corruption agency, the Agence française anticorruption (AFA), with the mission of assessing the robustness of compliance programmes and imposing sanctions in the case of non-conformity.
Enforcement: French criminal law, in particular the French Criminal Code, contains extensive rules relating to the fight against corruption and bribery, including active and passive corruption and influence peddling, in both the public and private sectors, domestic or foreign. It also provides for a list of related offences, such as unlawful taking of interests, misappropriation of public funds, extortion by public officials (concussion) and favouritism.
1.2 Which bilateral and multilateral instruments on anti-corruption have effect in your jurisdiction?
European Union: The Treaty on the Functioning of the European Union recognises corruption as a ‘euro-crime’, listing it among the particularly serious crimes with a cross-border dimension for which minimum rules harmonising the definition of criminal offences and sanctions may be established. The European Commission has been given a political mandate “to measure efforts in the fight against corruption and to develop a comprehensive EU anti-corruption policy”, in close cooperation with GRECO (in accordance with the Stockholm Programme).
As a member of the European Union, France has an obligation to comply with European laws and institutions. The European Anti-fraud Office and the European Public Prosecutor’s Office (which was recently created and will start operating in 2020) may both intervene in the context of certain corruption cases.
France is also a party to several European conventions, such as:
- the European Union Convention on the Fight against Corruption Involving Officials of the European Communities or of the EU Member States signed on 26 May 1997 (ratified on 1999), which requires EU member states to criminalise corruption;
- the EU Convention on the Protection of the European Communities’ Financial Interests and its first Protocol (harmonising the definition of bribery of public officials and the penalties for corruption offences) (1996) and second Protocol (1997); and
- the Convention on Mutual Assistance in Criminal Matters between the Member States of the European Union of 29 May 2000.
The European legislation in other areas such as anti-money laundering and public procurement may also include important anti-corruption provisions.
Council of Europe: France has notably ratified:
- the Council of Europe’s Criminal and Civil Law Conventions on Corruption of 27 January 1999 and 4 November 1999 (ratified on 2008); and
- the Additional Protocol to the Council of Europe Criminal Law Convention on International Corruption signed on 14 May 2003 (ratified on 2007).
OECD: France is a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention). France also adheres to non-legally binding OECD recommendations such as the Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions adopted on 2009 (currently under review).
United Nations: France is a party to the first global convention to fight corruption – the United Nations Convention against Corruption, which France signed on 31 October 2003 (Merida Convention).
1.3 Are there accessible directives or other guidance from enforcement authorities in your jurisdiction?
Criminal courts: Thus far, the French courts and prosecution agencies have not provided any written guidance – unlike the US Department of Justice, which, for example, published guidance relating to the evaluation of corporate compliance programmes in April 2019.
French anti-corruption agency: The Agence française anticorruption (AFA), recently created by the Sapin II Act, is entitled to issue various non-binding guidelines, such as its Recommendationsto Help Private and Public Sector Entities Prevent and Detect Corruption, Influence Peddling, Extortion by Public Officials, Unlawful Taking of Interest, Misappropriation of Public Funds and Favouritism, and various practical handbooks in relation to the Sapin II Act requirements (accessible on the AFA’s website). Most of these guidelines are published following a public consultation of the relevant actors and are updated from time to time.
Although the AFA guidelines are not legally binding, French practitioners generally take the view that any entity subject to the Sapin II Act requirements should comply with them, since the AFA considers that they “form a coherent set of measures that the AFA regards as constituting an effective anti-corruption programme”.
In addition to the publication of guidance materials, the AFA provides advice and guidance to entities subject to the Sapin II Act requirements, including training and awareness-raising activities, and responds to specific technical queries.
1.4 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?
Regulatory enforcement: The AFA is a national agency headed by a magistrate under the joint supervision of the Ministry of Finance and the Ministry of Justice, with broad administrative powers.
The AFA also includes an Enforcement Committee, which may impose various sanctions in case of non-compliance with the Sapin II Act.
In particular, the AFA has the following powers:
- Conduct inspections: The AFA may conduct inspections (off-site and on-site) of private and public sector entities to assess the adequacy of their anti-corruption compliance programmes. To this end, the AFA is also empowered, if deemed necessary for the inspection, to:
- obtain all information and documents; and
- interview any person.
