Commercial bribery: a practical guide to protecting your business

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Commercial corruption regularly makes the headlines, often associated with complex cases involving major international groups. However, it would be dangerous to believe that this risk only concerns other companies. Any company, whatever its size or sector of activity, can find itself exposed, directly or indirectly, to corrupt practices. The consequences can be devastating: criminal and financial penalties, as well as lasting damage to reputation. In an increasingly demanding legal environment, particularly since the Sapin II law, understanding the risks and obligations has become an imperative for any responsible manager.

This practical guide aims to give you a clear, concise overview. We will cover what commercial corruption actually means, the main risks for your company, the key points of the legal framework to be aware of - in particular compliance obligations - and the key role of the French Anti-Corruption Agency. The aim is to help you better understand this issue so that you can better protect your business.

What is commercial bribery in practice?

Beyond precise legal definitionsCommercial bribery is based on a simple mechanism: a person offers, gives or promises an undue advantage (money, a gift, a service, a job, etc.) to another person so that the latter performs (or refrains from performing) an act within the scope of his or her duties, in an unfair manner or in breach of his or her obligations. The person who receives or solicits this advantage is also guilty.

A distinction is made between corruption active (he who offers the advantage) of corruption passive (the person who requests or accepts it). It may be public (involving a French or foreign public official) or private (between private sector players).

In practical terms, this can take many forms: payment of bribes to win a contract, excessive gifts to a client or civil servant to obtain preferential treatment, lavish and unjustified invitations, use of opaque intermediaries whose remuneration is partly used to bribe, preparation of false invoices to conceal illicit payments, etc. Influence peddling, on the other hand, consists of paying a person to use their influence (real or supposed) with a decision-maker in order to obtain an undue advantage.

Why is your company affected?

Ignoring the risk of corruption can be very costly for a company. There are many issues at stake:

• Legal risks : The criminal penalties are severeThis applies both to individuals (managers and employees), who can face heavy prison sentences and fines, and to the company itself (a legal entity), which can face substantial fines (several million euros), exclusion from public contracts, and even more radical measures such as a ban on doing business.
• Financial risks : In addition to criminal fines, the company may suffer direct financial losses (lost contracts, investigation and defence costs) and indirect losses (difficulty in obtaining financing).
• Reputational risks : A conviction or even a simple indictment in a corruption case can permanently tarnish a company's image, resulting in a loss of confidence on the part of customers, business partners, investors and the public.
• Distorted competition : Corruption undermines fair and equitable competition, penalising virtuous companies that play by the rules.

The essential legal framework

France has a substantial legislative arsenal to combat corruption, which is enshrined mainly in the Criminal Code but also in various other texts. For companies, the Sapin II law of 9 December 2016 has become an essential reference text, as it focuses on prevention and detection within organisations themselves.

It is also important to know that France applies international conventions (in particular those of the OECD and the UN), which means that French companies can be prosecuted in France for acts of corruption committed abroad, in particular the bribery of foreign public officials. From a tax point of view, a simple rule prevails: sums paid as a result of corruption ("bribes", illicit "commissions") are not taxable in France. never deductible taxable profits.

Compliance obligations: the pillar of prevention (focus on Sapin II)

The major new feature of the Sapin II law is the introduction of a legal obligation for certain companies to actively implement measures to prevent and detect corruption. This applies to companies (and their directors) with at least 500 employees AND sales in excess of €100 million (these thresholds are assessed at the level of the company or the group to which it belongs).

Even if your company does not meet these thresholds, the measures provided for by law constitute a benchmark of good practice that is highly recommended. These measures include

• The adoption of a code of conduct clear and accessible.
• The introduction of a internal warning system secure.
• The development of a risk mapping identifying areas and processes at risk.
• Procedures forintegrity assessment customers, suppliers and intermediaries.
• From accounting controls reinforced.
• La training of the most exposed staff.

L'French Anti-Corruption Agency (AFA) is responsible for helping companies (through recommendations) and also for monitoring the existence and effectiveness of these compliance programmes. In the event of a proven breach, sanctions may be imposed. The objective is clear: to encourage companies to develop a genuine culture of integrity and to act upstream to prevent risks.

