France recently enacted a new anti-corruption law in the so-called Sapin II Act, that companies must implement by 1 May 2017.
After the 2014 Hamon Act and the 2015 Macron Act, it is the turn of the Sapin II Act of 9 December 2016 to tackle corruption issues and to attempt to modernise the economy. The Sapin II Act came into force in France on 11 December 2016.
The Act brings a string of reforms in France aiming to relax rules on price transparency, tighten control over restrictive business practices, and increase the penalties incurred all round.
Of interest to international businesses, the law also enacted a new anti-corruption regime in France with a new enforcement agency (the Agence française anticorruption or AFA), a programme of whistleblowers, a compliance regime or code of conduct (with eight mandatory measures to prevent corruption) and criminal penalties ranging from fines to imprisonment for executives.
It establishes a strict positive obligation on French companies to “prevent corruption.” Companies with over 500 employees or an annual turnover in excess of 100 million Euros are expected to implement an appropriate internal ABC risk management framework against which the company and its directors will be held accountable.
AFA is given enforcement powers to impose fines of up to 200,000 Euros per breach against individuals and 1 million Euros against entities. Failure to correct breaches can result in prison sentences of up to two years and fines of 400,000 Euros for individuals and 2 million Euros for companies. There is also a deferred prosecutions regime. AFA and its prosecutors have authority to investigate acts whether or not an offence occurred under local law.
This law looks and feels different from its UK and American counterparts in at least three ways worth mentioning in this blog:
- If, Sapin II expands extra-territorial reach for French prosecutors and applies fully to corruption by French companies overseas and foreign companies with a footprint in France (“exercising all or some of its activities on French territory”), the compliance regime that is now required from those companies is different from section 7 of the UK Bribery Act. Section 7 is a compliance defence for an act of bribery. Under Sapin II, a company may be sanctioned for non-compliance without any predicate offence. In addition, there is no formal mechanism for prevention programs to reduce the severity of penalties for companies prosecuted for corruption.
- Deferred Prosecutions Agreements (DPA). It is not clear what the French authorities will take on the effect of a foreign settlement as the Act does not settle the French position on double jeopardy. A few French court cases will soon be decided that will help to determine the recognition of US-deferred prosecution agreements in France.
- The whistleblowing programme is rather different from those in place in common law countries. For example, the law does not protect or incentivise whistleblowing by implicated parties and the “innocent whistleblower” must have firsthand knowledge of the facts and report them ”selflessly and acting in good faith”. Whistleblowers receive immunity from criminal prosecution in very few exceptions. If French law will guarantee their anonymity for a while and provide them with some financial support, the whistleblower will need to go through the internal whistleblowing channels of their organisation before blowing the whistle to the relevant regulatory authority and the press.
Most French companies will need to consult with their employee representative organisations prior to integrating the code of conduct into internal regulations. Companies already complying with UK and US regulations may need to consider how this last obligation affects their existing policy framework.
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