- Issue warnings: The AFA’s director may issue a warning to the representatives of the inspected entity by means of a letter inviting the entity to implement the recommendations contained in the final inspection report so as to comply with its legal obligations within a specified timeframe.
- Notify the public prosecutor: If the AFA becomes aware of facts that are likely to qualify as criminal offences, it may report them to the relevant public prosecutor.
- Impose sanctions: If the AFA determines that an entity has failed to implement an adequate anti-corruption compliance programme, its director may notify the AFA Enforcement Committee.
Criminal enforcement: The power to prosecute perpetrators of acts of corruption rests with the public prosecutor. During the course of an investigation, public prosecutors are accompanied by personnel from other investigation services, such as the judicial police and, in particular, the Central Office for the Fight against Corruption and Financial and Tax Offences (OCFLCIFF). Where necessary, prosecutors may also approach investigating magistrates to conduct full investigations.
A public prosecutor from one of the three following categories of prosecution offices may prosecute acts of corruption:
- Financial Prosecution Office (PNF);
- territorial prosecution offices; and
- prosecution offices of interregional specialised courts (JIRS).
The public prosecutor has various powers, including to make on-site searches, confiscate items, conduct witness interviews and hear suspects. For corruption cases, the public prosecutor may also authorise police officers to use special investigative procedures used in the fight against organised crime. These investigative techniques are particularly intrusive and include infiltration, pseudonymous investigations, interception of telephone conversations and the use of International Mobile Subscriber Identity catchers.
In addition, the Sapin II Act empowers public prosecutors to propose that a company which is subject to an investigation for corruption or related offences enter into a settlement agreement (‘Convention Judiciaire d’IntérêtPublic‘ – CJIP), inspired by the US and UK deferred prosecution agreements. The settlement agreement is not regarded as a conviction and, consequently, is not registered in the Criminal Record Bulletin No 1. However, the settlement agreement is published on the AFA’s website.
Corruption offences must be prosecuted before the criminal courts. Where the prosecution is conducted by the PNF, the 32nd Chamber of the Paris Court of First Instance has exclusive jurisdiction over these cases at first instance.
The criminal courts may impose various sanctions, including fines and prison sentences, as well as ancillary penalties.
A new sanction was introduced under the Sapin II Act for any legal entities found responsible for corruption and influence peddling offences. Criminal courts may sanction such entities with a ‘compliance programme penalty’ (‘Peine de Programme de Mise en Conformité‘), requiring them to comply, for up to five years, with the obligation to implement an anti-corruption compliance programme, under the AFA’s supervision. This penalty can be imposed on all legal entities, private and public, regardless of size, form, sector of activity and whether they are French or foreign registered.
1.5 What are the statistics regarding past and ongoing anti-corruption procedures in your jurisdiction?
AFA: In the course of 2017, the AFA issued four warnings as a result of six inspections of entities subject to the Sapin II Act. In 2018, the AFA conducted 43 inspections on its own initiative and four inspections within the context of settlement agreements.
In 2018, the AFA reported acts of corruption or related offences to several public prosecutor offices, including the PNF.
The first session of the AFA Enforcement Committee was held on 25 June 2019, against a French corporate entity, leading to a non-conviction decision published in July 2019.
PNF: On 1 January 2019 513 proceedings were ongoing at the PNF, 47% of which concerned corruption and related offences such as influence peddling. Of those, 90 related to a public official in a foreign state or within an international organisation.
In 2018, 18 persons were subject to criminal sanctions in relation to corruption or related offences; of those, three faced imprisonment and 11 were barred from exercising their professions.
French courts: In 2017 the French courts imposed 297 sanctions in relation to corruption or related offences.
1.6 What are the shortcomings identified in your jurisdiction’s anti-corruption legislation (including recommendations of the Organisation for Economic Co-operation and Development, where applicable)?
A recent parliamentary report recommends that the French government adopt several measures in relation to the current anti-corruption legislation – particularly as regards the resources allocated to fighting corruption, the settlement agreement and the rules governing the liability of legal entities – with a view towards further protecting France from foreign laws with extraterritorial application over French corporates and persons (such as the FCPA). France has also been encouraged by GRECO and the OECD, through their recommendations, to continue its efforts to bolster its arsenal against bribery, in particular foreign bribery.