The Public Interest Judicial Agreement (CJIP): a negotiated outcome?

Another major tool introduced by the Sapin II Act, the CJIP offers an alternative to traditional criminal proceedings for legal entities (companies, associations, etc.) accused of certain acts of corruption or related offences.

Proposed by the public prosecutor before the prosecution is initiated, the CJIP is a kind of settlement. If the company accepts and the agreement is validated by a judge, it generally undertakes to pay a public interest fine (calculated on the basis of the benefits derived from the offence, capped at 30% of average turnover) and to implement a compliance programme under the supervision of the AFA for a specified period.

The main advantage for the company is that the CJIP does not entail a declaration of guilt and is not entered in the criminal record (bulletin no. 2), which makes it possible to avoid certain automatic exclusions from public contracts or other consequences linked to a criminal conviction.

Towards a culture of integrity: going beyond legal obligations

Implementing an anti-corruption programme should not be seen as a simple administrative constraint or a box to tick. To be truly effective, the approach must be taken at the highest level of the company. A visible and sincere commitment from the top ("tone at the top") is fundamental to spreading a culture of integrity at all levels.

This also involves ongoing training tailored to the different business lines and levels of risk, as well as the constant promotion of the company's ethical values. The aim is to make the prevention of corruption a natural reflex and an integral part of the company's strategy and performance.

Implementing an effective anti-corruption strategy is an investment in your company's future and reputation. A tailored advice to your size, business sector and geographical areas of operation could save you time and resources, while protecting you against major risks. Contact us to find out more.

Frequently asked questions

What exactly is commercial corruption?

This is the act of offering, giving, soliciting or accepting an undue advantage (money, gift, etc.) so that a person performs or does not perform an act in the course of his or her duties in an unfair manner.

What is the difference between corruption and influence peddling?

Corruption pays for an act (or abstention) directly linked to the bribe-taker's position; influence peddling pays for the use of influence (real or supposed) over a third party decision-maker to obtain a favourable decision.

What are the penalties for corporate bribery in France?

A company can face heavy fines (up to several million euros), exclusion from public contracts, confiscation of its assets and even a ban on doing business.

Can my company be held liable if an employee bribes someone?

Yes, the company may be held criminally liable if the offence was committed on its behalf by one of its representatives or bodies (manager, employee with delegated authority, etc.).

What does the Sapin 2 law require of companies?

In particular, it requires certain large companies (with more than 500 employees and a turnover of €100 million) to set up a comprehensive programme to prevent and detect corruption (code of conduct, whistleblowing, risk mapping, etc.).

Am I obliged to set up an anti-corruption programme?

The legal obligation (Art. 17 Sapin II) concerns companies exceeding certain thresholds. However, the measures recommended are good practice for all companies wishing to prevent risks.

What is the French Anti-Corruption Agency (AFA)?

It is a public agency responsible for helping public and private players to prevent and detect corruption, in particular through recommendations, and for monitoring the anti-corruption programmes of companies subject to the Sapin II law.

What is corruption risk mapping?

It is a tool designed to identify, analyse and prioritise the risks of corruption to which a company is exposed according to its business sectors, geographical areas of operation, internal processes, etc.

How can an employee who reports corruption (whistleblower) be protected?

The law (in particular Sapin II) grants a protective status to whistleblowers who report corruption in good faith, prohibiting any retaliatory measures (dismissal, discrimination, etc.). Secure internal and external reporting procedures exist.

What is the CJIP (Convention Judiciaire d'Intérêt Public)?

This is a settlement agreement between the prosecutor and a company accused of corruption (before prosecution), allowing the case to be closed in return for a public interest fine and a compliance programme, without admission of guilt.

What is the offence of favouritism?

This is when a person with public authority gives an unjustified advantage to a candidate in the award of a public contract or a public service delegation, in violation of the rules of equality and free access.

Can "commissions" paid abroad be deducted from tax?

No, sums paid to bribe a public official (French or foreign) to obtain or retain a contract are not deductible from profits taxable in France.

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