Cracking down on commercial corruption: penalties, procedure and compliance obligations

Knowing what commercial corruption is is one thing. Understanding how it is actually prosecuted and punished in France is quite another, and just as essential for measuring the risks involved. Because beyond the legal definition, the repression of corruption involves specific mechanisms, potentially very heavy penalties and a judicial procedure that has adapted to the complexity of these cases. Furthermore, the legislator has recently placed the emphasis on prevention, even imposing specific compliance obligations on certain companies.

This article goes to the heart of the criminal response to commercial bribery. We begin by examining the elements that must be present for the offence to be constituted, then identify the various persons - natural or legal - who may be implicated. We will then detail the range of penalties that may be incurred, before addressing the specific features of the implementation of these penalties, from the detection of the offence to the jurisdiction of the courts. Finally, we will look at two major modern tools: compliance obligations under the Sapin II Act and the Public Interest Judicial Agreement (CJIP).

The constituent elements of the offence of corruption

For a conviction for corruption to be handed down, a number of elements must be established by the prosecution and recognised by the judge. Let's go back to the basics: it's basically a question of an illicit exchange.

On the one hand, there are the competing interests An undue advantage offered, promised, solicited or received by the bribe-taker (or on behalf of a third party), in return for a specific act or abstention on the part of the bribe-taker, an act that is part of or facilitated by his function, mission or mandate. As we saw in our previous article, this advantage can take extremely varied forms.

La completion of the operation does not require the exchange to have been fully consummated. The mere fact of soliciting an advantage, offering a bribe or accepting an illicit offer is sufficient to constitute an offence, whether or not the desired act has been performed and whether or not the advantage has actually been paid. The distinction between "active" bribery (initiated by the briber) and "passive" bribery (initiated or accepted by the bribe-taker) serves primarily to identify the protagonists, since both types of behaviour are punishable.

One important question has long concerned the time of the offence. In the past, case law held that a pact to bribe had to precede the act or abstention that it was intended to remunerate. In other words, a reward solicited or offered after the performance of an act of convenience could escape classification as corruption. This interpretation has been rejected. The law (particularly since an amendment in 2000 that has been incorporated into subsequent texts) now specifies that the offence can be constituted "at any time". Thus, a civil servant who demands payment after having rendered an illegal service, or a company that offers a substantial "thank you" after improperly obtaining a contract, can be prosecuted for corruption.

Who can be sued?

Corruption can involve a variety of actors in both the public and private sectors.

La public corruption By definition, the term "public official" refers to persons who hold public authority, are entrusted with a public service mission or hold a public elective office. This is a very broad category, covering government employees (ministers, tax officials, police officers, etc.), local government employees, employees of social security bodies, legal experts and elected representatives at national and local level (members of parliament, senators, mayors, general councillors, etc.). Articles 432-11 and 433-1 of the Criminal Code mainly target internal corruption, while articles 435-1 et seq. specifically target corruption involving foreign, European or international public officials, in accordance with France's international commitments.

La private corruptionThis is covered by articles 445-1 and 445-2 of the French Penal Code. These texts apply to any person who, without holding a public office, "carries out, in the context of a professional or social activity, a management function or work for a natural or legal person, or any body whatsoever".. This modern and broad definition therefore encompasses company directors (including those who are self-employed), employees, but also potentially the heads of associations, trade unions or foundations, if they solicit or accept an advantage for performing an act in their capacity as directors in breach of their obligations (legal, contractual or professional), or if someone offers them such an advantage.

In addition to the direct perpetrators (briber and bribe-taker), the complicity is also punishable under article 121-7 of the Criminal Code. A third party who knowingly aids in the preparation or commission of the offence (for example, by setting up a concealed financial arrangement to hide payments, as illustrated by case law in a case involving a lawyer), or who gives instructions to commit the offence, may be prosecuted and incur the same penalties as the principal offender. This is particularly relevant in complex bribery schemes involving intermediaries.

Finally, and this is an essential point in commercial matters, the criminal liability of legal persons (companies, associations, etc.) may be held liable for acts of corruption or influence peddling committed on their behalf by their bodies or representatives (de jure or de facto managers). Articles 433-15, 435-15 and 445-4 of the French Criminal Code make explicit provision for this. A company can therefore be criminally convicted for acts of corruption committed by its directors or employees with the aim of obtaining an advantage for the company (obtaining a contract, for example), as several recent cases have shown.