2 Definitions and scope of application,
2.1 How is ‘public corruption’ or ‘bribery of a public official’ defined in the anti-corruption legislation?
The bribery of French public officials is a criminal offence under French law. French law distinguishes between ‘active’ and ‘passive’ corruption involving public officials, which are both viewed as criminal offences. These offences cover public officials who solicit or accept a bribe and private individuals who attempt to bribe a public official.
The corruption offence is characterised by the act of soliciting or agreeing to a bribe, irrespective of whether:
- the bribe is actually paid;
- the action is performed;
- the beneficiary of the bribe is the public official himself or herself; or
- the briber is the ultimate beneficiary of the action or abstention of the recipient of the bribe.
Active corruption is committed by a person who bribes a public official. The offence is broadly defined as the proposal or offer by any person, directly or indirectly, of an undue advantage to a public official with the purpose of inducing that official to act or refrain from acting in relation to the performance of the official’s position, function or mandate.
Passive corruption is committed by a public official who is bribed. The offence is defined as the act of a public official to solicit or agree, directly or indirectly, an undue advantage as a reward for carrying out (or having carried out) or refraining from carrying out (or having refrained from carrying out) an act in relation to that official’s position, function or mandate.
The offence of bribery of a public official has been the object of harmonisation within the European Union, in particular through the Convention on the Protection of the European Communities’ Financial Interests and its Protocols, which differentiates between active and passive corruption of public officials, defines an ‘official’ (at both national and European levels), and harmonises the penalties for corruption offences.
2.2 How is a ‘public official’ defined in the anti-corruption legislation? How is a ‘foreign public official’ defined?
French criminal law defines a ‘public official’ as any person:
- holding an elected public office, such as a mayor or a regional adviser;
- holding public authority, such as a police officer, a justice of the peace, a police commissioner, a prefect of a region or a deputy prefect; or
- exercising a public service mission, such as a judicial liquidator agent, an employee of Electricité de France or an official of a prefecture.
French criminal law defines a ‘foreign public official’ as any person performing functions in a foreign country or within a public international organisation:
- holding a public elected office;
- holding public authority; or
- exercising public service duties.
2.3 How is ‘private corruption’ or ‘bribery in the private sector’ defined in the anti-corruption legislation?
Passive and active private bribery are broadly defined in the same manner as public bribery, except that private bribery involves persons who are not public officials (see question 2.1).
2.4 How is ‘bribe’ defined in the anti-corruption legislation?
Broadly, a ‘bribe’ may be any offer, promise, donation, gift or any advantage proposed or solicited for the performance of an act or abstention by the person being bribed, in accordance with the definition of the relevant offence as provided by the French Criminal Code (see question 2.1).
According to the French courts, the following advantages may characterise a bribe:
- payment of a sum of money;
- donation of an object of value;
- payment of a debt;
- granting of a loan;
- supply of goods;
- performance of work under abnormal economic conditions;
- granting of an internship or permanent job;
- invitation to a meal or entertainment such as tickets to a show or sporting event;
- payment of commissions on the benefits provided to the corrupt agent; and
- promise of a higher salary.
2.5 What other criminal offences are identified and defined in the anti-corruption legislation?
Public corruption offences are included in the category of offences that constitute a breach of the ‘duty of probity’. This category also includes the following offences:
- extortion by public officials;
- influence peddling;
- unlawful taking of interest;
- favouritism; and
- misappropriation of public funds.
The Sapin II Act has extended the scope of the influence peddling offence in order to prohibit influence peddling of foreign and international public officials (the offence previously covered French public officials only).
2.6 Can both individuals and companies be prosecuted under the anti-corruption legislation?
Yes, as matter of principle, legal entities may be held criminally liable for any offence committed on their behalf, by their management or by their legal representatives. Such liability does not exclude the criminal liability of individuals who are perpetrators of or accomplices to the same offence.
2.7 Can foreign companies be prosecuted under the anti-corruption legislation?
Foreign companies may be prosecuted under French criminal law in situations such as the following:
- The foreign company has committed an offence in France;
- The foreign company is an accomplice to a crime or offence committed in France; or
- The victim of the offence committed by the foreign company is a French national, where the offence is punishable by imprisonment.
