France’s Failure to Fight Foreign Bribery: The Problem is Procedure

When it comes to effective implementation of the OECD Anti-Bribery Convention, France is the black sheep of the herd. In 2012, the OECD’s Working Group on Bribery’s Phase 3 Report praised France’s efforts to enact an adequate legal framework, but expressed concerns on the low number of convictions. Two years later, the Working Group reiterated its concerns that France was insufficiently compliant with the Anti-Bribery Convention, and the EU’s 2014 Anti-Corruption Report expressed similar worries. In 2015, Transparency International placed France in the category of “limited enforcer” and has stated that France had failed to prosecute foreign bribery cases efficiently. Indeed, in the 16+ years since the OECD Convention came into force, no companies have ever been convicted in France for foreign bribery, and only seven individuals have been found guilty. The only French-led conviction against a company–Safran–was overturned on appeal last January. Even in this case, on appeal, the prosecution did not seek the conviction of the corporation, stating that the conditions to corporate criminal liability were not met (the court of appeal did not rule on that specific issue, and overturned the conviction on factual grounds).

The low number of French convictions for foreign bribery offenses is not due to the fact that French corporations do not bribe. In fact, a recent study on purchasing activities in the private sector showed that 25% of the Chief Purchasing Officers in France have been offered bribes by other French companies. And French companies have often been penalized by more aggressive enforcers, particularly the United States, when they have jurisdiction. (Most recently, Alstom agreed to pay a $772 million fine for violating the U.S. FCPA by bribing officials in several countries.) While some in France have grumbled about U.S. overreach, others in France share the views of the President of Transparency International France, who declared (in reference to cases like Alstom), “It’s humiliating for everyone in France that our judiciary is not capable of doing the work themselves”.

Why is France such a laggard with respect to its enforcement obligations under the OECD Convention? The issue is not France’s domestic legislation criminalizing foreign bribery, which is more than adequate. The real issue resides in France’s failure to enforce these laws. And the explanation for this lies not in France’s substantive criminal law on corruption, but rather in a number of important aspects of French criminal procedure and prosecutorial practices.

Commentators argue that one reason is France’s lack of mechanisms that enable prosecutors to enter into settlement agreements with alleged criminal offenders to resolve a case without going through a traditional criminal trial. Transparency International encouraged France to engage in such procedures, following the example of the United Sates. Admittedly, French criminal procedure does provide for a criminal plea procedure, the so called Appearance Upon Prior Admission of Guilt (Comparution sur Reconnaissance Préalable de Culpabilité, or CRPC), which could theoretically be applicable to corporate liability for foreign bribery offenses. However, this procedure has never been used in foreign bribery cases. The principal reason for this, besides the absence of political will of the authorities, is that there is currently no incentive for corporations to plead guilty pursuant to this procedure, given that the punishment imposed under this form of plea bargaining would entail all the collateral consequences of a criminal conviction, such as potential debarment. Moreover, although a guilty plea under the CRPC mechanism limits the potential prison sentence (not an issue for corporate defendants), the CRPC does not entail any mandatory diminution of the possible fine. Thus, a person or corporation accepting a guilty plea within the frame of a CRPC has no guarantee that the fine will be lighter than what would be imposed in a regular criminal trial. Even if the prosecutor and defendant negotiate the terms of the plea agreement, which include the penalty, there is nothing preventing the prosecutor from offering the highest fine possible for the given offense, and refuse to lower it. In a situation like this the defendant would have no choice but to accept it or to go to trial. Given all this, what incentive would a company have to self-report instances of bribery and enter into negotiations with the prosecutors? The only answer I can come up with is: nothing.

In light of this problem, and the fact that settlements in corporate corruption cases are often useful and efficient, France should consider reforming its plea bargaining procedures. Nonetheless, France cannot and should not attempt simply to transplant U.S. practices. Rather, these techniques should be adapted to the specificities of the French legal system, which is a civil law system and one in which pleas in criminal proceedings are not part of the judicial culture. Moreover, the French and American notions of corporate criminal liability are quite different (with a much broader notion of respondeat superior liability in the U.S.), and the powers allocated to prosecutors in these countries are also very different (with French prosecutors having much less freedom to shape deals and agree on penalties).

Rather than attempting to transplant the American approach wholesale, France should adapt the existing CRPC procedure. A recent report of the Club des Juristes, a think tank of French academics and professionals, entitled On Enhancing the Fight Against Transnational Bribery formulates three valuable suggestions along these lines:

