France, often criticized for its lax anti-corruption efforts, is considering an anti-bribery law of its own.
France’s Finance Minister Michel Sapin introduced a proposed anti-corruption bill, Sapin II, to the French government on March 30 that in many respects is inspired by anti-corruption laws already in place in the United States and United Kingdom. The bill, for example, “provides for the offense of corruptly influencing a foreign public official in order to bring our criminal procedure into line with the issues raised by transnational corruption,” the French government stated.
Additionally, the proposed bill would impose a legal obligation on companies and senior management to take “effective” measures to prevent and detect—in France and abroad—bribery and corruption risks. Specifically, they would be required to adopt the following anti-corruption internal procedures:
A code of conduct that defines and illustrates prohibited acts and behaviors;
An internal reporting system;
A risk map, to be regularly updated and based on the business sectors and geographical areas concerned;
Due diligence procedures for the company’s clients and suppliers;
Internal and external accounting controls;
Training for managers and individuals most likely to be exposed to corruption risk; and
Disciplinary sanctions for breach of internal rules.
“For bigger companies, measures already in place would need to be adapted to meet the new requirements,” stated a client alert from Herbert Smith Freehills. “However, they would also need to deal with conflicts between the French compliance rules and those of other laws or foreign authorities to which they are also subject. Companies are liable to be audited and would therefore need to maintain the appropriate procedures at all times, requiring them to re-direct resources to manage compliance.”
The reforms would apply to companies with 500 or more employees, or companies belonging to a group of companies with an aggregate workforce of 500 or more employees and an individual or group turnover of at least €100 million.
According to the French government, roughly 1,600 in France fall under this bracket. This obligation already exists in a number of countries, including the United Kingdom and Switzerland.
“The two conditions are cumulative: a company with a turnover exceeding the threshold but with a workforce below 500 would avoid the new rules and vice versa, according to the current wording of the law,” the client alert stated. “Businesses that do not meet the two thresholds individually but that belong to a group of companies with more than 500 employees and a consolidated turnover of over €100 million would nevertheless be affected.”
Not only would the company itself have to comply with the obligations under the bill, but so, too, would its subsidiaries and companies controlled by that company. “Compliance measures could be organized for the group as a whole by the parent company,” the client alert stated.
Additionally, the client alert added that the proposed reforms raise certain important questions as to how the rules should be interpreted in terms of international groups of companies: “For example, when applying the thresholds to groups of companies, should all companies be taken into account, both in France and abroad (or just companies incorporated in France)? Would the foreign parent company be affected if the group exceeds the thresholds but the French subsidiary employs fewer than 500 people?”
“While we can attempt to extrapolate tentative answers to these questions from the law as it currently stands, the final rules will evidently depend on the forthcoming changes and clarifications brought to the text,” the client alert stated.
New enforcement body
The proposed reform would create a new anti-corruption enforcement body, whose responsibilities would include issuing guidelines to help companies fulfill their new obligations to adopt anti-corruption prevention and detection procedures; monitoring compliance, and imposing fines on both individuals and legal entities for any breaches of compliance.
This new enforcement body would act under the supervision of the Minister of Justice and the Minister of Budget. The French President would nominate the director of the enforcement body for a non-renewable six-year term.
This enforcement body would also have the power to impose penalties for non-compliance on companies and individuals. Penalties may include ordering the company to implement an effective compliance program, and imposing a fine, up to €200,000 for individuals and €1 million for legal entities.
The proposed bill also promotes legal protection for whistleblowers in the financial sector. The newly formed National Agency will be able to advise them on their rights and the legal protection to which they may be entitled, particularly if they are accused of making false allegations.