How French companies are dealing with France’s anti-bribery law: what are the challenges in practice?
Our seventh business ethics debate in Paris focused on the challenges French companies are facing to comply with the French anti-bribery law, Sapin II.
The law represents a radical change in the country’s fight against corruption and is regarded in Europe and internationally as one of the most significant pieces of anti-bribery legislation. Unsurprisingly then, Sapin II is posing challenges to all stakeholders involved, including the French authorities, who must define their respective roles.
The wide-ranging responsibilities of the French anti-corruption agency (AFA), which cover advice, control and monitoring, differentiate it from a large number of other agencies involved in the prevention and detection of corruption. However certain elements of AFA’s role remain to be clarified. For example, it is not yet clear how businesses who self-report will be treated by the authorities, so the introduction of new legal tools such as the CJIP (Convention judiciaire d’intérêt public – equivalent to a Deferred Prosecution Agreement under the UK Bribery Act) is regarded as both an opportunity and a challenge for businesses and authorities.
All participants believed that major challenges remain in the implementation of Sapin II. For instance, businesses are facing potential contradictions between different regulatory requirements. This is the case, for example, between Sapin II and the European Union’s General Data Protection Regulation (GDPR) or its Trade Secrets Directive.
Some participants considered that Sapin II will facilitate cooperation between French and foreign authorities, provided that foreign authorities believe that the French standards are adequate. Although the adequacy of French standards has been doubted in the past, with countries such as the United States expressing reservations, the recent CJIP signed by a major French banking company is being regarded as a sign that French and US authorities are now willing to cooperate. Enhanced cooperation between the various anti-corruption agencies would enable businesses to limit the number of potential legal proceedings.
Another perceived challenge is the multiplicity of anti-bribery and corruption standards internationally. The high level of detail in the recommendations published by AFA stands in stark contrast to the guidelines from some other countries, which often lack precision and are therefore difficult to interpret in the absence of case law. The lack of harmonisation on this front complicates the implementation of compliance programmes and has an impact on their perceived effectiveness, particularly for large multinationals. Participants hoped that France’s progress in the fight against corruption will encourage other countries to adopt a similar approach and standards. The OECD, whose role is to accompany and evaluate countries in their fight against corruption, is currently working on a study of the different settlement and pre-trial resolution models worldwide, as well as the differences in expectations with regards to self-reporting and cooperation on the part of companies.
Participants also pointed out that regulatory developments have focused on penalising businesses engaging in corrupt practices. Whilst businesses have a key role to play in fighting corruption, participants believed that a comprehensive view of the problem also requires paying attention to passive bribery and the extortion attempts that businesses sometimes face. However, this aspect is rarely considered. In response to these concerns, the OECD is conducting a study on passive bribery which they will publish at the consultation of the Working Group on Bribery in International Business Transactions with the private sector on 11 December 2018. Some countries are also testing High-Level Reporting Mechanisms, which allow companies to report attempted extortion by public officials. These mechanisms are currently in place in Colombia and Ukraine.
All participants recognised that significant human resources and financial input is required to effectively implement a compliance programme. Indeed, devoting sufficient resource to the programme is a challenge for some businesses, especially for small and medium-sized companies. It is therefore necessary to adopt a pragmatic approach, identifying the ‘easy wins’ first. It is also important to consider the specific requirements of Sapin II: some organisations who already had anti-corruption compliance programmes based on the UK Bribery Act or the Foreign Corrupt Practices Act might have underestimated the adjustments required to comply with the French regulation.
To deploy a compliance programme internationally, some departments in charge of compliance rely on the various functions of the company. For example, they may use procurement for due diligence, risk management for risk-mapping, internal audit for evaluation, human resources for training etc. Furthermore, most participants communicated that they have also created networks of local representatives. However, the issue of their hierarchical and functional position, as well as the means that they are given to carry out their task, is complex. As a result, the role of these representatives varies. Where they benefit from adequate resources, the representatives can be in charge of implementing the compliance programme at the local level, managing potential alerts and verifying the consistency of the risk mapping in their local area.
Participants also stressed that the issue of culture is often underestimated in the implementation of an anti-corruption compliance programme. Ensuring that new policies and procedures are well understood by all staff can be a significant challenge for businesses, especially when operating in different countries. Decentralised businesses with few centralised processes face additional challenges, particularly when mapping risks or when setting up an internal whistleblowing system. Moreover, it is clear that the level of understanding of processes and procedures is affected by the local culture. Strong communication efforts on the purpose and application of policies and procedures is therefore necessary.
Finally, participants discussed how an evaluation of an anti-corruption compliance programme should be conducted. Choosing the indicators to evaluate the program was regarded as a complex task because these need to be quantifiable, relevant and applied to different geographical areas and over time. Nonetheless, several participants emphasised that evaluating the anti-corruption compliance programme, which can be done through the establishment of the three traditional lines of defence, is also an opportunity to bring the subject of corruption prevention to life. Doing an evaluation, rather than having the Compliance Officer perform a tick-box exercise, raises awareness of the subject. Furthermore, some companies are putting in place measurement tools (such as internal surveys) to assess the level of maturity of staff on anti-bribery and corruption issues.
The GoodCorporation view:
More than one year after Sapin II came into force, the role of various stakeholders and the expectations of businesses are increasingly clear. However, a number of internal and external challenges remain.
Our experience shows that an effective anti-corruption compliance programme must be tailored to the business activities, risks and culture. Beyond implementing policies and procedures, businesses need to support the required cultural change. This requires strong senior management commitment and a real effort in raising awareness among all staff.
However, the implementation of various pillars of an anti-corruption compliance programme can be highly complex for medium-sized, international, decentralised businesses working with many third parties and/or operating in risky areas. GoodCorporation’s Framework on Bribery and Corruption includes concrete recommendations to help businesses to meet the requirements of key anti-corruption laws, including loi Sapin II, and to implement best practice in the detection and prevention of corruption.
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