Sapin III – A new lease of life to the fight against corruption in France

7 Min Read

Nearly 6 years have passed since the creation of the French Anti-corruption Agency (“AFA”) and today France is ranked 22nd (just above the Seychelles and UAE) in the Transparency International Corruption Perception Index. Legislators realise that going forward France will require the confidence of the international community to fulfil its plans to “regain its economic sovereignty…not as a nationalistic withdrawal but as a regained capacity for independence serve France and Europe” by 2030.  

On 7 July 2021, MPs Raphaël Gauvain and Olivier Marleix, co-rapporteurs of the French National Assembly’s Law Commission in charge of evaluating the Sapin II law, described the AFA’s performance as “satisfactory” and presented 50 recommendations to strengthen France’s anti-corruption system. On the back of the report, a first draft of the bill “PROPOSITION DE LOI visant à renforcer la lutte contre la corruption” was laid before the French National Assembly by Mr Gauvain on 19 October 2021 and is currently under examination by the Commission des lois and is unlikely to reach the senate until at least 2023. We briefly consider the key recommendations in the report and the changes proposed in the new bill.

Institutional reorganisation

It is proposed that the AFA’s role as strategic advisor would be abolished over concerns that it lacks independence. Going forward, the AFA would therefore mainly be responsible for centralizing and sharing information to prevent and detect corruption. The report suggests that AFA’s advisory and control functions on anti-corruption compliance programs be transferred to the High Authority for Transparency in Public Life (“HATVP”) (Haute Autorité pour la transparence de la vie publique), which is currently responsible for identifying and preventing potential conflicts of interest among French civil servants.  

Ultimately, it is envisaged that a brand-new authority; Haute autorité pour la probité (the High Authority for Probity – “HAP”) will be created as a long-term solution. Unsurprisingly, the proposed amalgamation has received some push back by the current director of AFA, Charles Duchaine who seemed concerned that the proposed reorganisation will strip the AFA from its most important powers and cast doubts over the AFA’s authority. These proposals question what the future holds for the AFA and what France’s anti-corruption trends will look like over the next decade.  

Expansion in Scope – French subsidiaries of foreign companies

Sapin II currently applies to organisations which have more than 500 employees and an annual turnover of at least €100m. This scope was intentionally established to prevent over-burdening small and medium companies (“SME”) with complex procedures that do not match their size or needs. However, these protections afforded to SME’s had the problematic consequence of allowing big corporations’ subsidiaries to “opt out” of Sapin II, using the corporate veil. Under the revised system, small or medium subsidiaries of large corporations would now be required to comply with the obligations arising from Article 17. This is a welcomed change since, whilst it is understandable that SME’s should benefit from less stringent corporate governance requirements, the same reasoning does not apply to subsidiaries of large multinationals. The current legislation has allowed too many corporations to use this limitation to their advantage and limit or delay their compliance with Sapin II. Additionally, the change would also apply to the French registered subsidiaries of large foreign companies, adding a few inches to the Sapin II’s jurisdictional reach.  

Changes to Deferred Prosecution Agreements (Convention judiciaire d’intérêt public) – (“CJIP”)  

 The rapporteurs praised the CJIP system noting that it has enabled French prosecutors to assert themselves at an international level – the Airbus settlement being the largest of its kind, in the anti-corruption sphere, for the Parquet National Financier (“PNF”). With that said, some changes have been proposed to make CJIP’s more effective.  

For Companies

 The legislation proposes that the self-reporting system grant further legal certainty for companies who choose to self-report by providing better safeguards to documents and information volunteered during the negotiation of CJIP’s. Furthermore, it will also ensure that those who co-operate receive a reduction in the level of punishment or fine, which undoubtably ought to incentivise companies to be more transparent. 

For Individuals  

 The report also briefly considered the possibility of extending the CJIP to individuals, but this was ultimately dismissed and does not feature in the draft bill. The preference is for the creation of a Comparution sur reconnaissance préalable de culpabilité (“CRPC”) allowing individuals to benefit from legal certainty when making disclosure and reporting certain corruption offences.  

Lastly, the report raised concerns in relation to i) the level of protections of the individual’s defence rights and ii) the independence of internal investigators. To address this, the legislation proposes that the public prosecutor’s office gain the power to assign an official representative to companies carrying out internal investigations within the self-reporting framework. It will be interesting to see if these proposals materialises or if the costs and risks associated will be deemed too high. The legislation will also create new articles in the Criminal Procedure Code to ensure that individuals investigated during the negotiation of the CJIP have a right to be heard and a right to be informed with a summons. The latter provisions are crucial as they allow suspects to better safeguard their rights by instructing legal counsel early in the process. 

Further protection for whistleblowers  

The report touched on the additional requirements imposed by the 2019 EU Whistleblowing Directive and highlighted the importance of reinforcing the existing whistleblowing system.  Unsurprisingly, it highlighted the heightened risk of reprisals, arguably the key obstacle faced by all whistleblowing regimes. Interestingly, the report also touched on the lack of financial support provided to whistleblowers, which at first glance is unlikely to deter individuals from reporting but often manifests itself when matters take a wrong turn, often causing irreparable harm to the rights and reputation of those individuals. 

To mitigate some of these risks, the report suggests removing the criterion of “disinterestedness”, considered to be too vague, and allowing whistleblowers to report directly to the authorities without the obligation to first report wrongdoing internally. The latter amendment ought to be welcomed by policymakers as it will undoubtably increase the number of reports made to the authorities and better protect the rights of employees by granting them increased anonymity. 

French legislators acted swiftly on the whistleblowing front and adopted those recommendations and the further requirements imposed by the EU Directive 2019/1937 by bringing into force law No. 2022-401 on 21 March 2022. Therefore, the Sapin III legislation will not make any further amendments to the existing whistleblowing regime.  

Concluding remarks 

The proposed Sapin III legislation makes some important amendments to what is described as a satisfactory piece of legislation. With that said, although these changes appear cosmetic, they are key for the proper functioning of the CJIP regime and bring into focus the rights of individuals, which in the past have largely been considered inadequate. There is no doubt that these amendments will help to uphold the rule of law as well as streamlining key processes required in the fight against corruption.  

By contrast, Mr Michel Sapin stated in a recent interview that he “does not see the usefulness of a Sapin III law in the field of the fight against corruption. The challenge is above all to persevere in the fight against corruption, with the tools and means put in place such as the fight against aggressive tax optimization, the national financial prosecutor’s office or the French anti-corruption agency.” Mr Sapin’s comments are interesting as they suggest that anti-corruption should not be viewed in isolation to other financial crimes and a holistic approach should be taken when developing and using legislative tools to ensure that all wrongdoing on the financial crime spectrum, including tax evasion and aggressive tax optimization are effectively policed. A recent example of the above can be seen in the €1.2bn settlement paid by McDonalds to settle a now historic tax evasion case.  With that said, some of the proposed changes in the new legislation, especially those involving DPA’s and whistleblowers, are no half-measures and should undoubtably grant a new lease of life to the French anti-corruption effort. 


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