There has been a lot of commotion about fighting corruption on a global level, as organizations and economies have suffered greatly due to bribery and corruption. Such activities can cause extreme financial losses and consequential damage to a company's reputation in the market, leading to a loss of trust. There is a growing intolerance for corruption, and recent prominent cases have contributed significantly to creating an environment that demands transparency and accountability.

We are witnessing rapid growth in the rate of entrepreneurial experiments post-pandemic. Suppose you are a business with an idea to expand your customer base in Europe. In that case, you may consider France, an advanced and industrialized country with steady GDP, as a potential market. France offers a pro-business environment that fosters a skilled labor force and an educated workforce. However, the country has a notorious global reputation for not catering to Anti-Bribery and Anti-Corruption (ABAC) laws. In response to this, the country's administration has recently implemented new laws to safeguard the flourishing economy and promote ethical business practices.

Understanding Anti-Bribery and Anti-Corruption (ABAC) Laws in France

France has not traditionally enforced compliance practices requiring businesses to implement preemptive measures to combat corruption. Instead, the country has relied on recommendations from various international organizations and has been a party to several global agreements, including the Organization for Economic Cooperation and Development (OECD), the Group of States against Corruption (GRECO), and Transparency International. However, these guidelines were not adequately implemented in the country.

In response, French authorities reinforced a new parallel regime to combat corruption and bribery known as Sapin II in 2016, named after Michel Sapin, who initially proposed this legislation in 1993. Sapin II heavily draws influence from bribery laws in the United States of America and the United Kingdom. The regulation primarily focuses on detecting and preventing bribery and corruption through enhanced corporate transparency and internal monitoring. This law applies to all companies that originated or are headquartered in France, and defines the contours of the anti-corruption regime while acting as a comprehensive guide that aids in minimizing corruption in the country.

Sapin II also led to the creation of the Agence Française Anticorruption (AFA), an agency that governs the anti-corruption vertical. AFA's mission is to determine the effectiveness of compliance programs and levy penalties for non-compliance. The Association is presided over by members of the Ministry of Finance and the Ministry of Justice in France.

The Scope of Application of Sapin II

While it's beneficial to learn about French laws, it's important to understand if they apply to your business. Sapin II requires French corporate entities to establish an effective anti-corruption program. French companies subject to this program include those with a workforce of at least 500 employees and a turnover exceeding €100 million, those belonging to a group with a French parent company and a combined turnover of above €100 million, certain subsidiaries (foreign or local) of the above-mentioned French companies issuing consolidated financial statements, and state-owned industrial and commercial entities belonging to a state-owned group with a total workforce of at least 500 employees and a consolidated turnover exceeding €100 million.

It's worth noting that Sapin II prohibits any gift, donation, or reward that indicates an unfair trade practice or confers a corporate advantage. The law's application also extends to international territories, encompassing corruption by French companies overseas and foreign companies with a presence in France.

The preceding discussion provided an introductory overview of French anti-corruption law. In the next part of this blog, we will delve into the concept of the compliance requirements for corporations and explore case studies to better comprehend the impact of SAPIN II.

Directions and Contributions: Akanksha Arora, AVP-Legal, Rainmaker