The application of the French criminal law involves both the jurisdiction of the French courts and the application of French laws relating to the punishment of offences and procedural rules.
2.8 Does the anti-corruption legislation have extraterritorial reach?
As a general principle, French criminal law applies to the perpetrators of an offence committed within the territory of the French Republic (French courts have a broad interpretation of this rule).
By way of exception, French anti-corruption legislation may have extraterritorial reach in certain circumstances. Broadly, French criminal law is applicable to offenders who commit an offence outside France where certain conditions under the French Criminal Code are met.
For instance, French criminal law will apply where:
- the victim is a French national or the perpetrator is a French national;
- the act committed constitutes an offence both in France and in the foreign jurisdiction; and
- the French public prosecutor has initiated the proceedings following a complaint by either the victim or the competent foreign authority.
Furthermore, French criminal law applies to accomplices acting within the French territory of offences committed abroad, provided that:
- the act is an offence both in France and in the foreign jurisdiction; and
- a final judgment in the foreign jurisdiction has established that the offence was committed.
The Sapin II Act has facilitated the prosecution of bribery and influence peddling offences committed abroad. As a result, by way of exception, French law may also apply to:
- perpetrators of bribery and influence peddling offences committed outside France, provided that the perpetrator is a French national, a French resident or any person carrying out, in whole or in part, any business in France; and
- accomplices in France of acts of corruption committed abroad, provided that the acts constitute an offence both in France and in the foreign jurisdiction.
3 Corruption and bribery
3.1 How are gifts, hospitality and expenses treated in your jurisdiction?
Definition: The proposal or offering of gifts, hospitality and expenses to a person may amount to an offence such as bribery or influence peddling, depending on the circumstances of the case.
There are no rules or guidelines under French criminal law for determining when a gift or hospitality may be viewed as having crossed the line. Likewise, French law does not provide for any specific safe harbour or de minimis amounts. The question of whether gifts, hospitality or expenses incurred could be viewed as an offence must therefore be determined on a case-by-case basis, depending on the circumstances of the case.
However, members of the French Parliament are subject to a code of conduct in relation to gifts and hospitality:
- Members of the French National Assembly must report to the compliance officer any gift, invitation to a cultural or sporting event, or benefit exceeding €150 received in the course of their mandate. They must also report any acceptance of travel. The report must be made prior to the travel and must detail the purpose and the financing of the travel.
- Members of the French Senate must report gifts, presents or benefits in kind they receive exceeding €150 (except customary gifts) within 30 days from their receipt to the Senate Office. Invitations received which exceed €150 must also be notified to the same office at least 30 days before the event or on receipt. Invitations for cultural or sporting events in France, and from French authorities or linked to a local mandate, do not fall within the scope of the reporting. Invitations reported are published on the Senate website.
The Sapin II Act has reinforced the regulation of lobbying in France by providing:
- a definition of ‘lobbyist’;
- disclosure and ethic requirements; and
- sanctions in case of non-compliance.
The following are among the good conduct rules that lobbyists should comply with:
- Refrain from proposing or offering to their contacts any gifts or other benefits of significant value. No additional detail is provided by the law; and
- Refrain from inciting their contacts to breach their good conduct rules.
Case law: French courts have typically interpreted ‘any advantage’ broadly. For instance, French courts have ruled that the offering of meals (under certain circumstances), sums of money, non-cash benefits and entertainment may be characterised as bribery.
Self-appreciation: It is for the relevant person to assess whether the proposal, offering or acceptance of gifts, hospitality or expenses complies with applicable laws.
For entities subject to the Sapin II Act (see question 4.1), the Agence française anticorruption (AFA) expressly requires the inclusion in their compliance programme of guidelines regarding gifts, hospitality and sponsorships. In its 2018 annual report, the AFA expressly advised entities to:
- explain under which conditions gifts and hospitality could be accepted; and
- record in a specific register the nature, amount, frequency and origin of any gift or hospitality received.
The AFA is currently preparing guidelines on gifts and hospitality.
