A future bill to improve France’s anti-corruption framework

Friday 29 October 2021

Julie Zorrilla
Navacelle, Paris
jzorrilla@navacellelaw.com

Pierre Calderan
Navacelle, Paris
pcalderan@navacellelaw.com

Louis Beltaire
Navacelle, Paris
lbeltaire@navacellelaw.com

Five years on from the enactment of the Sapin 2 law, the ambition of which is to ‘bring French legislation to best European and international standards and to contribute to a positive image of France in the world’,[1] an evaluation of its effectiveness was carried out by a commission led by two Members of Parliament (MPs) Raphaël Gauvain and Olivier Marleix. The commission published a report listing 50 recommendations for improving France’s anti-corruption endeavours.[2] The two MPs then decided to convert this into a draft bill which will consider some of the recommendations listed in the report. This draft bill, which has not yet been published, is currently under government review before its submission to parliament which is expected to take place in November 2021. The main areas for improvement identified by the MPs, which should be the subject of the draft bill, are outlined below.

Revamping the French Anti-corruption Agency and its missions

The Sapin 2 law introduced the French Anti-corruption Agency (AFA), an administrative service, headed by an independent magistrate, with national jurisdiction and responsible for monitoring the existence and effectiveness of anti-corruption programmes put in place by government agencies, local authorities and large companies and the implementation of injunctions issued by its Sanctions Commission. The AFA investigates potential breaches of the obligations imposed by the Sapin 2 law relating to anti-corruption measures and the AFA’s Sanctions Commission can impose fines and issue injunctions.[3] The AFA also has a mission of administrative coordination which involves the centralisation and dissemination of information to help legal entities that are subject to the law implement measures for preventing and detecting corruption-related offences. To that end, the AFA issues regularly updated guidelines.[4]

The report highlighted that even though the AFA’s controlling and sanctioning missions have been well regarded, they have been carried out to the detriment of its coordination mission.[5]

It suggests, therefore, the creation of a special committee to fight corruption, comprised of representatives of several ministries, in order to clarify the institutional organisation of the France’s anti-corruption policy.[6] This committee would be managed by the AFA,[7] which would therefore redirect its focus towards administrative coordination.

The AFA’s missions of support, control and sanctions, however, would be transferred to the already existing High Authority for the Transparency of Public Life (HATVP),[8] responsible for promoting probity and the exemplary behaviour of public officials,[9] which would then be renamed the High Authority for Probity. The report argues that this would ensure that the controls are performed with greater independence.[10]

Encouraging the resort to the Judicial Public Interest Agreement and the creation of specific plea bargaining for executives

One of the most prominent features of the Sapin 2 law was the introduction of the Judicial Public Interest Agreement (CJIP Agreement), an alternative to prosecution offered by a French Prosecutor to a legal entity targeted by criminal investigations regarding a limited scope of offences. Entering into a CJIP Agreement allows the latter to avoid criminal charges in exchange for a fine and the implementation of a compliance programme.[11]

The report gives a very positive assessment of the CJIP which is considered as a true success.[12] The MPs recommend that this mechanism is used more frequently, as it notably allows a more rapid dispute resolution in the context of cross-border corruption cases.[13] They also advise offering more guarantees to legal entities as a means of encouraging self-reporting[14] including the assurance that they will actually be offered a CJIP if they cooperate fully.[15] The level of cooperation of the legal entity could also be taken into account to reduce the level fines.[16]

Nevertheless, the report emphasises that this mechanism only concerns legal entities and not individuals. Therefore, the two MPs suggest the creation of a new negotiated justice mechanism applicable to individuals, which would take the form of an individual guilty plea negotiated in parallel with the CJIP.[17]

Broadening the spectrum of entities subject to anti-corruption obligations

Another suggestion for improvement relies on the need to ensure full equality between French and foreign companies regarding the fight against corruption.

