The French anti-corruption law addressing transparency, anti-corruption and economic modernization, also known as the Sapin II law, entered into force on 1 June 2017. The law stipulates that companies must establish an anti-corruption program to identify and mitigate corruption risks. The Sapin II law criminalizes influence peddling and, thus, makes any legal or natural person criminally liable for offering a donation, gift or reward, with the intent to induce a foreign public official to abuse his/her position or influence to obtain an undue advantage.
A ground-breaking feature of the Sapin II law is the expanded extraterritorial effect it gives to French criminal law, consequently removing the dual criminality requirement. Prosecution of corruption may take place in French courts regardless of whether an official denunciation is made by the state in which the alleged breach occurred or whether any complaint is filed by the alleged victims of the crime.
The Three Driving Principles of the Sapin II Law
- Promote transparency. This is primarily manifested in the creation of a status of whistleblowers and the creation of a list of all interest groups. This list publicly discloses information on links between interest groups and public officials.
- Step-up the fight against corruption. The law clearly aims at strengthening France’s efforts in curbing corruption on a global level through the creation of a new anti-corruption agency (Agence Française Anti-Corruption) with far more resources and power than its precedent, the ‘Service Central de Repression de la Corruption’ (SCPC), and through strengthening sanctions on non-compliance.
- Modernize the economy. The law stipulates that company leaders must receive awareness training on the risks of corruption.
Who can be held liable under the Sapin II law?
The Sapin II law is mostly preventive in nature, with the French anti-corruption agency, Agence Française Anti-Corruption (AFA), mandated with making recommendations to companies on the effectiveness of, and potential improvements to, their anti-corruption programs. If not followed, the AFA can issue warnings and impose sanctions. This applies to:
- Legal persons:
- any company located in France with 500 employees or more, and an annual turnover reaching at least EUR 100 million;
- any company belonging to a group whose headquarters located in France, with a minimum of 500 employees worldwide and an annual turnover of at least EUR 100 million;
- any French public entity with an industrial or commercial character, with at least 500 employees and an annual turnover of at least EUR 100 million;
- Natural persons:
- members of the executive board, presidents and directors of companies accountable under the law;
- CEOs and presidents of French public entities with a commercial character with at least 500 employees and an annual turnover of at least EUR 100 million;
What are the sanctions that can be imposed under the Sapin II law?
- A legal person may incur:
- A fine up to EUR one million for the breach of the obligation to implement measures to prevent and detect corruption.
- A fine up to EUR 200,000 for failure to implement measures to prevent and detect corruption.
Judicial Agreement in the Public Interest (convention judiciaire d’interêt public - CJIP)
‘Judicial Agreement in the Public Interest’ (convention judiciaire d’interêt public - CJIP), or what is more commonly known as deferred prosecution agreements (DPAs), is another new feature introduced by the Sapin II law. Imitating the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, the French CJIPs are offered to legal persons suspected of having committed an act of corruption, at the initiative of the public prosecutor or the investigating judge. If a CJIP is reached, the imposed fine will be proportionate to the gains made from the breach, yet it cannot exceed 30% of the entity’s average annual turnover within the last 3 years at the time the offence was committed. In addition, the company will be compelled to implement a compliance program under the control of the AFA for a period of three years. A settlement also imposes the indemnification of any known victim, with payment having to be made within one year.
Unlike under the FCPA – where DPAs are reached whenever there is a suspicion or an identification of an actual breach – and unlike under the UK Bribery Act – where companies may demonstrate a full defense of ‘adequate procedures’ in case of a breach – the Sapin II law can hold companies liable for failure to implement an efficient anti-corruption program, even when no corrupt activity has taken place.
The judicial agreement in the public interest will have to be validated by the President of Tribunal (Tribunal de grande instance) after a public hearing, but this validation will not have the effect of a sentencing judgment, thus allowing companies to avoid automatic debarment from public procurement contracts. There is no admission of guilt. However, victims of corruption are excluded from the CJIP, and may nonetheless seek damages against the party accused of corruption. DPAs may also be reached during criminal proceedings, before a court’s final judgment.