One of the main contributions of France’s law no. 2016-1691, known as the “Sapin II” law for the promotion of transparency, combating corruption and the modernisation of the economy, involves new anticorruption measures designed to change the behaviour of companies based in France. This law, which was promulgated on 9 December 2016, was adopted after a lengthy parliamentary debate followed by a control of its constitutionality, which covered both the obligation of some companies to adopt an anticorruption programme and the institution of a protection system for whistleblowers. The Sapin II law is thus designed to equip France with effective anti-corruption programmes and measures, based on the Anglo-Saxon standards. It is intended to be a modern and functional system for preventing and combating corruption.
To begin with, the new law provides for the formation of an anticorruption agency in charge of the prevention and detection of acts of corruption in France. This new body will have broad advisory, inspection and investigation powers, which will tie in with the procedures implemented by private and public players to prevent corruption.
France’s Constitutional Council has approved most of the measures aimed at protecting whistleblowers and the procedure for reporting alerts, as well as the obligation to implement corruption prevention measures in large companies (decision 2016-741 DC of 8 December 2016).
Protection of whistleblowers
Chapter 2 (articles 6 to 15 of the Sapin II law) on the protection of whistleblowers lays down a foundation of common provisions applicable to any natural person who reveals or reports a crime, a misdemeanour or a serious and blatant violation of the law, of any regulations, of an international commitment or of a unilateral act of an international organisation accomplished on the basis of such a commitment. Threats or serious damage caused to the public interest may also be reported.
The Constitutional Council nevertheless laid down a proviso: that the system is limited to whistleblowers who issued an alert concerning the body that employs them or the body for which they work on a professional basis. Thus, the law does not apply to external whistleblowers.
Article 8, which institutes a procedure to be followed for reporting an alert, also requires companies with 50 or more employees to implement an appropriate procedure for gathering alerts raised by their permanent staff or ad-hoc external contractors, under conditions set by a decree of the Conseil d’Etat that has yet to be published. The date on which these provisions of the law are due to come into force will depend on the publication of this decree.
Moreover, article 9 establishes a protective regime guaranteeing full confidentiality of the identity of the persons who raise the alert, the persons targeted by the alerts and the information that is gathered. Whistleblowers are also protected against reprisals by their employer (disciplinary procedure, dismissal, discriminatory measures, etc.).
Prevention of corruption within large companies
Article 17 of the law requires companies and groups of companies whose parent company has its registered office in France, and public bodies of an industrial and commercial nature with at least 500 employees and turnover of more than 100 million euros, to take measures designed to prevent and detect acts of corruption or influence peddling in France or abroad.
Companies that fall within the scope of the Sapin II law have a timescale of around five months, or until 1 June 2017, to implement the requisite processes.
France’s Constitutional Council has ruled on the extent of the scope of article 17 for groups of companies. The expression “groups of companies” must be understood as referring to a construct consisting of a company and its subsidiaries as per the meaning of this term in article L. 233-1 of France’s Commercial Code or a construct consisting of a company and the companies that it controls as per article L. 233-3 of the same code.
A series of eight measures must therefore be implemented very rapidly, namely:
- a code of conduct that defines and illustrates the various types of behaviour to be prohibited;
- an internal alert scheme designed to enable the gathering of alerts;
- a map of potential corruption risks;
- procedures for assessing the position of clients, leading suppliers and intermediaries;
- internal or external audit procedures;
- a system for training the employees who are most at risk;
- a disciplinary procedure in the event of a violation of the company's code of conduct; and
- a system for internal inspection and assessment of the measures implemented.
Under the new article 131-39-2 of France’s Criminal Code, an additional compliance punishment of up to five years may be meted out (corresponding to the obligation to implement a monitoring programme), in order to ensure the existence and the implementation of the measures defined in article 17 of the Sapin II law.
Finally, the financial sanctions that may be meted out have been bolstered and may now amount to up to 1 million euros in the case of legal entities (in the event of a violation of article 17 of the law) and even a fine of 30% of the average yearly turnover based on the last three years for which figures are available in case of signature of a public interest legal settlement, akin to a “deferred prosecution agreement” under US law, the first time this concept has been introduced in French law.