French Anti-Corruption Legislation Hits Obstacles

I am hearing multiple reports this week that Sapin II, the proposed French anti-corruption law meant to drag that country up to modern compliance standards, has run into political trouble.

The sticking points seem to include the powers of a proposed new French anti-corruption agency, as well as requirements for companies to perform due diligence on suppliers. The French Senate dislikes both ideas, and stripped them out of the legislation. Supporters in the National Assembly want those points added back in. Negotiations to resolve those differences—which are pretty big—will take time, so hopes to adopt Sapin II this month seem unlikely.

How much does all this matter to compliance officers at U.S. companies or other global corporations? Honestly not much, since the FCPA is far more demanding than anything Sapin II requires. If you’re FCPA compliant, almost by definition you’ll be on the right side of Sapin II. French companies specifcally, or smaller companies that have somehow evaded the FCPA and Bribery Act but still do business in France, will feel a painful pinch.

If French lawmakers actually adopt something, that is.

The original language of Sapin II included numerous reforms to put France’s anti-corruption law on par with the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. The main points are below.

Deferred-prosecution agreements. DPAs don’t currently exist under French law, certainly not as we know them here in the United States. The original Sapin II legislation proposed them, then that clause was removed and added back as the bill bounced back and forth between the Senate and the National Assembly. Last I heard, DPAs are still included, although French concepts about corporate criminal liability make some people wonder how useful DPAs will really be.

A new anti-corruption agency. Originally the agency would have had broad powers to issue guidance, investigate companies for their compliance with Sapin II, and enforce sanctions against offenders. That would have put the agency on par with the Securities and Exchange Commission or Britain’s Serious Fraud Office—and also would have been a sharp break from usual French regulatory enforcement, where prosecution rests with public prosecutors.

So as it stands now, that agency will only be able to issue guidance and compliance standards for Sapin II, and then investigate companies accused of violating the law. Then the agency would still need to turn over all that evidence to public prosecutors for further action—meaning, prosecutors would still have final say on whether to enforce the law. (Roughly equivalent to the SEC issuing new rules, investigating you for breaking the rules, and then handing all that work over to your local U.S. attorney to decide your fate.)

Commentary on Sapin II’s recent changes are hard to find in English, unfortunately. (The most recent one I found was from Aug. 5.) The FCPA Professor blog has one extensive, cynical analysis of the bill from May, and you can find other law firm bulletins from earlier in the summer. If anyone has more current bulletins, please let me know.

Enter the CCO

A duty to prevent bribery. U.S. compliance officers would feel at home with this part of the legislation, would require that all companies implement policies, procedures, and controls to prevent and detect bribery. That had included some responsibility for oversight of third parties—now at least one source tells me the due diligence piece might get cut.

Another big change for France would be uniform protection of whistleblowers. France does have various laws protecting some whistleblowing activity; Sapin II would bring a uniform national standard to protecting them. That said, the Senate wants to add language allowing prosecution for whistleblowers who provide false or prejudicial information, while the National Assembly does not.

All this means that any hope of enacting Sapin II this month have floated away down the Seine. Instead, what happens next is that the National Assembly must finish its response to the Senate’s latest version by Sept. 30, then the Senate reviews the National Assembly’s response, then back to the National Assembly again for final approval.

No date has been set for that latter round of legislative Ping-Pong—and remember that if Sapin II gets kicked into 2017, that’s an election year in France and lord knows whether anything will get accomplished then.

Bonus: Another source in France has sent me a link to the current text of Sapin II as it stands before the National Assembly, although the text is in French.

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