Sapin 2 Law- 5 years later assessment and perspectives
22 July 2021
22 July 2021
On July 7, 2021, MPs Raphaël Gauvain and Olivier Marleix, co-rapporteurs of the French National Assembly's Law Commission in charge of evaluating the Sapin 2 Law (the "Commission"), presented their 50 recommendations to strengthen France's anti-corruption system.
The co-rapporteurs welcomed the significant progress made by France in the fight against corruption since the entry into force of the Sapin 2 Law. However, they emphasized that there is still significant room for improvement in order to reach the best international standards. In this respect, they recall that France has stagnated for several years at the 23rd rank on the Transparency International Corruption Perceptions Index.
In a nutshell, the Commission's proposals, which are the subject of this brief (non-exhaustive analytical summary), aim to give "a new lease of life to the fight against corruption in France" on the eve of the OECD's evaluation of France’s anti-corruption strategies.
First of all, the Commission highlights the efforts made by the Agence Française Anticorruption (the French Anticorruption Agency – “AFA”) over the last five years and describes its results as "satisfactory".
As a reminder, the AFA is an agency often described as "hybrid“, structured as a service with national competence placed under the dual supervision of the Minister of Justice and the Minister in charge of the Budget which benefits from broad guarantees of independence, giving it the status of a quasi-independent administrative authority (IAA).
To cut short the questions about the independence of the AFA - whose scope of intervention covers both advising companies as well as supervising those subject to the provisions of Article 17 of the Sapin 2 Law - the Commission suggests an in-depth institutional reorganization along the following lines:
This restructuring proposal is a blow for the AFA and its Director, Charles Duchaine, who regularly faces criticism concerning (i) AFA's lack of independence and (ii) the cumbersome nature of the controls conducted. He already had to defend the Agency's results during his hearing before the Commission on April 1, 2021. On March 10, 2021, AFA’s Director had already strongly opposed Didier Migaud (the President of the HATVP)’s request to "absorb" the AFA into the HATVP.
Without agreeing with Didier Migaud, the two co-rapporteurs suggest that the AFA's control mission (which contributed greatly to its authority) should be taken away from the AFA and reassigned - initially - to the HATVP and then to the HAP. The recommendations made by the two MPs are also part of a more global dynamic questioning the usefulness and relevance of the AFA to exercise the prerogatives its has been entrusted with. A confidential report on the activities of the AFA was submitted by the Inspection générale des finances (French Treasury) and the Inspection générale de la justice (French Judiciary General Inspectorate) in early 2020.
As a reminder, the Sapin 2 Law applies to companies meeting two cumulative criteria relating to (i) the number of employees (more than 500 employees) and (ii) the annual turnover (at least 100 million euros of consolidated or non-consolidated turnover).
As it stands, these criteria allow "small" French subsidiaries (less than 500 employees, less than 100 million euros in revenues) of "large" foreign groups to avoid being subject to the obligation to prevent the risks of corruption arising from Article 17 of the Sapin 2 Law.
To (i) strengthen the applicability of the Sapin 2 Law and (ii) to prevent an unequal treatment between companies belonging to large French groups and those belonging to large foreign groups in the implementation of anti-corruption compliance programs, the two co-rapporteurs suggest removing the condition requiring the parent company's head office to be located in France.
According to their proposal, a small or mid-sized French subsidiary of a large foreign group (fulfilling the criteria for applicability of the Sapin 2 Law) would now be required to comply with the obligations arising from Article 17.
Pursuant to this proposal, many French subsidiaries of large foreign groups, currently not subject to (sometimes barely) the provisions of Article 17 of the Sapin 2 Law, would then be required to comply with these provisions.
The Commission notes that the CJIP has enabled France to regain a certain sovereignty in judicial matters enabling the French prosecuting authorities (including the Parquet national financier – “PNF”) to assert itself on the international scene. MP Raphaël Gauvain describes the CJIP as “a great success of the Sapin 2 Law".
The Commission insists on the need to promote the use of this transactional justice which ensures the speedy resolution of cross-border disputes and proposes certain enhancements to be made.
The Commission also wishes to offer more guarantees to legal entities during the negotiations to encourage voluntary self disclosures. These guarantees could take the form of (i) a better consideration of the degree of cooperation and (ii) a reduction of the fine according to a scale that would be made public.
Finally, following the success of this transactional justice with legal entities, the Commission briefly considered the possibility of extending the CJIP to individuals. However, this proposal was shortly dismissed. An alternative option would consist in creating a Comparution sur reconnaissance préalable de culpabilité (“CRPC”) specific to corruption offences, conditional upon the voluntary disclosure and cooperation of the individual.
In addition, it should be noted that the possibility of extending this form of negotiated justice to economic sanctions and export controls violations alongside other economic crime offences, although frequently called for, was not addressed as part of the discussions.
The Commission stresses that the practice of internal investigations in France remains insufficiently regulated. It therefore suggests strengthening the procedural safeguards granted to individuals involved in internal investigations to ensure more effective protection of the defense rights.
Moreover, the two MPs want to ensure the independence of the internal investigator. To this end, and in the context of a CJIP, the public prosecutor's office could be given the power to request the appointment of an ad hoc agent or the creation of a special committee to conduct the internal investigation, negotiate the CJIP and represent the company in court.
The Commission emphasizes the positive results of the Registre des représentants d’intérêts (interest representatives register). To date, 2,200 interest representatives have been registered with the HATVP, and 30,000 activities have been declared.
However, the Commission points out that the criteria for inclusion in the register of interest representatives set out in the Decree of May 9, 2017 have rendered the verification of the accuracy of declarations impossible. The Commission therefore proposes to revise the definition of interest representatives to assess the activity criterion at the legal entity level and not at the level of the individual acting on behalf of the legal entity.
In addition, the Commission suggests increasing the precision of the information requested and the frequency of declarations to enhance the quality of information collected as well setting up search tools on the HATVP website to make decisions publicly available.
The Commission notes that the risks of reprisals and the lack of financial support for whistleblowers are obstacles to the effective use of whistleblowing channels.
With the transposition of the European Directive (EU) 2019/1937 of October 23, 2019 on the protection of persons who report violations of Union law expected to be submitted to Parliament in the near future, the two MPs deem that it is essential to ensure better protection for whistleblowers to reinforce the existing whistleblowing framework.
To create a more incentive-based framework and offer better protection to whistleblowers, the Commission proposes to amend existing admissibility criteria. It also suggests removing the criterion of disinterestedness, considered to be too vague, and simplifying reporting procedures by allowing whistleblowers to report directly to the administrative or judicial authorities upon specific conditions ensuring their anonymity and the confidentiality of the documents transmitted.
The analysis of the impacts of Sapin 2 Law and the issuance of these recommendations nourished by on the ground feedbacks, conducted by Mr. Gauvain and Mr. Marleix, provide relevant insights to strengthen the fight against corruption in France. We should now carefully monitor future parliamentary discussions on this proposed "Act II" of the Sapin 2 Law and their future outcome.
Authors: Olivier Dorgans, Partner; Paul Charlot, Senior Associate; Camille Mayet, Associate