  • Participation of the Central Service for the Prevention of Corruption (SCPC) in the phase of admission of guilt. Handling corruption-related offenses through CRPC mechanisms would require the intervention of a specialized entity as the primary interlocutor with the corporations. That entity should be the SCPC rather than the prosecutor. Because French prosecutors are focused on securing criminal convictions, they are not well-suited to negotiate settlements with corporations facing corruption issues. By contrast, the mission of the SCPC is to prevent bribery, inter alia by promoting corporate compliance. This would make it a better primary contact, especially when corporations decide to self-report.
  • Taking into account the situation of corporations in deciding on penalties. France should adopt a multi-level reform combining incentives to self-report and possibilities for the SCPC to formulate recommendations on penalties proposed by the prosecutors. In case of self-reporting, the SCPC’s opinion on penalties should be binding on the prosecutor, though the judge reviewing an agreement between the prosecution and a corporation should retain the ability to refuse to ratify the agreement. However, when offenses are uncovered without self-reporting, the SCPC’s opinion would not bind the prosecutor. In both situations, penalties would be formally offered by the prosecutor, and should take in account the situation of the company; that is combining the obligation of implementing adapted compliance programs and paying proportionate fines with an upper limit, enabling lower fines in a CRPC procedure. However, the report also indicates that such diminution of the fine would not apply if the company has generated more profit out of the offense.
  • Introducing more flexibility in procedural rules. The current CRPC procedural rules are too rigid to accommodate corporate criminal liability for foreign bribery offenses. For instance, the hearings before a judge to ratify plea agreements are entirely public; soliciting in camera hearings to protect confidential business information might encourage more self-disclosures and settlement negotiations. And, given the complexity of bribery cases, corporations should have a longer time to decide whether to take a plea.

These and other suggestions from the Club de Juristes might be the first step toward better compliance with the OECD Convention. However, even these helpful changes might not be enough to incentivize corporations to come clean after detection of wrongdoing by their officers or employees. Indeed, even after these potential reforms, the CRPC would still be a procedure in which the outcome would be a public criminal sentence with all the collateral consequences attached to it, with no guarantee of a lighter fine. Furthermore, this CRPC procedure would still be offered at the discretion of the prosecutor after an offense has come into light, whether or not the wrongdoing was revealed through self-reporting of through any other means. In these conditions, corporations might still be willing to gamble on the fact that they might not get caught. The real incentives to self-report in addition of the above reforms would be:

  • Setting up a real threat of conviction at trial. This would imply stricter corporate liability principles. Though France need not follow the U.S. example of vicarious corporate liability, French legislators might consider an approach similar the British approach of corporate criminal liability, with relaxed knowledge and intent standards.
  • Assuring a lighter sentence in the event of self-reporting directly linked to cooperation. To create an incentive to self-report, corporations have to be certain that the sentence they would be subject to when they self-report and cooperate will be lighter than a sentence pronounced if they do not. This would imply U.S.-style sentencing guidelines and cooperation credits policy. It would also require amending the Code of Criminal Procedure to include a mandatory diminution of the sentences when conditions provided by the guidelines are met.
  • Increasing the resources of the investigating authorities. The high probability of detection by the authorities might push corporations to self-report. Today there is no real threat for corporations. Increasing the chances of detection would imply increasing the resources allocated to investigating authorities. (Greater involvement of other administrative agencies, in addition to the prosecution, in investigation of foreign bribery cases might also be more effective, though this would raise a separation-of-powers that might not be well-received by the French legal community).

5 thoughts on “France’s Failure to Fight Foreign Bribery: The Problem is Procedure

  1. Thank you for this post. There’s so much interesting information in here, especially about the differences with respect to respondeat superior liability and power of prosecutors in France. I was thinking about France’s lack of mechanisms to enter into settlement agreements with corporations, a point you mention in your piece, and the role of settlement agreements elsewhere. I can see why, on the part of corporations, the French system currently might disincentivize self reporting or pleading guilty, but I’m less certain of how the lack of settlement possibility affects prosecutors and the political will of authorities in pursuing companies. I’d be interested in hearing your thoughts on that point, and relatedly, I’d personally also interested in reading more about what might happen in the US in terms of how vigorous earlier stages of enforcement efforts might be if the US didn’t have such widespread availability/use of NPAs and DPAs for cooperation and more frequently required trial.

  2. You are raising very interesting points. I don’t believe the lack of settlement possibility affects prosecutors’ will to prosecute companies, but it affects their capacity to do so. In France powers of the prosecutors are limited in deciding whether to prosecute or not. They do not have the ability, like in the US, to shape deals with few boundaries and minimal judicial supervision. Thus, even if prosecutors are willing to prosecute companies, they are just missing the procedural tools to make it efficient.

    Another issue, close to question you are raising, is the criticism (from the OECD Working Group on Bribery mostly) faced by France on the lack of independence of prosecutors. Today, I am not sure such criticism is still relevant. At least, two things weaken it:
    – the fact that anti-bribery organizations can initiate procedures, under certain conditions, by becoming a ‘civil party’, when the prosecution fails to do so;
    – the law dated July 25th 2013 abolished a practice whereby the Minister of Justice would send individual instructions to public prosecutors.

  3. Pingback: Limited Corporate Criminal Liability Impedes French Enforcement of Foreign Bribery Laws | Anti Corruption Digest

  4. Pingback: Development Channel » This Week in Markets and Democracy: New French Anticorruption Law, More Panama Papers Fallout, India’s Big Currency Ban

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