3.2 How are facilitation payments treated in your jurisdiction?
Definition: Although facilitation payments will usually give rise to an undue advantage, facilitation payments are not expressly mentioned in French criminal law.
To date, there are no rules or guidelines under French criminal law for determining in which cases a facilitation payment may be deemed acceptable.
Particular attention should be paid to facilitation payments, especially given that the European Parliament has called for vigilance in this regard, stating that “bribery should not be concealed by the abuse of the term ‘facilitation payments’, which the OECD Convention considers acceptable under certain, specific circumstances (small payments, e.g. to get permission to unload goods in a port)”. It has urged “Member States to agree to reject this notion, or to use it only in extreme situations”.
Case law: French courts have typically interpreted ‘undue advantage’ broadly (see question 2.4).
Self-appreciation: It is for the relevant person to assess whether a facilitation payment complies with applicable laws.
For entities which are subject to the Sapin II Act (see question 4.1), the AFA expressly:
- indicates in its guidelines that all facilitation payments (irrespective of amount and frequency) can be the object of prosecution for corruption; and
- requires inclusion of rules on facilitation payments in their compliance programmes.
3.3 How is bribery through intermediaries and other third parties treated in your jurisdiction? Can those third parties be held liable?
French criminal law contains express provisions on bribery committed through third parties. The offence of corruption may be committed where the undue advantage is provided through third parties such as intermediaries, agents and consulting firms.
As the use of an intermediary could give rise to an important risk of corruption, the AFA has expressly recommended that entities subject to the Sapin II Act (see question 4.1) include specific rules on the use of intermediaries in their compliance programmes, to manage the risk of corruption.
A third party involved in a bribery case will be held criminally liable together with the person on whose behalf the third party acted. Under French criminal law, the accomplice to an offence shall be punished as the perpetrator of that offence.
3.4 Can a company be held liable for bribery committed by management or other employees?
Yes, under French criminal law, legal entities can be criminally liable for offences committed for their benefit by their management or representatives (including employees with the power to represent the company and acting on its behalf). Moreover, case law has held that the criminal liability of a legal entity can also be engaged by the acts of persons who, while not members of official bodies or representatives of the company, are in practice conducting these functions.
The breach of an internal corporate policy by the management or representatives will not exonerate the company from criminal liability.
3.5 Can a company be held liable for bribery committed by domestic or foreign subsidiaries?
Yes, under certain circumstances.
The following are certain principles under French criminal law in relation to companies that could prove useful in this regard:
- “No one is criminally liable except for his/her own actions”;
- A ‘group of entities’ does not have legal personality; and
- Legal entities are criminally liable for offences committed for their benefit by their management or representatives.
It follows from the above that an offence cannot be attributed to a person who did not commit or participate in it. However, this principle may not apply where:
- a subsidiary does not have effective operational independence. In fact, case law has found that an offence committed by a subsidiary may be attributed to the parent company where the nexus between the two entities is so strong that the subsidiary has no autonomy and simply carries out, in all material respects, the instructions of the parent company. The liability of the parent company may also be brought up in case of any confusion of capital and/or technical means, which may be qualified on a case-by-case assessment of circumstantial evidence (eg, where two companies share their registered office, human and/or technical resources and logos, exchange cash flows and so on); or
- the parent company participated as an accomplice to the offence committed by the subsidiary.
Under French criminal law, an ‘accomplice’ is a person that:
- knowingly facilitates the preparation or commission of an offence by means of support or assistance; or
- through gift, promise, threat, order, abuse of authority or power, incites an offence or gives instructions to commit one.
The issue of liability within international groups was raised by the Organisation for Economic Co-operation and Development, which has asked France to clarify “that a legal person cannot escape liability for acts of bribery by making use of an intermediary, including a related legal person”. In response, France indicated that French law “on conspiracy and complicity which determines the liability of parent companies for actions of foreign subsidiaries is very familiar to prosecutors and courts”. It further pointed out that:
[su_quote] the Chancellerie [Central Administration of the Ministry of Justice] is keen to remove any ambiguity on this matter in relation to action against foreign bribery, and states expressly in its latest circular on criminal policy in this area (page 7) that “legal persons may be rendered criminally liable by the actions of a person to whom powers have been delegated, for instance the director of a foreign subsidiary. [/su_quote]
3.6 Post-merger or acquisition, can a successor company be held liable for bribery committed by legacy companies?
Criminal liability: The French courts have held that in the case of a transaction through which a company may lose its legal form (eg, following a merger or dissolution), the successor company may not be held liable for any acts of bribery committed by legacy companies that were sentenced for conviction before the date of the transaction, on the basis of Article 121-1 of the French Criminal Code, according to which any person is criminally liable only for own actions.