Indeed, the Sapin 2 law currently applies to companies and public institutions of an industrial and commercial nature which employs at least 500 people as well as to companies belonging to a group of companies headquartered in France, which employs at least 500 employees, when such entities have a turnover greater than €100m.[18] This wording of the law excludes subsidiaries of large foreign companies headquartered abroad from its scope, which would actually meet the conditions set up in the Sapin 2 law if they were headquartered in France.[19]

The report, therefore, proposes to abandon the condition of location of the head office in France when considering groups of companies in order to subject small subsidiaries of large foreign groups established in France to the requirements of the Sapin 2 law.[20]

By the same logic, it suggests that obligations provided by the Sapin 2 law - such as the implementation of a code of conduct or a risk mapping system which currently apply to private entities - also be extended to public entities.[21]

Allowing the Prosecutor to request the appointment of an ad hoc investigator to conduct the internal investigation

Whereas until now the legal entity was free to choose the counsel who would carry out the internal investigation, the report suggests that, in order to ensure the independence of the internal investigator, the Prosecutor’s office should be allowed to request the appointment of an ad hoc agent or the creation of a special committee which would conduct the internal investigation, negotiate the CJIP and represent the company in court.[22]

Strengthening the guarantees granted to individuals involved in internal investigations

The conclusion of a CJIP with the Prosecutor largely depends on the level of cooperation of the inquired legal entity. Cooperation can notably be achieved by conducting an internal investigation within such entity. The Sapin 2 law has allowed for an increased use of internal investigations within companies, which contribute to a large extent to determining the truth. [23]

The report highlights that, in order to be truly effective, these must be accompanied by sufficient guarantees granted to individuals who may participate in such investigations.[24] Indeed, these individuals are exposed to a risk of disciplinary and criminal sanctions.[25] It suggests, therefore, granting a right to access the investigation’s files,[26] as a means of encouraging individuals to participate in the process.[27]

 

Notes

[1] Law No 2016-1691 on transparency, the fight against corruption and the modernisation of economic life, 9 December 2016.

[2] Report No 4325 on the evaluation of the impact of law No2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021.

[3] Law No 2016-1691 on transparency, the fight against corruption and the modernisation of economic life, 9 December 2016.

[4] Report No 4325 on the evaluation of the impact of law No2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021.

[5] Art 1 of Law No 2016-1691 on transparency, the fight against corruption and the modernisation of economic life, 9 December 2016: ‘The French Anti-Corruption Agency is a service with national competence, placed under the Minister of Justice and the Minister in charge of the budget, whose mission is to help the competent authorities and the people who are confronted with them to prevent and detect acts of corruption, influence peddling, misappropriation of public funds and favouritism’; Art 2 of Law No2016-1691 on transparency, the fight against corruption and the modernisation of economic life, 9 December 2016:

‘The French Anti-Corruption Agency is headed by a senior judge of the judiciary appointed by decree of the President of the Republic for a non-renewable term of six years. His or her functions may only be terminated at his or her request or in the event of impediment or serious misconduct. The magistrate who heads the agency shall not receive or seek instructions from any administrative or governmental authority in the exercise of the missions mentioned in No 3 and No 4 of Art 3. He or she may not be a member of the Sanction Commission or attend its meetings. The agency has a sanctions committee responsible for imposing the sanctions mentioned in Art 17, IV’.

[6] Art 3 of Law No2016-1691 on transparency, the fight against corruption and the modernisation of economic life, 9 December 2016:

‘The French Anti-Corruption Agency: (1) Participates in administrative coordination, centralises and disseminates information to help prevent and detect acts of corruption, influence peddling, misappropriation of public funds and favouritism; (2) Draws up recommendations intended to help public and private legal entities to prevent and detect corruption, influence peddling, misappropriation of public funds and favouritism. These recommendations are adapted to the size of the entities concerned and to the nature of the risks identified. They are regularly updated to take into account changes in practices and are the subject of a notice published in the Official Journal’.

[7] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 42: 'However, the voluntarism shown by the agency in its control and advisory activities has been to the detriment of its coordination mission, which is not at all satisfactory. In addition, the resources allocated to the agency were significantly lower than initially estimated, and the constraints associated with the agency’s attachment to the general secretariat of the economic and financial ministries are weighing on its attractiveness’.

