04 August 2020 - Post by:
Earlier this month, the French Anti-Corruption Agency (Agence française anticorruption) published its 2019 annual report, setting out its main actions over the course of last year as regards training and awareness, enforcement and cooperation.
France needs to strengthen its anti-corruption culture and framework
Whilst noting that France dropped from 21st to the 23rd on the Corruption Perceptions Index published by Transparency International in 2019, notably ranking behind the UAE and Estonia, the Head of the French Anti-Corruption Agency (the Agency) notes in the Report’s introduction that time is up for a change in French culture. This former criminal Judge insists that the fight against corruption should not just be seen as the responsibility of the Agency or public prosecutors, but that of each and every one of us, and one way to achieve such evolution is to strengthen the Agency’s powers to prevent corrupt practices and increase its resources.
The Agency is there to give training and advice, not just to launch enforcement actions
In addition to giving 50 training sessions and 70 awareness campaigns for private and public actors, 76 written requests for advice from private companies and 33 written requests for advice from public actors were dealt with by the Agency in 2019. The latter also accompanied, on an individual basis, 7 private companies and 9 public actors regarding the implementation of all or part of their anti-corruption framework.
The Agency’s inspections target a panel of economic actors
The Agency initiated 36 inspections in 2019, compared to 43 in 2018. Regarding the private sector more specifically:
- 3 general inspections were launched on companies listed on French markets, into their entire anti-bribery and corruption (ABC) compliance set-up imposed by the so-called Sapin II law (i.e. code of conduct, whistle-blowing mechanism, risk mapping, procedures for vetting and auditing counterparts, accounting controls, training program, disciplinary procedures, internal audit system);
- 12 thematic inspections were launched on the main companies from a particularly exposed activity sector, like the health sector, public works, contracts and construction; and
- 5 follow-up inspections were conducted on companies already inspected by the Agency in 2017 or 2018, focusing on the implementation of the recommendations issued by the Agency.
The said inspections targeted companies with a turnover of between EUR 102m and EUR 5 bn, and between 1,500 and 211,000 members of staff. At the time of the inspections, they had between 1 and 505 subsidiaries, 56% of which were on average based abroad.
The tone at the top approach is insufficient and certain ABC measures poorly implemented
The Report notes that while the inspected entities have achieved different levels of maturity in terms of ABC compliance, three general lessons can be drawn from the inspections conducted in 2019:
- The tone from the top approach is progressing but often insufficient;
- Certain measures of the Sapin II ABC program, in particular the risk mapping and the assessment of third parties exercises, are subject to insufficient methodology and too often poorly implemented, despite being decisive to the robustness of the whole set-up;
- Most breaches or weaknesses observed result from a non-compliant implementation of specific ABC measures required by the Sapin II law or their insufficient deployment within the group.
The alerts received by the Agency rarely lead to inspections
The Agency regularly receives alerts from individuals who witness facts, which they believe could amount to corrupt practices or breaches to the ABC requirements imposed by the Sapin II law. Upon receipt, the Agency either dismisses them, opens an inspection, or refers them to the relevant administration (e.g. the French tax or competition authorities, public prosecutors). The Report highlights that amongst the 229 alerts sent to the Agency in 2019, mostly via email, only 2 led its Head to launch an inspection.
The Agency does refer facts to the public prosecutor
The Agency’s civil servants have a duty to notify criminal authorities of any facts which they believe might constitute a criminal offence under French law. As such, in 2019, the Agency made 7 referrals to public prosecutors of facts that could characterize corruption-related offences (corruption, influence peddling, misuse of public funds, favoritism), but also tax fraud or breach of trust. To date, six of these referrals have purportedly given rise to on-going criminal investigations.
The Agency’s role in monitorships and its cooperation with French and foreign criminal authorities
Since the enactment of the Sapin II law, companies willing to settle investigations into corruption-related offences may execute a French-style DPA, which may include a monitorship for up to 3 years under the supervision of the Agency. In 2019, the latter handed over five reports to public prosecutors, assessing the proper implementation of such monitorships.
The Report underlines a strong level of cooperation between the Agency and criminal authorities, both locally with public prosecutors and in particular the French National Financial Prosecutor’s Office (i.e. the parquet national financier, the PNF), and internationally, with foreign enforcement bodies such as the UK Serious Fraud Office or the US Department of Justice.
Entities not caught by the French ABC requirements are strongly encouraged to implement them using a risk-based approach
The Report finally insists on the benefits for small and medium-sized companies to implement an ABC framework, in particular highlighting advantages like the protection of their reputation and business, the commercial edge vis-à-vis competitors, the facilitated access to financing, requests for proposals and bids, the reduction of fines in the event of criminal proceedings, etc. It adds that such framework should be proportionate to the risks the company is facing, in light of its activities, geographical base and interactions with third parties, principally.
For more information on white-collar crime developments in France and elsewhere see the Allen & Overy White Collar Crime and Investigations Review.
 Available at: https://www.transparency.org/en/cpi/2019/results/table