However, the Court of Justice of the European Union has ruled that a conviction which becomes final after the date of the transaction for an offence committed by a legacy company before the transaction must be transferred to the successor. Based on recent case law, the French courts are continuing to apply the criterion as stated above.
Individuals: The execution of a transaction through which a company loses its legal form does not affect the conditions for engaging the criminal liability of the relevant individuals (eg, legal representatives of the legacy company).
Civil liability: In case of a merger, the absorbed entity may lose its legal personality and there is a universal transfer of its assets to the successor entity. Such transmission includes any civil claims that have arisen or may arise.
4.1 Is implementing an anti-corruption compliance programme a regulatory requirement in your jurisdiction?
While the rules prohibiting criminal offences such as bribery and influence peddling apply to any person, the Sapin II Act preventing corruption has a limited scope of application.
The Sapin II Act requires French companies and state-owned industrial and commercial entities that exceed certain thresholds to implement an effective system to prevent and detect corruption. With regard to such preventive measures, these companies are supervised by the Agence française anticorruption (AFA).
The following companies must put in place anti-corruption programme:
- French companies with at least 500 employees and a turnover above €100 million;
- French companies belonging to a group with a French parent company, at least 500 employees in total and a consolidated turnover above €100 million;
- subsidiaries, whether French or foreign, of the French companies referred to above that publish consolidated financial statements; and
- French state-owned industrial and commercial entities with at least 500 employees or belonging to a state-owned group with at least 500 employees in total and a consolidated turnover above €100 million.
As a result, any French entity belonging to a group with French parent company with at least 500 employees in total and a consolidated turnover above €100 million is subject to the Sapin II Act.
4.2 What compliance best practices should a company implement to mitigate the risk of anti-corruption violations?
Companies that are subject to the Sapin II Act should comply with the guidelines published by the AFA in proportion to their size and the nature of the risks identified in their risk map. Most of the AFA’s guidelines are published following consultation with the relevant actors and are inspired by international best practices. In addition, companies which do not fall within the scope of the Sapin II Act are also encouraged to set up a compliance programme that meets the Sapin II Act requirements to prevent corruption (even if implementation is not mandatory).
French professional associations such as the Association Française des Marchés Financiers have also issued best practices for the banking and financial industry to consider and manage corruption risks within their activities. According to the AFA, these recommendations “bring French legislation up to the highest standard in this area, and are part of France’s efforts to comply with its international commitments” and “are at least as stringent as the FCPA Resource Guide, the UKBA Guidance and the World Bank’s Anti-Corruption Guidelines”.
4.3 Which books and records requirements have relevance in the anti-corruption context?
Any document caught within the anti-corruption programme should be subject to the books and record requirements under the Sapin II Act (eg, documents attesting to the identities of customers, intermediaries, agents and so on).
Discussions between the AFA and the Commission Nationale de l’Informatique et des Libertés on how best to reconcile the recording and data protection rules are ongoing. These authorities intend to publish a handbook in the near future in the context of anti-corruption programmes.
4.4 Are companies obliged to report financial irregularities or actual or potential anti-corruption violations?
No rules under French law require companies to reveal any violation of anti-corruption laws; neither are there leniency provisions for such disclosures.
However, there is an immediate reporting obligation to the public prosecutor for any authority, public officer or civil servant who, in the performance of his or her duties, becomes aware of an offence under Article 40, paragraph 2 of the French Code of Criminal Procedure. However, enforcement of this reporting has been subject to criticism by the Organisation for Economic Co-operation and Development, which has stated that “no warning and reporting mechanism (had) been put in place in government agencies to enable comprehensive enforcement of the provisions of Article 40, paragraph 2 of the Code of Criminal Procedure”, and that “The interpretation of the modalities to report allegations of bribery… was still an outstanding issue”.
