On Friday 9 December 2016, the French National Assembly has passed the new French anti-corruption law No. 2016-1691 (known as Sapin II). The new law will fully enter into force on 1 June 2017. For many years France has had a large number of statutes aimed at fighting corruption and bribery. However, the new law introduces an expanded list of offences and imposes positive obligations on companies which fall under its provisions to take active steps to prevent committing bribery and corruption offences in France and abroad.
Sapin II criminalises the acts of corruption, bribery, and influence peddling, and contains a list of ancillary offences, such as, favouritism in public procurement procedures, unfair representation of a company’s accounts and abuse of corporate assets. In addition to fighting bribery and corruption in France, the new law aims to prevent French companies (or nationals) from committing corruption offences abroad where they conduct business. It also capture offences committed by foreign companies operating in France. Sapin II also creates an obligation for companies and their senior management to prevent bribery and corruption by implementing internal anti-corruption programmes, employee trainings and risk management measures.
The new anti-corruption provisions under Sapin II apply to French companies (including state-owned companies) with yearly revenue of more than €100 million provided they either have a minimum of 500 employees, or they form part of a corporate group (whose parent company is incorporated in France) which employs no less than 500 employees and have a yearly revenue of more than €100 million. Sapin II also apply to certain subsidiaries and affiliates of the above mentioned companies regardless of their place of incorporation subject to certain criteria.
What is new about Sapin II?
Sapin II imposes an obligation on large French companies to prevent bribery and corruption and requires such companies to implement effective internal compliance measures to achieve that. For example, companies to which Sapin II applies will have to put in place, among other things, an internal corporate code of conduct, employee disciplinary procedure, corruption risk assessment framework, a review of business partners and suppliers, whistleblowing mechanism and anti-corruption training for employees. This is in addition to internal accounting controls and checks to guarantee that the company’s accounts are not used to conceal corrupt conduct.
Sapin II also creates a new French Anti-Corruption Authority (AFA). AFA has broad investigative and preventive powers which are wider than those given to the previous French Central Service for the Prevention of Corruption (SCPC). The powers of the SCPC were limited to collecting information on corruption and communicating that information to the public prosecutor. It did not have any investigation powers. The AFA will work closely and support French legal authorities in enforcing anti-corruption law. It is authorised to issue guidelines to facilitate compliance with the obligations imposed by Sapin II. Such guidelines will encourage companies to adopt adequate internal procedures to prevent and deter corruption and ensure that they monitor their anti-bribery and corruption compliance programmes in a manner consistent with their risk exposure (e.g. industry and geographical risk profile).
Sapin II imposes a financial penalty for non-compliance with its provisions. Decisions imposing penalties on companies which are found to be in breach of Sapin II will be published on the AFA’s website. Failure to comply with these decisions will amount to an administrative violation. It is worth noting that Sapin II does not provide for a compliance defence like the one, for example, available under Section 7 of the UK Bribery Act 2010.
In addition, Sapin II allows for settlement agreements which are similar to the Deferred Prosecution Agreements in the US and the UK. Under such agreements criminal charges would be dropped by the French authorities in exchange for fines paid by the prosecuted company which will also be required to undertake compliance commitments monitored by the AFA for a period of no more than 3 years. These settlement agreements will not be registered in the company’s criminal record. However, it will be published on its website.
Sapin II harmonises parts of the French anti-corruption regime with the anti-bribery and corruption laws in the U.K and the U.S especially in the area of extraterritorial enforcement. Companies subject to Sapin II will have to review their relevant compliance programmes and controls which may need to be upgraded in order to meet the new requirements imposed by Sapin II.