Published in 2016, the Sapin 2 law was born out of the State’s desire to strengthen the fight against corruption in France. A wide-ranging law, it comprises 169 articles relating to transparency, the fight against corruption, and the modernization of public life. At the heart of the framework: economic stakeholders, placed on the front line in the fight against influence peddling, bribery, unlawful taking of interest, misappropriation of funds, or favoritism. The anti-corruption obligations incumbent on them are summarized in a single article: Article 17. A point-by-point reading of the law.
Section I: which private and public stakeholders are covered by the Sapin 2 law?
Section I of Article 17 sets out which stakeholders are covered by the Sapin 2 law, with the obligation to deploy internal anti-corruption measures. Specifically:
- Companies employing at least 500 employees, or belonging to a group of companies whose parent company has its registered office in France and whose workforce includes at least 500 employees, and whose turnover or consolidated turnover exceeds €100 million. The obligations apply to the parent company, its subsidiaries, and the companies it controls.
- Public industrial and commercial establishments employing at least 500 employees, or belonging to a public group whose workforce includes at least 500 employees, and whose turnover or consolidated turnover exceeds €100 million.
The obligations are addressed directly to the chairpersons, chief executive officers, and managing directors of these entities. Article 17 specifies that it is the executives who are recognized as responsible for the fight against corruption. Specifically, they are the ones who “are required to take measures intended to prevent and detect, in France or abroad, acts of corruption or influence peddling in accordance with the arrangements provided for in II.” They face financial penalties in the event of non-compliance with the Sapin 2 law’s anti-corruption compliance obligations.
Word for word, the law also specifies that it applies to “members of the management board of public limited companies governed by Article L. 225-57 of the French Commercial Code and employing at least 500 employees, or belonging to a group of companies whose workforce includes at least 500 employees, and whose turnover or consolidated turnover exceeds €100 million.”
Section II: what anti-corruption measures must private and public stakeholders implement?
Section II of Article 17 details the eight measures—also referred to as pillars—that the entities concerned must deploy internally to comply with the Sapin 2 law. They must therefore put in place:
- An internal code of conduct: it defines and illustrates behaviors characteristic of corruption or influence peddling, which are prohibited within the organization. Incorporated into the internal regulations, it must be subject to consultation with staff representatives.
- An internal whistleblowing mechanism: this procedure is intended to confidentially collect reports from staff relating to the existence of conduct contrary to the code of conduct.
- A risk mapping: regularly updated, the risk mapping identifies, analyzes, and prioritizes the corruption risks to which the entity may be exposed. The assessment takes into account the business sectors and geographic areas in which it operates.
- An assessment of third parties: this involves assessing the integrity of customers, tier-1 suppliers, and intermediaries, and the corruption risks to which the entity could be exposed through them.
- Accounting control procedures, internal or external: the objective is to ensure that books, records, and accounts are not used to conceal acts of corruption or influence peddling.
- A training program: it raises awareness of the risks of corruption and influence peddling among managers and staff most exposed.
- A disciplinary regime: proportionate and graduated, it aims to sanction employees in the event of a breach of the internal code of conduct.
- An internal control and evaluation mechanism for the anti-corruption measures implemented.
The law reminds that responsibility lies with executives as natural persons, but also with the entity as a legal person.
Section III: who monitors compliance with the implementation of an anti-corruption framework?
Section III of Article 17 specifies that it is the French Anti-Corruption Agency (AFA) that has the authority to monitor compliance with the implementation of the anti-corruption measures and procedures detailed in the law.
The audit procedure is detailed in another article of the Sapin 2 law: Article 4. It specifies the arrangements for document-based and on-site audits, carried out by authorized agents. These agents are bound by professional secrecy. Any attempt to obstruct their work is punishable by a €30,000 fine.
The audit results in the drafting of a report. It sets out all of the AFA’s observations regarding the quality of the corruption prevention and detection framework deployed within the audited entity. Where applicable, the AFA issues proposals and recommendations to improve existing procedures.
Section IV: what is the sanction procedure in the event of non-compliance with the Sapin 2 law’s obligations?
Section IV covers sanctions for non-compliance with the Sapin 2 law’s obligations. The French Anti-Corruption Agency has a three-tier scale of sanctions, proportionate to the seriousness of the breaches identified. After giving the executive the opportunity to respond to the report’s conclusions, the AFA Director may either:
- Issue a warning to the company’s executives.
- Refer the matter to the AFA Sanctions Commission in order to order the company and its representatives to adapt, deploy, or strengthen internal compliance procedures.
- Refer the matter to the AFA Sanctions Commission to impose a financial penalty.
Section V: what are the penalties for breaches of anti-corruption obligations?
Section V of Article 17 formalizes the penalties applicable in the event of a breach of the Sapin 2 law’s obligations.
With regard to the injunction, the text specifies that the entity must comply with the recommendations of the AFA audit report to adapt its procedures for preventing and detecting acts of corruption or influence peddling. The compliance deadline is set by the supervisory agency and may not exceed three years.
With regard to the financial penalty, Section V specifies the amounts. The fine may not exceed €200,000 for a natural person and €1 million for a legal person. It is determined according to the seriousness of the breaches concerned. The AFA must also take into account the financial situation of the sanctioned legal or natural person. The fine is paid to the Public Treasury and recovered as “State receivables unrelated to tax and public property.”
Article 17 allows the Sanctions Commission to decide whether or not to make the sanction public. The publication arrangements are determined by the agency, and any costs are paid by the sanctioned person.
Decisions of the Sanctions Commission must be reasoned. The natural or legal person concerned must have been heard beforehand or, failing that, duly summoned.
The final points, Sections VI and VII, are very short and provide two further clarifications on sanctions. Section VI clarifies the limitation period conditions for action by the French Anti-Corruption Agency. Specifically, it states that it “is time-barred after three full years from the day the breach was identified if, within that period, no act has been carried out aimed at sanctioning that breach.”
Section VII specifies that appeals that may be brought against decisions of the Sanctions Commission are appeals with full jurisdiction, i.e., brought before an administrative court.
The scope of anti-corruption obligations under the Sapin 2 law is summarized in a single article: Article 17. In around sixty lines, it specifies who is covered, the measures to be put in place, the audit arrangements, and the sanctions.
Why is it called the Sapin 2 law?
The Sapin 2 law is the big sister of the Sapin 1 law, promulgated on January 29, 1993 by the minister of the same name, Michel Sapin. The Sapin 2 law expands and strengthens the first anti-corruption framework introduced by the Sapin 1 law. The latter, less ambitious, focused on political and public corruption. The Sapin 2 law innovates by placing companies at the heart of the fight against corruption, influence peddling, bribery, unlawful taking of interest, misappropriation of funds, or favoritism. Article 17 precisely sets out their anti-corruption obligations, which translate internally into the implementation of a so-called compliance program.
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