Penalties incurred

France has one of the toughest arsenals of sanctions against corruption in the world.

For the private personsThe main penalties vary according to the nature of the offence. Active bribery and active trading in influence committed by private individuals or involving public officials are generally punished more severely, up to a maximum of ten years' imprisonment and a fine of €1 million (or double the proceeds of the offence, cf. Art 433-1, 435-3, 435-9 C. pén.). Passive bribery and influence peddling, as well as private bribery (active and passive), are generally punishable by maximum sentences of five years' imprisonment and a fine of 500,000 euros (or double the proceeds of the offence, cf. Art 433-2, 435-1, 435-7, 445-1, 445-2 C. pén.). These fines have been significantly increased by the Sapin II Act.

In addition to these main penalties, there are numerous complementary penaltiesThese are listed in article 435-14 of the Criminal Code:

• Suspension of civic, civil and family rights.
• Disqualification from holding public office or the professional or social activity in connection with which the offence was committed (for up to 5 years or permanently).  
• Forfeiture of the thing used to commit the offence or which is the product of the offence (including property owned or freely available to the convicted person).
• Display or dissemination of the conviction.
• For foreign nationals, a ban from French territory (permanent or for up to 10 years).

For the legal entities declared criminally liable, the penalties are also very severe:

• The fine can be up to quintuple of that provided for natural persons for the same offence (article 131-38 of the Criminal Code), i.e. up to €5 million in the most serious cases, or ten times the proceeds of the offence.
• Above all, they incur the penalties set out in Article 131-39 of the Criminal Code, which may include :
  • Dissolution (if the legal entity was created or misused to commit the offences).
  • Disqualification from one or more professional or social activities (permanently or for 5 years).
  • Placement under judicial supervision (for a maximum of 5 years).
  • Exclusion from public contracts (permanently or for 5 years).
  • A ban on public offerings.
  • Confiscation of all or part of their property.
  • Posting the decision.
  • Since the Sapin II Act, a penalty of compliance mandatory under AFA supervision (Art 131-39-2 C. pén.).

The nature and quantum of these sanctions can have devastating consequences, even threatening the very survival of the company.

Implementing sanctions: detection and procedure

The severity of sanctions would only be an indication if detection and prosecution mechanisms were not effective. However, the often secretive and complex nature of commercial corruption poses particular challenges.

La detection is based on several channels. Supervisory bodies such as the Court of Auditors and the AFA can play a role. Civil servants have a duty to report to the public prosecutor any offences of which they become aware in the course of their duties (article 40 of the Code of Criminal Procedure). Statutory auditors have a similar obligation to disclose offences to the public prosecutor (article L. 823-12 of the French Commercial Code). In addition, a number of professions (bankers, chartered accountants, lawyers under certain conditions, estate agents, etc.) are required to report suspicious transactions to TRACFIN (the anti-money laundering body), particularly those that may be the result of corruption (article L. 562-2 of the Monetary and Financial Code). International police and judicial cooperation (via Eurojust, OLAF, Interpol) is also crucial in transnational cases.

To deal with the sophistication of certain forms of economic crime, the special investigation techniquesThese include surveillance of people and places, sound recordings, computer data capture, infiltration of agents and telephone tapping (governed by articles 706-80 et seq. of the Code of Criminal Procedure).

The protection of whistleblowers is another key element in encouraging the disclosure of facts. The Sapin II Act strengthened this status, prohibiting any retaliatory measures (dismissal, discrimination, etc.) against an employee who reports or testifies, in good faith, to facts constituting a corruption offence of which he or she has become aware in the course of his or her duties (Article L. 1161-1 of the Labour Code and specific law on whistleblowers).

Concerning lawsuitsHowever, the initiative lies primarily with the public prosecutor, who decides whether to initiate proceedings. It is not possible for the victim to bring a civil action, but this can run into difficulties: it is excluded for certain offences of international corruption involving officials of non-EU member states (articles 435-6 and 435-11 of the Criminal Code), where only the public prosecutor can take action. In addition, the victim must demonstrate direct and certain personal harm resulting from the offence. However, case law has accepted the admissibility of actions by anti-corruption associations in certain high-profile cases, recognising their specific prejudice.

