Corruption does not hinder business in France. The country's investment climate is very favourable, and there exists a strong legal framework to counter corruption. Corruption is perceived to be a problem where business and politics overlap. Public procurement is the sector most affected by corruption. Cases involving illegal political funding have tainted the careers of several high-ranking French politicians. The Penal Code (in French) criminalises active and passive bribery and bribery of national and foreign officials, and gifts and facilitation payments are criminal offences. Demands for irregular payments are very unlikely to occur in France.
Last updated: December 2015
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Companies do not contend with any corruption risk when dealing with the courts in France. The judiciary is perceived as independent and the levels of integrity of prosecutors and judges are deemed to be very high, with a very low number of corruption cases (GCR 2015-2016; FER 2014). More than half of citizens indicate a high-level of trust in the judicial system (European Commission, Feb. 2014). A factor that represents a competitive advantage for the country is the judiciary's effectiveness in enforcing investor’s contractual and property rights, in settling disputes and in challenging government actions and/or regulations (GCR 2015-2016). International rulings are enforced by the local courts, provided that the foreign courts in question have been declared 'executor' by a French judge. A mediator for corporate relations between industry and subcontractors are in charge of resolving intercompany disputes and cooperates with both French and foreign companies (ICS 2013).
Evidence from a corruption case involving former president Nicolas Sarkozy included secret wiretaps of Sarkozy’s phone conversations. The wiretaps revealed discussions between him and lawyer Thierry Herzog, over whether to offer a magistrate a lucrative job in exchange for insider information in the Bettencourt affair (relating to alleged illegal campaign financing). The court ruled, to the detriment of Sarkozy, that the wiretaps would be used as evidence in his corruption case, despite the bugs being a breach of lawyer-client confidentiality. Although the magistrate was never given the job, him and Thierry Herzog were also charged (RFI, May 2015). France is a member of the International Centre for Settlement of Investment Disputes (ICSID) and is a signatory to the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
There is a very low corruption risk for businesses dealing with the French security sector. The police are well-trained and the levels of integrity within the institution are fairly high (EUACR 2014). Businesses consider the police reliable in enforcing law and order (GCR 2015-2016). Despite this, almost half of citizens consider the police to be corrupt (GCB 2013), and around half of respondents from another survey perceive instances of bribery and abuse of office within the police to be widespread (European Commission, Feb. 2014). The Inspectorate General of National Police (IGPN) was reformed to allow citizens to report police abuse online through the Minister of Interior's website (HRR 2014). The IGPN actively investigates and prosecutes corruption among the police (HRR 2014).
Businesses investing in France face a low corruption risk when dealing with public services. Irregular payments are rare (GCR 2015-2016), and almost half of companies report that they would experience minor delays upon refusal of paying facilitation payments (Control Risks 2015-2016). Half of surveyed businesses report bribery and the use of connections often being the easiest way to obtain a public service (European Commission, Feb. 2014). Around a third of citizens perceive inspectors and officials dealing with licencing to be involved in bribery and abuse of office, yet none report to have paid a bribe to obtain a public service (European Commission, Feb. 2014).
Companies believe that the burden of government regulations and inefficient bureaucracy negatively affects levels of competitiveness in France. Businesses also complain about inter alia, red tape and unpredictability in legislation (ICS 2015; GCR 2015-2016). Companies are able to manage administrative tasks online, such as establishing, selling or taking over a company through the one-stop-shop at Guichet-entreprises.fr. Starting a business in France is less time-consuming and less costly on average compared to other OECD countries (DB 2016).
Companies dealing with France's land administration face a low corruption risk. Almost half of surveyed citizens perceive bribery and corruption to be widespread among officials issuing building permits, yet none report having paid a bribe (European Commission, Feb. 2014). The real estate sector is ranked among the two sectors that are most vulnerable to corruption (AgileBuyer 2015, in French). Half of the surveyed businessmen venturing into the real estate sector report that they have been victims of corruption (AgileBuyer 2015). Registering property in France is on average more costly and more than twice as time-consuming compared to other OECD countries (DB 2016).
Almost half of surveyed businesses perceive tax fraud in France to be widespread (European Commission, Feb. 2014). Companies complain that the tax environment represents an obstacle to business (ICS 2015; GCR 2015-2016); a majority report that tax rates are a problem (European Commission, Feb. 2014). France recently decreased the costs required to pay taxes by introducing a credit against corporate tax and reducing labour tax rates (DB 2016).
The French customs administration is transparent, and irregular payments in relation to exports and imports rarely occur (GETR 2014). Companies perceive customs procedures to be effective (GCR 2015-2016). Only one document is required for exporting and importing across the borders of France, while the time required to deal with trading across borders is minimal. France recently eased the process of trading across the country's borders by introducing an electronic customs declaration and by eliminating the need to submit certain documents (DB 2016).
Public procurement is the most corruption-prone sector in France (ICS 2015), despite the strong legal framework regulating the sector. Businesses claim that public funds are sometimes diverted to companies, individuals or groups due to corruption, and that government officials tend to show favouritism when deciding on contracts (GCR 2015-2016). Most surveyed French managers report that practices of favouritism and corruption hamper competition (European Commission, Feb. 2014), and a little over one-third report that they have lost contracts due to competitors resorting to corruption (Control Risks 2015-2016). Corruption risks identified by companies include overly bureaucratic and burdensome procedures and tailor-made criteria for certain companies (European Commission, Feb. 2014). France's procurement provisions are in-line with the EU Directive on Remedies to protect bidders from unfair competition (OECD 2012). Companies are recommended to set up and strengthen integrity systems and conduct due diligence when investing or planning to invest in France.
