Today’s guest post is from Valentina Lana, a lawyer and lecturer at Sciences Po, and Michel Sapin, who served in multiple senior positions in the French government, including as Minister of Finance from 2014-2017 and Minister of the Economy in 2016-2017, and who was the principal author of the Loi Sapin II, the French anticorruption law.
Since the OECD Anti-Bribery Convention entered into force back in 1999, France has been a member, and as such France committed to adopt and enforce an effective legal framework to detect, punish, and deter transnational bribery. Yet in October 2012, when the OECD’s Working Group on Bribery released its Phase 3 report on France’s compliance with its obligations under the Convention, France received very poor marks. The report emphasized the Working Group’s “serious concern” about the paucity of enforcement proceedings addressing foreign bribery by French entities, expressed its disappointment in France’s failure to address key legal obstacles to holding companies liable for foreign bribery, and the insufficient penalties. In short, while France had laws on the books that supposedly criminalized foreign bribery, in practice France was doing very little to make those laws meaningful in practice.
The highly critical Phase 3 report served as a wake-up call for French policymakers. But it was not only this very public and embarrassing OECD criticism that prompted France to act. French companies that issued securities in the United States also found themselves targeted by the U.S. Department of Justice for alleged violations of the U.S. Foreign Corrupt Practices Act (FCPA). Many French firms and government officials bristled at what seemed like the intrusive and extraterritorial prosecutions by the U.S. government. But in high-level conversations between leading figures from the two countries, the U.S. representatives made clear their position that they were pursuing these cases, even though France might seem to have a greater interest, because France couldn’t or wouldn’t prosecute foreign bribery cases involving French companies vigorously and effectively. “We are doing your job,” was the basic position of the U.S. representatives.
There was also pressure for reform from the French business community. This at first seems counterintuitive, given that companies are generally reluctant to accept more stringent regulations. But business operators in France perceived that France needed to promote a more transparent, corruption-averse environment, in order to increase the attractiveness of France for investors and shake off France’s bad reputation as an unfair business environment where bribes would count more than skills, experience, and competence. Though one might think that French firms would care only about domestic corruption, in fact many business leaders embraced the idea that taking a stronger stand against foreign bribery—and embracing legal reforms that would elevate France to the level of countries like the US or the UK, at the forefront of the fight against transnational corruption—would help improve France’s reputation and overall business environment.
These factors contributed to an environment that enabled reformers, particularly those in the French Ministry of the Economy, to act. In 2016, the French parliament adopted a crucial set of reforms contained in a law known as the la loi Sapin II (the Sapin II Act). This broad law covers more than just the fight against corruption; it contains a range of provisions intended to improve France’s attractiveness to local and foreign investors through greater transparency and modernization of economic life. But several of the Act’s most important reforms were motivated by, and targeted toward—the fight against corruption, including transnational corruption, a fact acknowledged symbolically by the date of the Act’s adoption: December 9th, UN International Anti-Corruption Day.
Among the Sapin II Act’s key measures, three can be considered as essential to driving France’s progress on anticorruption:
- First, the Act created the French Anti-Corruption Agency (Agence Française Anticorruption, or AFA), in charge of both counseling and controlling public and private entities in their implementation of the Sapin II Act.
- Second, the Act required large firms (those with over 500 employees and revenues over 100 million euros) to develop and implement an anticorruption program that would include a number of specific elements (such as the creation and implementation of a code of conduct, the establishment of whistleblowing channels, mapping corruption risks, conduction due diligence on third parties, implementing financial controls, training employees on anticorruption and integrity, adopting effective disciplinary measures, and conducting regular assessments of the overall program) as well as embracing one overarching imperative, l’engagement de l’instance dirigeante, or tone at the top. While other countries also encourage corporate compliance systems in various ways, the French approach is distinctive and innovative in that legal persons subject to the Sapin II Act can be investigated and fined by the AFA for not having implemented a satisfactory anticorruption compliance program, irrespective of the emergence of corrupt practices and prosecution thereof.
- Third, the Act introduced a French version of the deferred prosecution agreement that the U.S. often uses to resolve FCPA and other corporate crime cases. The French version is called convention judiciaire d’intérêt public (CJIP). The Act allows legal persons (such as corporations) to enter into negotiations with the prosecutor to settle corruption cases, with the settlements to include appropriate punishment, compensation of victims, and implementation of satisfactory compliance programs, while at the same time allowing the entity to continue its productive activities, thereby promoting the public interest.
These reforms were widely celebrated, including by the OECD Anti-Bribery Working Group. In its Phase 4 report on France’s compliance with the OECD Convention, published in December 2021, the Working Group commended France for its progress in taking action against transnational bribery, and in particular emphasized the significance of France’s legislative and institutional changes—mainly the Sapin II Act. The Working Group emphasized, as areas of substantial improvement, the enforcement of foreign bribery laws, the increase in sanctions against legal persons, and the productive role of the Public Prosecutor’s Office and other French authorities.
Yet France cannot rest on its laurels; there’s more work to be done. Indeed, the Working Group’s Phase 4 report noted that France must consolidate its recent achievements and take stronger action in areas such as the liability of legal persons, the training of judicial authorities, and confiscation. This is correct, but at the same time France’s approach to strengthening its anticorruption framework should build incrementally on the strong foundation laid by the Sapin II Act. As more and more companies have built their compliance programs, the government can do more to help them improve and strengthen those programs, while further developing the legal framework to fill gaps and redress weaknesses.
Some in the French government are pushing for more dramatic and comprehensive reforms. Most notably, a French parliamentary commission recently completed an assessment of the impact of the Sapin II Act and published a report containing fifty recommendations, as well as a draft bill, now known as the Sapin III Act. The fate of the proposed Sapin III act is uncertain, especially given the political turnover resulting from the upcoming French elections. But putting questions of politics aside, as a matter of policy, pursuing something like the Sapin III Act would likely be a mistake at this time. The Sapin II Act already marked a substantial change, but it was one that was both urgently needed and broadly supported by a wide range of stakeholders. The Sapin III bill doesn’t respond to an urgent need, nor does it have the same support its predecessor had. Moreover, pushing through yet another drastic legal overhaul barely more than five years late is likely to be too disruptive and confusing, and may provoke more reluctance and uncertainty on the part of those subject to the law. France has made huge progress in its fight against corruption, and the best option now is to build gradually on the existing and agreed upon framework, fostering stability and maturity. Forcing through more big changes now would, paradoxically, cause unwelcome steps backwards.