The last version of the “French Bribery Act” gives more shape to the new provisions of the law and confirms that it contemplates to substantially change the legal anti-corruption scope in France.
Since March 2016, French parliamentarians have been examining what promised to be a new anti-corruption law that would represent a milestone event in the French history of anti-corruption landscape and a legal revolution (see our previous alert).
On 8 November 2016, the legislation has been definitively adopted by the French Parliament but has not yet been enacted because it has been submitted to the French Constitutional Council on 15 November 2016. The latter must rule within one month, and if it rules invalid certain provisions of the legislation, three options are available: (i) the law could be enacted without the invalid provisions, (ii) the law could be discussed again before the Parliament, or (iii) the French Constitutional Council expresses reservations which will be taken into account by future implementing decrees.
At this stage, the contours of the law are well defined and one can more specifically contemplate great changes in the legal framework on the fight against corruption.
The newly defined roles and powers of the new National anti-corruption Agency
The new French anti-corruption Agency will be a truly innovative organisation headed by a Magistrate. The Agency will be invested with several missions that have been specified by the legislation:
- Preparation of recommendations to assist public and private companies in preventing and detecting corruption;
- Control, on its own initiative, of the quality and efficiency of the procedures implemented within State administrations and authorities in order to prevent corruption;
- Monitoring of the implementation of specific compliance programs (see below).
Regarding the latter, the Agency will be invested with a toolbox of sanctions in case of non-compliance, among which have to be mentioned in particular (a) a financial sanction of up to €1,000,000 for legal persons as well as (b) the publication of the Agency’s decision regarding the sanction.
Precise guidelines for the implementation of compliance programs
The new law aims at setting up a positive obligation on French companies to implement a compliance program. The targeted companies are those with at least 500 employees and a yearly turnover of above €1.000.000. The French Ministry of economy stated in its press release of 8 November 2016 that it expects to target about 1,570 companies.
The guidelines set forth by the new law regarding the compliance program provide that it must include:
- A code of conduct defining and illustrating the different types of prohibited conducts that are likely to be considered as acts of corruption;
- An internal whistleblowing system designed to collect reports made by employees relating to the existence of conduct or practices that are in breach of the company’s code of conduct;
- A risk mapping in the form of regularly updated documentation designed to identify, analyze and prioritize the risks of exposure of the company to external solicitations for corruption, in particular by taking into account the sector of activity and the location of the company’s activities.
- Procedures for assessing the situation of clients and suppliers with respect to risk mapping;
- Internal or external accounting controls to ensure that books, records and accounts are not used to mask corruption;
- Training for managers and staff most exposed to the risk of corruption;
- A system of disciplinary sanctions in order to sanction employees in the event of a violation of the company’s code of conduct;
- A mechanism for internal monitoring and evaluation of the implemented measures.
Failure to implement such a compliance program could be sanctioned by the new anti-corruption agency as mentioned above (financial sanction up to €1,000,000).
In addition, in case of conviction for corruption, the judge can impose on the company the obligation to take appropriate steps to comply with the requirement of implementation of a compliance program under the close monitoring of the anti-corruption Agency.
A better defined disclosure of links of interests with lobbyists
The law contemplates to create a National registry of lobbyists. The latter are defined as “representatives of interest” and include any manager, employee or member of private or public companies whose main or regular activity is to influence public decision, in particular on the content of laws and regulations.
When a representative of interest liaises with a member of the Government, including the Prime Minister, parliamentarians, local elected officials, public officials, he/she will have to disclose his/her relationships with them and, in particular, the following information on the online register of the French High Authority for transparency in public life (‘HATVP’):
- For an individual, his/her identity, for a legal person, the identity of its directors;
- The scope of his/her representation of interest’s activities;
- His/her actions of representation of interests and the amount of expenses related to those activities in the previous year;
- The number of persons it employs in carrying out its task of representing interest and, where appropriate, the company’s turnover for the previous year;
- Professional or trade union organizations, or associations related to represented interests to which he/she belong to.
Regarding the disclosure of amount of expenses related to representation of interests’ activities, one could question what would be precisely covered here; however, at this stage, the law is already one step ahead of the French Sunshine Act at the time of its adoption on 29 December 2011. The latter targets the disclosure of links between pharmaceutical companies and healthcare practitioners. It had first imposed on companies to publish only the existence of agreements, but not the amounts which remained confidential (i.e. fees for services, etc.). This has been reformed by the French law of 26 January 2016, which now requires pharmaceutical companies to also disclose the amounts included in their contracts with healthcare practitioners.
In addition to the disclosure obligation, the representatives of interest will also be imposed several ethic rules. The HATVP will be invested with injunction powers to oblige the representatives of interest to communicate the required information or to comply with the ethical rules.
Failure to comply with this new set of obligations may be punished by a fine of up to € 15,000 and imprisonment up to one year.
Recognition of a legal status for whistle-blowers and obligation for companies to put in place a whistleblowing system
Under the new legislation, a whistle-blower is defined as an individual who discloses or reports in good faith and selflessly, a crime or offense, a serious and manifest infringement of an international commitment, an unilateral act of an international organization on the basis of the latter commitment, law or regulation, or serious threat or prejudice to the public interest of which he/she has been personally aware.
Facts, information or documents covered by the military secrecy, medical secrecy or the attorney-client privilege are excluded from the whistleblowing regime.
A specific obligation is imposed on public and private companies of at least 50 employees: they have to put in place appropriate procedures regarding whistleblowing systems, which constitutes an important cultural shift in France as so far, ethical alert lines were merely considered as the transposition tool in France of the Sarbanes-Oxley.
The legislation also ensures the legal protection of the whistle-blower by prohibiting any retaliation sanction, discrimination or unfavourable disciplinary measure pronounced against him/her.
Determination of the maximum amount in off-setting agreements in case of prosecution
The law establishes the possibility of an off-setting agreement that may be proposed by the Public prosecutor to a company before its prosecution. A judge will review the legality of this off-setting agreement during a public hearing.
In this procedure, the company will have to pay a fine to the Public Treasury, the amount of which is proportionate to the benefits derived from the breaches found within the limit of 30% of its annual turnover. In addition, for a period up to 3 years and under the control of the French anti-corruption Agency, the company will have to implement a compliance program (see above).
The fine will not be registered in the National criminal records, but the off-setting agreement will be published on the website of the French Anti-Corruption Agency and will be mentioned in a press release.
In that respect, the price of avoiding prosecution may be much higher than the fines actually at stake in case of conviction. In addition, such off-setting agreement will not hinder prosecution against individuals involved in the same case.
Sanctions remain unchanged
Without the off-setting agreements which imply the payment of a significant fine, the sanctions related to corruption have not been amended by the new law.
For individuals, the principal penalties for corruption offences are imprisonment of up to 10 years and a fine of up to €1 million or twice the profits drawn from the offence. There is no clear guidance as to how to assess such a profit yet.
Concerning companies or organisations, the principal penalty is a fine of up to €5 million for corruption. Other penalties that can be imposed on companies include temporary or definitive prohibition to carry out the business or debarment from public tenders, which is a separate but quasi-automatic additional penalty that does not exist in other regulations.
Extension of the territoriality of the French law
To date, French companies and individuals could be prosecuted for acts of corruption committed abroad and convicted in France. Now, the new law also apprehends any company which carries out all or part of its activities in France and also a foreign National who ordinarily resides in France. This extension makes it possible to sanction a foreign National at the head of a company located in France to which the French criminal law is applicable.
Client Alert 2016-312