France will soon change the anti-corruption landscape with a new law aimed at reducing foreign bribery.  Finance Minister Michel Sapin introduced the new law in July 2015 with hopes of aligning France’s efforts with those of the U.S., UK, and other countries.  The draft law was formally introduced in March 2016, but it has since been revised by the French Parliament in many subtle but important ways.  One of the more significant changes in the latest iteration of the bill is the re-introduction of a deferred prosecution process.  Companies operating in France (and those with significant ties to the country) should consider the impact of this imminent law on their compliance efforts.

The new law (known as Sapin II) comes after much criticism of France’s current anti-corruption regime.  Sapin II aims to fix many of the current law’s shortcomings.  It imposes compliance requirements on certain companies by introducing an offense against corporations that fail to prevent corruption.  It eliminates a dual criminality standard for foreign bribery of public officials.  Structurally, Sapin II creates a new agency under the Ministry of Justice with administrative responsibilities.

The French Parliament will continue debating the bill over the coming weeks with an expected approval later this year.  Nevertheless, as it stands now, the current bill contains changes to three features that are worth highlighting:

  1. The DPA is back in play . . . for now. The government continues the debate over the availability of a deferred prosecution agreement (DPA) in any new anti-corruption law.  Sapin’s initial DPA process allowed for a corporate entity (but not an individual) to avoid criminal conviction in exchange for implementing or enhancing a compliance program and/or paying a fine.  The latest draft bill includes many of Sapin’s original proposals, including calling for fines of up to 30% of an average annual turnover of a company, compliance obligations for up to three years, and compensation to third parties affected by any corruption.  We will have to wait to know whether the new law will include details about how a judge will review and validate a proposed corporate settlement.
  1. The new anti-corruption agency lacks standalone enforcement power. The original proposed bill called for a replacement of the Service Central de Répression de la Corruption with an agency that had broad supervisory authority over anti-corruption enforcement.  The contemplated agency would have ensured companies implemented compliance programs and continually improved those programs according to appropriate risk.  The agency would also have had investigatory power with the ability to impose penalties for wrongdoing.  After recent debate, however, Parliament has scaled back the proposed agency’s powers, leaving punishment to prosecutors and the judiciary.
  1. Possible retaliation against whistleblowers may impact the effectiveness of internal reporting processes. Current law does not provide general protections to whistleblowers (with the possible exception of specific but unrelated labor laws).  Sapin II originally included broad protection for whistleblowers by prohibiting retaliation and incentivizing people to come forward about instances of actual corruption or influence trafficking.  Recent debate, however, eliminated the anti-retaliation provisions from the bill.

What does all of this mean for multinationals?  Most importantly, the new law may hold companies with a connection to France accountable for misconduct occurring anywhere in the world by the companies’ employees and agents.  Existing compliance programs and internal controls designed to meet the requirements of the U.S. Foreign Corrupt Practices Act and UK Bribery Act may not need to change because of the new law.  But companies will want to confirm whether gaps exist and whether their French-connected activities present new risks.  Also, as with any change to an anti-corruption regime, companies will need to analyze if France’s new law impacts voluntary disclosure decisions and whether those decisions or any discovered misconduct imposes new collateral consequences.  We will keep an eye out for Parliament’s finale.