La prescription of public prosecution for corruption offences is now six years (since the 2017 law doubling the time limits). A crucial question is the starting point of this period. As corruption is often concealed, case law considers that the time limit does not start to run until the day on which the offence came to light and could be established under conditions that allowed the exercise of due diligence. of public action. In the case of acts of corruption that last over time (staggered payments, ongoing benefits), case law also tends to postpone the starting point until the last act of execution, considering that the offence is ongoing or renewed.  

Finally, the jurisdictional competence follows the traditional rules (place of the offence, residence of the perpetrator, etc.). However, French law may apply to offences committed abroad under certain conditions (article 689 of the Code of Criminal Procedure), particularly where international conventions so provide (article 689-8 for corruption). In addition, to ensure greater efficiency in complex cases of international corruption, influence peddling or bribery of foreign public officials, the Paris courts (public prosecutor, examining magistrate, criminal court) have concurrent jurisdiction throughout France (article 706-1 of the Code of Criminal Procedure).

Modern tools for dealing with corruption

Faced with the limitations of the repressive approach alone, the legislator has developed tools aimed at strengthening prevention and offering alternatives to traditional criminal prosecution, particularly for companies.

The Sapin II compliance obligations are a real revolution. Article 17 of the Law of 9 December 2016 requires the chairmen, chief executive officers and managers of companies employing at least 500 employees and whose turnover (or that of the group) exceeds €100 million, to implement an anti-corruption programme. This programme must include eight specific measures:

1. A code of conduct defining prohibited behaviour.
2. An internal alert system to receive reports.
3. A mapping of corruption risks by sector and geographical area.
4. Procedures for evaluating customers, first-tier suppliers and intermediaries.
5. Accounting control procedures (internal or external).  
6. A training programme for staff exposed to risks.
7. A disciplinary system for breaches of the Code of Conduct.
8. An internal control and evaluation system for the measures implemented. AFA is responsible for monitoring the existence and effectiveness of these programmes. In the event of non-compliance, the AFA's Sanctions Committee can issue compliance injunctions and impose substantial financial penalties (up to €1 million for an individual director and €5 million for a legal entity).  

La Public Interest Judicial Agreement (CJIP)also introduced by the Sapin II Act (article 41-1-2 of the Code of Criminal Procedure), offers a negotiated exit route for legal entities accused of certain offences, including bribery and trading in influence. Before criminal proceedings are instituted, the public prosecutor may suggest that the company enter into a CJIP. If it accepts and the agreement is approved by a judge, the company generally undertakes to :

• Pay a public interest fine, the amount of which is set in proportion to the benefits derived from the breaches (capped at 30% of average annual turnover).  
• Submit, for a maximum period of three years, to a compliance programme supervised by AFA.
• To compensate identified victims. The major advantage of the CJIP for the company is that it puts an end to public proceedings without admission of guilt and is not entered in the criminal record (bulletin no. 2), thus avoiding certain negative consequences such as automatic exclusion from certain public contracts. This is a form of transactional justice that is increasingly used in large-scale corruption cases.

The consequences of involvement in corruption are potentially devastating, in criminal, financial and reputational terms. Anticipating these risks, understanding your legal obligations, particularly in terms of compliance, and putting in place robust preventive measures have become imperatives of good management. For a personalised analysis of your situation or to help you set up or audit your anti-corruption programme, our team is at your disposal.

Sources

• Criminal Code: articles 121-7, 131-38, 131-39, 131-39-2, 432-11, 433-1, 433-2, 435-1 et seq., 435-14, 435-15, 445-1, 445-2, 445-4
• Code of Criminal Procedure: articles 40, 41-1-2, 689, 689-8, 706-1, 706-80 et seq.
• French Commercial Code: Article L. 823-12
• Monetary and Financial Code: Article L. 562-2
• French Labour Code: article L. 1161-1
• Law 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of economic life (known as "Sapin II"), in particular Article 17.