Sapin II and French Anti-Corruption Enforcement

As more countries enter into the anti-corruption enforcement world, companies face exponential risks of detection and enforcement.

Recently, Deputy Attorney General Rosenstein has commented on the need to avoid unfair enforcement actions by multiple jurisdiction based on a single course of conduct.  This approach has been reflected in FCPA enforcement actions involving multiple countries and resulting in division of fines and penalties.

The United States has coordinated enforcement investigations and settlements with Brazil, Swiss, Dutch, German, Swedish and other prosecutors.  This strategy is an outgrowth of law enforcement efforts to coordinate, share best practices and conduct joint training sessions.

In November 2016, the French enacted Sapin II as its new global anti-corruption tool.  The law became effective on December 11, 2016.  Sapin II requires global companies to implement effective anti-corruption compliance programs.

The law creates a new anti-corruption agency and applies to companies that have 500 or more employees (or have a parent company in France with 500 or more employees), and whose annual turnover is 100 million Euro.  Companies that fall under the new law are mandated to implement a compliance program.  The French anti-corruption agency has broad powers to ensure that companies implement a compliance program.

Any company that does not implement or improve a compliance program as required is subject to fines.  Directors also can be held liable for failure to implement a compliance program.

The Sapin II law requires that companies implement the following eight measures relating to compliance:

  1. A code of conduct defining prohibited conduct, including bribery or influence peddling.
  2. An internal reporting system for employees to report potential violations of the code of conduct.
  3. A risk map, which is regularly updated, and designed to identify, analyze and risk rank a company’s exposure to bribery risks.
  4. A bribery risk assessment of clients, vendors/suppliers and third-party intermediaries.
  5. The design, implementation and continuing assessment of financial accounting controls to ensure that the company’s books and records are accurate and not used to disguise bribery payments.
  6. Anti-bribery training for managers and employees who may be at risk to engage in bribery or influence peddling.
  7. Maintenance of a disciplinary program to punish employees that violate the company’s code of conduct or other compliance policies and procedures.
  8. A system of internal controls that will ensure the efficiency of the compliance program, and that can be assessed on a continuing basis.

Aside from the mandated compliance program, the Sapin II law creates a new criminal offense for influence peddling of foreign public officials, expands the French criminal courts’ jurisdiction, and establishes a new deferred prosecution scheme.

Under the new law, a company or individual can be held criminally liable if it offers a donation, gift or reward to induce a foreign public official to abuse his real or alleged influence in order to obtain employment, contracts or any other favorable decision from a public authority or foreign government.  The criminal offense is punishable by up to 5 years’ imprisonment and a fine of 500,000 Euros.

The Sapin II law has extraterritorial application outside of France.  French citizens and foreign nationals who reside in France can be prosecuted in French courts for bribery and influence peddling committed abroad.

Finally, the Sapin II law authorizes the prosecutors to enter into agreements akin to deferred prosecution agreements, which can be offered to any company or person.  Under this new agreement procedure, the fine imposed on the company may be up to 30 percent of its average annual turnover within the last three years at the time the offense was committed.  The agreement has to be validated by the French Tribunal after a public hearing.

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