In a foreign bribery case, French energy and transport conglomerate Alstom was found guilty of paying more than USD 75 million in bribes to government officials in different countries, including Saudi Arabia, Indonesia, Egypt, Taiwan and the Bahamas. The company and its subsidiaries admitted to bribing officials in return for obtaining contracts for power, grid and transportation projects for state-owned entities. Alstom had secured power projects amounting to USD 4 billion and had made a profit of USD 300 million. In an attempt to hide the scheme, the company had hired consultants who acted as conduits to pay the bribes to officials. Alstom will pay a fine of USD 772 million (Financial Times, Dec. 2014).
The Penal Code of France (in French) criminalises active and passive bribery of national and foreign officials, with the punishment for bribery reaching 10 years' imprisonment and a fine of up to EUR 150,000 for individuals and EUR 750,000 for legal entities. In actuality, penalties have been limited to fines averaging EUR 850 and prison sentences are rare, leading to criticism by the French anti-corruption agency SCPC, which claims corrupt profits exceed the penalties and thus, fails to form the basis of a strong deterrent (Association Corporate Council, Aug. 2013). The Penal Code also criminalises facilitation payments, giving and receiving gifts to influence officials, influence peddling, money laundering,extortion and abuse of office. French anti-corruption laws apply to corrupt practices committed in foreign countries by citizens or businesses incorporated in France, provided these acts are also punishable under the law of the country where the crime was committed (CLCG 2012). The French government has been criticised for the low numbers of prosecutions on transnational bribery committed by French companies abroad. Since signing the OECD convention in 2000, France has only prosecuted four foreign bribery cases - three of which were minor with fines of less than EUR 10,000 - compared to the seventy prosecutions in Germany (Metis, Feb. 2015). The government is criticised for taking no steps to clarify or remove the dual criminality requirement for foreign bribery enforcement, as well as for the removal of the requirement of a victim report or an official accusation from a foreign country before launching an investigation (FCPA Blog, Jan. 2015). In fact, three of the ten largest FCPA actions were enforced on French companies; no other country appears more than twice in the top ten cases (Global Compliance News, Sep. 2015). Government officials are required to declare their assets upon taking and leaving office (HRR 2014).
France is a signatory to several anti-corruption conventions, including the UNCAC, the OECD Anti-Bribery Convention, the Council of Europe Criminal Law Convention on Corruption, the Council of Europe Civil Law Convention on Corruption and is a member of the Council of Europe Group of States against Corruption (GRECO). Access the Lexadin World Law Guidefor a collection of legislation in France.
French law provides for freedom of the press, and the government respects this right (FotP 2015). Public media outlets are popular in France, and independent media outlets have flourished, operating independently and without any government restrictions. France’s strict defamation laws are sometimes used to pressure journalists (FotP 2015). A military programming law gives broad powers to government agencies to monitor internet content, potentially jeopardising the confidentiality of journalists’ sources (FotP 2015). France’s press environment is considered 'free' (FotP 2015).
Civil society in France operates freely, and domestic and foreign NGOs operate in France without government restrictions (HRR 2014). According to an analysis of French civil society published by Donor Tracker, the influence that civil society groups exercise on decision-making and policy development is limited, despite it being an active sector.
- World Ban & IFC: Doing Business 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Control Risks: International Business Attitudes to Corruption 2015-2016.
- Freedom House: Freedom of the Press – France 2015.
- US Department of State: Investment Climate Statement - France 2015.
- AgileBuyer: Les Priorités des Services Achats en 2015 ou la manière dont seront gérés les sous-traitant en 2015.
- Global Compliance News: 'Anticipating New French Anti-Corruption Rules: France Signals Willingness to Strengthen Legislation to Combat Bribery and Corruption', 9 September 2015.
- RFI: 'French court allows Sarkozy phone-taps as corruption case evidence', 7 May 2015.
- Metis: 'Lutte contre la corruption: La France exemplaire?', 2 February 2015.
- FCPA Blog: 'OECD to France: When will enforcement start', 20 January 2015.
- US Department of State: Country Report on Human Rights Practices - France 2014.
- World Economic Forum: The Global Enabling Trade Report 2014.
- European Commission: EU Anti-Corruption Report - France 2014.
- European Commission: Special Eurobarometer, February 2014.
- GRECO: Fourth Evaluation Round - Evaluation report France 2014.
- Financial Times: 'Alstom to pay record $772 fine for bribery', 22 December 2014.
- Transparency International: Global Corruption Barometer 2013.
- Daily News: 'UBS fined $13 million after stalling 18 months to curb money laundering and fiscal fraud', 26 June 2013.
- New York Times: ‘France Expands Inquiry of Tax Evasion at UBS’, 7 June 2013.
- Spiegel Online: ‘Trouble in Paris: A crisis of Democracy rocks the fifth republic’, 8 April 2013.
- McDermott Will & Emery: Anti-Bribery and Corruption Law Multi-Jurisdictional Client Guide 2012.
- Transparency International: Money, Politics, Power: Corruption Risks in Europe 2012.