On November 8, the French government adopted a significant new law on “transparency, the fight against corruption and modernization of economic life.” The law is part of a larger effort toward anti-corruption reform in France.
Nicknamed the Sapin II Law, after French Minister of Finance Michael Sapin, the legislation comes following pressure from fellow nations and international organizations for France to step up efforts to combat bribery and corruption. The Organization for Economic Cooperation and Development (“OECD”), in particular, asserted in a formal 2015 declaration that France was not adequately complying with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The OECD urged France to take prompt action to enact more effective anti-corruption measures to meet its convention requirements.
French companies are not strangers to anti-corruption enforcement. Three of the top 10 U.S. Foreign Corrupt Practices Act (FCPA) enforcement actions involve French companies. Technip, Alcatel, Total and Alstom alone have paid an aggregate of $1.65 billion in fines following DOJ and SEC enforcement.
The French Ministry hopes that legislative reform will increase transparency and offer a robust anti-corruption framework. Sapin II has four key features:
- The creation of a new anti-corruption agency
France’s existing anti-corruption agency, the Central Service for the Prevention of Corruption (SCPC), created in 1993, lacks the inability to investigate as well as to levy fines. Sapin II creates a National Agency for the Detection and Prevention of Corruption (ANPDC) with broader investigative and sanctioning powers, as well as exclusive authority over whistleblower investigations and protection efforts (see below).
- Duty to prevent corruption
Another key feature of Sapin II is the creation of a binding duty of companies to prevent corruption. Currently, no comparable legal obligation exists. Under Sapin II, presidents, managing directors, directors and managers are required to implement measures to prevent and detect corruption, domestically and internationally. Mandatory implementation measures include: “(i) an ethics code, (ii) an internal whistleblowing procedure, (iii) risk mapping, (iv) assessment procedures for customers, major suppliers and intermediaries, (v) accounting checks, (vi) employee training, (vii) disciplinary sanctions, and (viii) an internal check and assessment system regarding the implemented measures.”
- Sanctioning scheme
The new law establishes corporate criminal liability for failure to prevent bribery and corruption. This feature seemingly draws influence from the UK Bribery Act. France’s criminal penalty will require convicted entities to implement anti-corruption policies in three years, per ANPDC guidelines, or face additional sentencing and monetary sanctioning.
- Opportunity for settlement
Sapin II will offer accused parties the opportunity to come to a criminal settlement agreement with prosecutors, similar to those reached in the U.S. and under the U.K.’s Deferred Prosecution Agreement (DPA) system.
- Whistleblower program and anti-retaliation protection
Finally, under the new law, whistleblowers will be guaranteed anonymity. As in the UK, whistleblowers will not be compensated financially for their reporting. However, in the event of retaliation, Sapin II imposes penalties on retaliators. The law also provides whistleblowers who report misconduct in good faith and are then subject to retaliation with possible opportunities for indemnity as well as financial assistance.
Sapin II is applicable to (i) all companies with 500 employees or more; and (ii) all companies belonging to a group with 500 employees or more, recording a turnover of a minimum of 100 million euros (“bound entities”). Liability under Sapin II covers any act of corruption committed by applicable companies or employees thereof, either in France or abroad.
For more information on international anti-corruption standards, as well as best practices for adherence, please see CREATe.org resources.