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For years, France has faced international criticism for its loose enforcement towards corruption. As a result, the U.S. Department of Justice (DOJ) has imposed severe sanctions on French companies. On November 8, 2016, France sealed the first step in a renewed campaign to tackle the problem of corruption by adopting a new anti-corruption law named The Law on Transparency, the Fight against Corruption and Modernization of Economic Life or the Sapin II. Named after the French Minister of Finance Michel Sapin, who championed the legislation, the Sapin II aims to bring France’s anti-corruption regime up to the highest international standards.
Central to the Sapin II law is the firm obligation to prevent and detect corruption risks. The law mandates that French companies that have over 500 employees and generate revenue exceeding 100 million euros adopt a compliance program. Some 1,600 companies in France fit this profile and will have till May 2017 to implement their compliance programs. Failure to do so will result in large fines on the company.
At the heart of it, the law will establish an Anti-Corruption Agency (Agence française anticorruption) under the authority of the French Minister of Justice and Minister of Budget. The Agency will review the quality and effectiveness of companies’ anti-corruption programs. Unlike its predecessor, the Central Service for the Prevention of Corruption (SCPC), France’s new Agency now can implement compliance programs, request documentation from companies and exercise investigative powers. The information the Agency gathers relating to detection and prevention of corruption, will be published in an annual report.
France’s existing legal framework currently has no provisions for the protection of whistleblowers. The Sapin II will change that by expanding the definition of a whistleblower to “any individual who reveals or reports, disinterestedly and in good faith, a crime or misdemeanor; a serious and manifest breach of an international commitment duly ratified or approved by France, of an unilateral act of an international organization adopted on the basis of such commitment, or of a law or regulation; or a serious threat or harm to the public interest, of which he/she has had personal knowledge.” This broad definition will provide whistleblowers with a new protection that they have never had under French law. The law will punish individuals who retaliate against whistleblowers or attempt to prevent them from filing reports, with up to one year in prison and a fine up to 15,000 euros. Although Sapin II imposes financial penalties on those who retaliate against whistleblowers, the law does lack financial incentives for exposing corruption, something that is present in US whistleblower laws.
Under Sapin II, companies charged with corruption can enter into a Deferred Prosecution Agreement (convention judiciaire d’intérêt public) that will enable them to avoid prosecution or criminal sanctions. Instead of prosecution, companies will have to pay a public fine (based on the gains of the wrongdoing) and implement an internal compliance program, which will be monitored by the Agency for a three year period. By entering into the agreement, all charges against the company will be dropped and it will not have to admit any liability.
The Sapin II is a potential game changer in France’s fight against corruption. The law aims to foster a new environment of compliance and ethics in a country that has been lacking such values. It remains to be seen if Sapin II will elevate France’s anti-corruption regime to the highest international standards, but it certainly is a significant step in the right direction.
Amol Nadkarni is Program Assistant for Global Programs at CIPE