4.5 Does failure to implement an adequate anti-corruption programme constitute a regulatory and/or criminal violation in your jurisdiction?
Administrative violation: Failure to implement an anti-corruption compliance programme that meets the Sapin II Act requirements constitutes a regulatory violation that may lead to administrative sanctions imposed by the AFA Enforcement Committee.
Criminal violation: Failure to implement an anti-corruption compliance programme that meets the Sapin II Act requirements does not constitute a criminal violation per se. However, there is a risk that the AFA may become aware of facts that are likely to qualify as a criminal offence when carrying out its duties and report them to the public prosecutor, resulting in a criminal prosecution.
5.1 Can companies that voluntarily report anti-corruption violations or cooperate with investigations benefit from leniency in your jurisdiction?
No. French law does not provide for formal leniency programmes for companies that disclose anti-corruption violations.
However, there is a mechanism for natural persons who disclose violations in exchange for lesser penalties. In 2013 a new law introduced into the French Criminal Code the possibility for the perpetrators of, or accomplices to, an offence of bribery or influence peddling of public officials or judicial staff to have their penalties reduced by half if, by informing the administrative or judicial authorities, they make it possible to prevent or stop the offence or to identify other perpetrators or accomplices.
5.2 Can the existence of an anti-corruption compliance programme constitute a defence to charges of anti-corruption violations?
In the event of a criminal prosecution for corruption of a company, its management or employees, a robust compliance programme is a factor that may be taken into account.
However, French prosecution agencies and courts have not published any guidance on mitigating factors; unlike the US Department of Justice, which has published, for example,guidance relating to the evaluation of corporate compliance programmes.
5.3 What other defences are available to companies charged with anti-corruption violations?
Defences to charges of anti-corruption violations must be assessed on a case-by-case basis.
5.4 Can companies negotiate a pre-trial settlement through plea bargaining, settlement agreements or similar?
Yes. Article 22 of the Sapin II Act introduced the settlement agreement into Article 41-1-2 of the French Criminal Procedure Code. Although the settlement agreement was inspired by the deferred prosecution agreements that have been employed in the United States and the United Kingdom, there are several key differences in this regard.
The Agence française anticorruption (AFA) and the Financial Prosecution Office (PNF) recently issued guidelines on the implementation of the settlement agreement.
The settlement agreement procedure authorises the public prosecutor to offer to public or private legal persons who have been accused of offences such as corruption, influence peddling and tax fraud, as well as related offences, regardless of their nationality, turnover or number of employees, to enter into an agreement whose execution will have the effect of extinguishing the public action.
The settlement agreement does not protect the legal representatives of a company, who remain accountable as individuals. The settlement agreement may impose one or more of the following obligations on the legal entity:
- payment of a ‘public interest’ fine, the amount of which shall be in proportion to the benefits derived from the violations (within the limit of 30% of the average annual turnover, calculated on the basis of the last three annual turnover figures known at the time of the findings of the violations);
- implementation of a compulsory compliance programme for a maximum of three years, under the AFA’s supervision. In these cases, the costs incurred by the AFA in carrying out the legal, financial, tax and accounting review necessary for its audit shall be borne by the legal entity, up to a cap stated in the agreement; and
- compensation for damages caused by the offence to any known victims.
After negotiation of its terms between the public prosecutor and the legal entity, the settlement agreement must be validated by a judge (the president of the first-instance court).
The AFA will supervise the execution of the anti-corruption programme required under the settlement agreement. Within the course of its supervision, the AFA “must report to the public prosecutor, at his or her request and at least once per year, on the implementation of the programme”, and “will report any difficulties and will also submit a report when the time limit for execution of the measure lapses”. In case of breach of the settlement agreement, the public prosecutor is authorised to reopen the case.