[8] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 87: ‘Proposal No10: Strengthen the governmental steering of the fight against corruption by regularly convening a specialised inter-ministerial committee, chaired by the Prime Minister, with the French Anti-Corruption Agency acting as permanent secretariat […] This committee would bring together the various ministers concerned by the anti-corruption theme, and in particular the Minister of Justice, the Minister in charge of the budget, the Minister of the Economy, Finance and Recovery, the Minister of Europe and Foreign Affairs, and the Minister of the Interior. This inter-ministerial committee would be responsible for drawing up the multi-year anti-corruption plan, updating it if necessary, and validating the steering committee’s work programme for the year ahead. It would meet annually for this purpose’.

[9] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 87: ‘Its secretariat would be provided by the department of national competence responsible for administrative coordination and the development of the multi-year anti-corruption plan, which means by the French Anti-Corruption Agency’.

[10] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 87: 'Proposal No 11: Transfer to the High Authority for Transparency of Public Life the support and control missions of the French Anti-Corruption Agency, in order to create a major authority competent in matters of public ethics and prevention of corruption, the High Authority for Probity’ and ‘A draft bill to strengthen the fight against corruption’, Dalloz Actualités, 6 September, 2021:

‘AFA would be refocused on defining and implementing anti-corruption policy and supporting public and private actors. Its president's term of office would be reduced to four years and the agency would lose its right of communication. The control missions of an independent administrative authority would be transferred to the High Authority for the Transparency of Public Life (HATVP), which would be transformed into a ‘High Authority for Probity’ with very broad missions. It would define anti-corruption obligations, control the effectiveness of public and private actors’ systems, and monitor the compliance penalty and the application of the blocking law’.

[11] The High Authority for the Transparency of Public Life’s official website: ‘The High Authority for the Transparency of Public Life (HATVP) is an independent administrative authority (AAI) in charge of a public service mission: to promote probity and exemplary behaviour of public officials’, accessible at https://www.hatvp.fr.

[12] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 88: ‘Your reporters propose that some of the tasks currently carried out by the French Anti-Corruption Agency be entrusted to an independent administrative authority. As they have had occasion to develop above, missions other than those relating to administrative coordination, and more particularly advisory and control activities, would be better performed if they were entrusted to an independent regulator’.

[13] Art 22 of Law No 2016-1691 on transparency, the fight against corruption and the modernisation of economic life, 9 December 2016:

'As long as the public prosecution has not been initiated, the Public Prosecutor may propose to a legal entity accused of one or more of the offences provided for in Arts 433-1, 433-2, 435-3, 435-4, 435-9, 435-10, 445-1, 445-1-1, 445-2 and 445-2-1, the penultimate paragraph of Art 434-9 and para 2 of Art 434-9-1 of the Criminal Code for the laundering of the offences provided for in Arts 1741 and 1743 of the General Tax Code, as well as for related offences, excluding those provided for in the same Arts 1741 and 1743, to enter into a judicial public interest agreement imposing one or more of the following obligations: […]’.

[14] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, pp 95-96: ‘Four and a half years after its creation, the CJIP is an undeniable success. […] The CJIP has quickly proven its effectiveness: 12 agreements have already been concluded, and this mechanism has made it possible to assert France’s judicial sovereignty on the international scene. In addition to the payment of a fine, it provides for the implementation of a compliance programme, which prevents recidivism’.

[15] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 95: 'The creation of the judicial public interest agreement (CJIP) is one of the major contributions of the Sapin 2 law. Inspired by the criminal transaction procedures that already existed in Anglo-Saxon law, its introduction responds to the need to apprehend acts of transnational corruption and to promote a concerted settlement of disputes, in a context of increasing extraterritorial legal proceedings targeting French companies’.

[16] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 95: ‘The main disadvantage is that the guarantees provided to the legal entity during the negotiation are weak, and rely essentially on the “foi du palais”. Although the risk of unfair use of the system by the public prosecutor’s office seems limited, the system does little to encourage spontaneous disclosure of facts by legal persons, and the situation of natural persons involved in corruption remains delicate’.

[17] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p116: ‘Proposals Nos 20, 21 and 22: Publish new Guidelines and a new circular from the Minister of Justice in order to: assure the legal entity that a CJIP will be offered to it under certain conditions (notably, if it cooperates fully)’.

[18] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 116: ‘Proposals No 20, 21 and 22: Publish new Guidelines and a new circular from the Minister of Justice in order to: ensure that the full cooperation of the company is taken into account, and in particular the spontaneous disclosure of corruption, by reducing the fine, according to a public scale (No 21)’.

