- Posted by WTA Secretary
- On November 22, 2016
- 0 Comments
Written by Barbara Bagnasacco, a partner with Kirton | McConkie Law.
On November 8, France adopted its new framework legislation against corruption, the Law on Transparency, the Fight against Corruption and Modernization of Economic Life, otherwise called the “Sapin II Law” from the name of its sponsor, Michel Sapin, the French Minister of Finance. The Sapin II Law elevates French standards to those of the UK, the U.S. and other countries in the international fight for transparency and against corruption; it also represents a strong response to much criticism from the international community for weak domestic enforcement at a time when French companies have received gigantic penalties by U.S. authorities. Companies with operations in France (as well as French companies operating abroad) will now have to adjust their compliance efforts to take into consideration these new standards.
Among other things, the Sapin II Law establishes a national anti-corruption agency (the agence française anticorruption, the “Agency”) which operates under the Ministries of Justice and Budget and which, like the Department of Justice in the U.S., has the authority to review companies’ anti-corruption programs and conduct investigations to request documentation. More broadly, the Agency is responsible for aiding authorities to prevent and detect acts of corruption, influence peddling, extortion, and misappropriation of public funds. The Agency will publish a multi-annual plan to combat corruption and protect whistleblowers, it will opine on contractual parties of government entities and publish guidelines on the prevention of corruption within governmental agencies.
Notably, the Sapin II Law also introduces an obligation to prevent corruption risks and makes the adoption of a compliance prevention plan mandatory for companies with at least 500 employees (or companies belonging to a group of companies whose parent company is headquartered in France and whose workforce is comprised of at least 500 employees) and with consolidated revenues of at least 100 million Euros. The cost for non-compliance? Fines of up to 1 million Euros for the company and 200,000 Euros for its individual executives, and possibly the publication of the sanction. Affected companies will have until May of 2017 to implement their compliance programs.
In addition, the Sapin II Law makes influence peddling with respect to a foreign public official a specific offence and it removes prior obstacles to legal action (for instance, the condition of a prior complaint by a public prosecutor). And the law provides protections for whistleblowers in the financial sector, who will receive a guaranty that their identities will be kept secret but who, similar to whistleblowers in the UK, will not receive financial rewards for reporting violations.
Along the lines of monitorships in the U.S., the Sapin II Law creates a “mandatory compliance” penalty for acts of corruption and/or influence peddling; offenders will be forced to adopt a compliance program, at their expense, under the supervision of the Agency (which in turn will report to the Public Prosecutor) for a period of three years. Failure to adopt such a program may result in imprisonment for two years and a fine of 400,000 Euros for individual executives and 2 million Euros for companies.
Also, the Sapin II Law introduces settlement agreements that are similar in nature to U.S. deferred prosecution agreements. Companies (but not individuals) will be able to choose to enter into settlement agreements to avoid prosecution and criminal charges by either paying a public fine of up to 30% of the company’s three-year average annual revenue (plus certain damages and expenses) and/or by adopting a compliance program under the supervision of the Agency for a period of three years. Settlements will be reviewed by a judge at a public hearing and will be published on the Agency’s website.
Overall, the obligations that the Sapin II Law imposes on companies within its reach are significant. A carefully designed compliance program is now more than ever necessary in France.
For any questions, please contact Barbara Bagnasacco at 801-321-4885 or email@example.com.
 In the second largest enforcement of the U.S. Foreign Corrupt Practices Act ever, the U.S. imposed a $772 million criminal fine against French power and transportation company Alstom for violation of the Act. Other French companies that received significant fines by U.S. authorities include Total S.A. ($398 million in fines and disgorgement of profits), Technip S.A. ($338 million in penalties and disgorgement of profit) and BNP Paribas S.A., France’s top bank ($9 billion penalties).