The first settlement agreement was proposed by the PNF to HSBC Private Bank Suisse SA in 2017, together with a public interest fine of €300 million. Four settlement agreements were signed in the first half of 2018 and one in the first half of 2019, as set out in the following table.
|June 2019||CARMIGNAC GESTION||Tax fraud||€30 million|| |
|May 2018||SOCIETE GENERALE SA||Bribery of public agents||€250,150,755|| |
|May 2018||POUJAUD SAS||Bribery, misuse of company assets||€420,000|| |
|February 2018||SET ENVIRONNEMENT SAS||Bribery of public agents||€800,000|| |
|February 2018||KAEFFER WANNER SAS||Bribery of public agents||€2,710,000|| |
|November 2017||HSBC PRIVATE BANK SUISSE SA||Illicit banking solicitation, money laundering, tax fraud||€157,975,422|| |
One procedural route to avoid a trial is for the company to opt for a guilty plea (‘Comparution sur ReconnaissancePréalable de Culpabilité‘). This will be proposed by the public prosecutor or requested by the offender and is subject to validation by the president of the first-instance court.
5.5 What penalties can be imposed for violations of the anti-corruption legislation? Can non-exhaustive penalties be imposed for such violations (eg, exclusion from public procurement, exclusion from entitlement to public benefits or aid, disqualification from the practice of certain commercial activities, judicial winding up)?
Violations of the anti-corruption legislation may lead to the imposition of criminal sanctions by criminal courts and/or administrative sanctions by the AFA Enforcement Committee for entities subject to the Sapin II Act requirements.
Criminal courts: Criminal courts may notably impose one or several of the following sanctions for corruption or related offences:
- compliance programme penalty;
- imprisonment (up to 10 years);
- prohibition for a period of no more than five years to exercise directly or indirectly the activity in connection with which the offence was committed;
- exclusion from public procurement; and
- any additional sanctions.
Alternatively, as mentioned above, a settlement agreement can be sought to end a prosecution without a criminal conviction.
AFA Enforcement Committee: Where the AFA determines that a company has failed to implement an anti-corruption compliance programme under the Sapin II Act requirements, the AFA’s director may either issue a warning to the company’s legal representatives or initiate a sanctions procedure before the AFA Enforcement Committee.
The AFA Enforcement Committee has the power to impose one or several of the following administrative sanctions:
- injunction to adapt compliance procedures for the prevention and detection of acts of corruption or influence peddling within a period of up to three years;
- fine of up to €200,000 for individuals (eg, chairman, CEO) and €1 million for legal persons; and
- publication of the sanction at the company’s expense.
The company may be assisted by legal counsel before the AFA Enforcement Committee.
5.6 What is the statute of limitations to prosecute anti-corruption violations in your jurisdiction?
AFA actions: AFA actions shall be time barred after three years, which starts to run from the date on which the breach was established if, within that period, no action was taken to sanction that breach.
Criminal prosecution: Following the reform of the statute of limitations that came into force on 1 March 2017, the limitation period to prosecute offences (‘délit‘) such as corruption has doubled from three years to six years.
This period begins to run from the date of the act of corruption or the last act of corruption. If the offence is hidden or dissimulated, the period begins to run only from the date on which the offence could be detected and prosecuted (but the offence cannot be prosecuted more than 12 years after its commission).
6 Trends and predictions
6.1 How would you describe the current anti-corruption enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
French law does not provide for any alternative to criminal prosecution per se where enforcement agencies establish the offence of corruption. Criminal prosecution may lead to a settlement through the settlement procedure, a guilty plea or a trial.
7 Tips and traps
7.1 What are your top tips for the smooth implementation of a robust anti-corruption compliance programme and what potential sticking points would you highlight?
The anti-corruption enforcement landscape has become more complex in the last few months:
- The Agence française anticorruption (AFA) considers that the implementation of anti-corruption programmes under the Sapin II Act should now have been completed.
- The AFA will be more demanding when conducting its inspections (since the grace period for implementation of the anti-corruption requirements is ending).
- The number of AFA personnel has increased, in particular persons in charge of on-site inspections.
- The types of companies under investigation have become broader (real estate construction companies, pharmaceutical enterprises, automobile manufacturers and now the banking industry have all been the object of AFA audits).
- The AFA is now more willing to impose heavier sanctions so as to pressure companies within its scope of audit to implement serious, robust and effective anti-corruption programmes.
The AFA continues to update its recommendations in order to assist relevant entities in understanding how the Sapin II Act requirements should be interpreted and applied.
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.
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Article by Jean-Baptiste Poulle
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