Author: Azizur Rahman
12 November 2021
5 min read
Rahman Ravelli details a French bill that aims to enhance the country’s approach to fighting corruption and breaches of integrity
Four years after its introduction, the Law Commission of the French Parliament instructed MPs Raphael Gauvain and Olivier Marleix on December 16, 2020 to assess the Sapin II Law1 and its efficiency in the fight against corruption. In the aftermath of this evaluation, MPs Gauvain and Marleix issued a series of 50 recommendations aimed at breathing new life into France’s anti-corruption policy. On October 19, 2021, they subsequently submitted a bill aimed at strengthening the fight against corruption. If passed into law, it will significantly change the current Sapin II framework.
The bill utterly revises the authority and prerogatives of the French Anti-Corruption Agency (AFA), the authority that was created in 2016 to advise and control companies with respect to their implementation of their compliance obligations under the Sapin II Law.
In particular, the bill suggests a new relationship between the AFA, which would now be entrusted with administrative coordination and strategic planning, and the High Authority for Transparency in Public Life (HATVP), which would be entrusted with advising and controlling public entities. Ultimately, the HATVP’s overseeing of public entities would be transferred to a newly created independent administrative authority, the High Authority for Probity (HAP). Under this new arrangement, the AFA would continue to advise and control economic players, in particular with respect to compliance with the French blocking statute and monitorship. The overseeing and control duties for public entities would be entirely devoted to the HATVP and then HAP.
Another key proposition of the Gauvain-Marleix bill is to extend the scope of compliance obligations provided by the Sapin II Law to any company exceeding the cumulative thresholds of 500 employees and €100 million in turnover, regardless of its seat of incorporation. Until now, article 17 of the Sapin II Law only applied to parent companies incorporated in France who – when their French and foreign subsidiary operations were taken into account exceeded the aforementioned thresholds.
If the bill were to be enacted into law, French subsidiaries of major foreign companies would also be required to run Sapin II compliance programmes that include thorough risk mapping, internal whistleblowing mechanisms, accounting controls and third-party due diligence procedures, no matter how big their operations are in France, as long as their foreign parent companies meet the 500 employees and €100-million-plus turnover criteria.
Removing the nationality condition for compliance obligations is not only aimed at broadening the application of the Sapin II Law. It would also enable a more even implementation of anti-corruption compliance programs between French and foreign economic actors operating in France.
The Gauvain-Marleix bill also looks to amend the sanctions procedure for breaches of anti-corruption compliance obligations. In practice, the bill proposes to make it compulsory for the AFA to issue a formal notice (mise en demeure) before referring the matter to its sanctions board. Failure of the company to comply with the formal notice within the set time period (between 6 months and 2 years) would be a necessary requirement before moving on to imposing sanctions. The bill creates, however, exceptions whereby a formal notice would not be required, in particular if a serious breach is committed (e.g. lack of cooperation or bad faith).
In addition to expanding the scope of compliance obligations to French subsidiaries of foreign companies, the Gauvain-Marleix bill suggests reforming the conditions under which legal entities may be held criminally liable for the offenses committed by their employees. Accordingly, legal entities could now be held criminally liable if they fail to supervise their employees and prevent them from committing criminal offenses. French companies would have a defence if they could prove that they had sufficient measures in place to prevent employees from breaking the law. The bill, however, has not so far outlined precisely what measures would be considered sufficient.
This new mechanism would, in a way, mirror the “failure to prevent” offense introduced by the 2010 UK Bribery Act. Similar provisions were also included in the German bill creating the concept of corporate criminal liability (Verbandssanktionnengesetz) that failed to make it into law before the chancellor’s elections of this fall.
However, it seems rather unlikely that the French provision would be enacted as currently drafted given the particularly unclear and extensive conditions under which corporate criminal liability would now be engaged.
The Gauvain-Marleix bill introduces interesting provisions aimed at enhancing defence rights when internal investigations are conducted by corporations. These new provisions very much mirror those applicable in judicial criminal proceedings, especially those pertaining to the questioning of individuals under police custody.
More specifically, individuals questioned during an internal investigation could only be freely interviewed if they receive a proper notification of rights, including (i) the right to be assisted by counsel or an interpreter, (ii) the right to make spontaneous statements, answer questions or remain silent, or (iii) the right to terminate the interview at any time. The bill would enable such interviewed individuals to review and sign the minutes of their interview, as well as to make comments about the interview which would then be appended to the minutes.
These guarantees would, however, be applicable only for internal investigations conducted in parallel to an ongoing criminal investigation and based on the same facts. Consequently, internal investigations carried out spontaneously and unrelated to any ongoing criminal investigation would not be covered by these additional safeguards.
The bill further proposes to increase the guarantees granted during the negotiation of the French equivalent to deferred prosecution agreements (“DPA”), the so-called convention judiciaire d’intérêt public (“CJIP”). These provisions aim to reinforce the attractiveness of the CJIP and encourage companies to self-report and settle criminal offenses for which a CJIP is available.
Indeed, despite being a strong innovation implemented by the Sapin II Law, CJIPs are in practice not as appealing as expected. The main criticism voiced about this French DPA is that there are no guarantees as to the confidentiality of information and documents provided by the company during the negotiation phase, in particular with respect to how these would be used if negotiations fail.
The bill therefore extends the confidentiality to all documents and information exchange during the negotiation process even if the company renounces the CJIP or refuses the proposal made to it by the prosecutor.
Along with enhancing the protection and confidentiality of information and documents during negotiations, the bill aims to increase the CJIP’s appeal by granting access to the case file during an intermediary phase concurrent with negotiations. This would utterly transform France’s approach to criminal proceedings especially when negotiations occur in the context of a preliminary investigation led by the prosecution office. At present, the French code of criminal procedure does not provide access to the case file during a preliminary investigation (enquête préliminaire). Until now, legal entities engaged in CJIP negotiations were left in the dark as to the charges they may face.
Furthermore, the bill introduces the possibility of the company being represented by an ad hoc representative or committee when looking to settle the claims through a CJIP. This provision would prevent any risk of conflict of interest, especially between the company’s wish to negotiate a CJIP and its senior executives, who would not be covered by the CJIP. Senior executives targeted by the investigation would therefore be granted the time to focus on their own defence (which could only be settled through a guilty plea as the CJIP is not open to individuals).
The bill also adds new offenses which could be settled through a CJIP, now including favouritism.
The Gauvain-Marleix bill introduces key provisions that would enhance France’s fight against corruption. Practitioners particularly welcome the introduction of proper defense rights when conducting internal investigations as well as the greater protection and confidentiality governing CJIP negotiations. However, the bill does not include any enhancement of the procedural tools available to individuals. In light of the recent Bolloré case - where the CJIP was validated by the court but the guilty pleas of the group’s senior executives were rejected – this is likely to remain the key issue regarding the attraction of the CJIP.
Regardless of its possible effectiveness, there is doubt about whether the bill would ever become law, as it is unclear whether there will be time for debate on it before the April 2022 presidential elections.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.