[19] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 125:

‘Proposal 26: Create a CRPC procedure specific to corruption offences, which could only be proposed in the event of spontaneous disclosure of the facts and full cooperation of the individual in the investigations, and whose approval procedures would be more regulated: the approval judge’s assessment would essentially focus on the legal characterisation of the facts, on the spontaneous nature of their disclosure, as well as on the reality of the individual's cooperation in the investigations […] In order to secure the system, while complying with this jurisprudence, your reporters suggest creating a specific individual guilty plea, the scope of which would be restricted to acts of corruption and other offences against probity’.

[20] Art 17 of Law No 2016-1691 on transparency, the fight against corruption and the modernisation of economic life, 9 December 2016:

The chairmen, chief executive officers and managers of a company with at least 500 employees, or belonging to a group of companies whose parent company has its registered office in France and whose workforce includes at least 500 employees, and whose revenues or consolidated revenues exceed €100m, are required to take measures to prevent and detect the commission, in France or abroad, of acts of corruption or influence peddling, in accordance with the terms and conditions set out in II. This obligation also applies to the chairmen and general managers of public establishments of an industrial and commercial nature employing at least five hundred employees or belonging to a public group with a workforce of at least 500 employees, and whose turnover or consolidated turnover exceeds €10m’.

[21] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 52:

‘The AFA notes that the “condition that the parent company’s headquarters be established in France” has the effect of excluding from the scope of Art 17 a large number of foreign groups that do not have subsidiaries in France that meet the thresholds or, if they do, may be tempted to reduce the number of employees in order to avoid compliance with Art 17. The agency also states that it “intends to open a significant number of audits on French subsidiaries of foreign groups […] In order to remedy this situation, your Rapporteurs propose to abolish the condition that the head office of the parent company be established in France, for subsidiaries located in France.” This deletion would make it possible to re-establish equal treatment between small subsidiaries of large groups located in France, depending on whether the parent company is established in France or abroad’.

[22] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 53: 'Proposal no 1: Remove the condition that the parent company’s head office be located in France, in order to subject small subsidiaries of large foreign groups established in France to the obligations set out in Art 17, as soon as the parent company exceeds the thresholds provided for by the law’.

[23] ‘A draft bill to strengthen the fight against corruption’, Dalloz Actualités, 6 September 2021: ‘The report highlighted the significant shortcomings of public actors in preventing corruption. For the main public actors, Art 2 proposes to introduce obligations comparable to those of private actors (code of conduct, risk mapping, evaluation of third parties. The audit reports of public actors could be published. In addition, each local authority will debate an annual report on its corruption prevention policy'.

[24] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 128: ‘Proposal No 29: Ensure the independence of the internal investigator; allow the Public Prosecutor’s office to request the appointment of an ad hoc agent or the creation of a special committee, in order to conduct the internal investigation, negotiate the CJIP and represent the company in court’.

[25] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, pp 112 and 126: ‘The success of the negotiation presupposes the full cooperation of the legal entity and its contribution to the determination of the truth […] The Guidelines thus emphasise that the investigations conducted by the legal entity must actively contribute to the “ascertainment of the truth” in order for the legal entity to benefit from a CJIP, a contribution that is usually achieved through an internal investigation or a thorough audit’.

[26] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 127: ‘Proposal No 27: Encourage the use of internal investigations, by providing a better framework for their use and offering more guarantees to individuals’.

[27] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 126: ‘In fact, individuals taking part in investigations expose themselves not only to disciplinary sanctions, but also to the opening of legal proceedings against them’.

[28] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 127: ‘The report recommends the application of a minimum standard of investigation, giving guarantees to individuals at the different stages of the procedure (hearings, access to the file and closing the file'.

[29] Report No 4325 on the evaluation of the impact of Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of public life, 7 July 2021, p 127: ‘Although the Sapin 2 law has strongly encouraged the development of internal investigations through the creation of negotiated justice tools, it has not followed through the logic by providing specific regulations applicable to these investigations. They call for a better supervision of this tool, in order to offer more guarantees to individuals, and thus encourage its use’.

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