The French bill for Transparency and Modernization of Economic Life, which, among other things, aims at preventing foreign bribery and intensifying the fight against it, has been the subject of much speculation during the past few months.
The bill was originally composed of a series of measures. They included creating a national agency in charge of monitoring the implementation of anti-bribery compliance programs in companies above a certain size, increasing protection for whistleblowers, and introducing settlements to resolve foreign bribery allegations.
But at the end of last week, the Conseil d’Etat (France’s highest administrative court) delivered an opinion advising the government to strike the provision on settlements before introducing the bill to the French parliament.
The debate over settlements to enforce the French foreign anti-bribery law has been going on for some time. While France has been criticized by the OECD Working Group on Bribery for its lack of enforcement efforts, French companies have been subject to heavy FCPA enforcement in the United States. In fact, three of the top ten FCPA cases involve French companies.
The introduction of settlements through the new bill was intended to restore the enforcement balance. French Minister of Finance Michel Sapin, under whose authority the bill was drafted, said Saturday in an interview that the French arsenal to combat foreign bribery has to be improved, adding that other countries have taken up the task of sanctioning French companies, which impacts France’s image and sovereignty.
In spite of this, the Conseil d’Etat’s opinion does not come as a surprise.
Many stakeholders in France have been opposing the use of settlements to resolve foreign bribery allegations. In their book “Deals de Justice,” French magistrate Antoine Garapon and attorney Pierre Servan-Schreiber argued that settlements to resolve criminal allegations would conflict with the very foundations of the French penal system and hurt societal and ideological values.
Last week, 14 organizations, including Oxfam, called for the controversial provision to be struck from the bill, arguing that pretrial settlements would lead to increased leniency toward alleged bribe payers, and ultimately lower accountability for French companies when it comes to foreign bribery.
The OECD hasn’t advocated pretrial settlements but has acknowledged their efficiency to enforce foreign bribery laws. In fact, since the OECD Anti-Bribery Convention’s entry into force nearly 20 years ago, 69% of foreign bribery cases were resolved through settlements, and an increasing number of countries are now using them. The UK used its first deferred prosecution agreement late last year to resolve a foreign bribery enforcement action.
But pretrial agreements are still commonly criticized for lacking transparency or sufficient judicial review. At the outset of the OECD Anti-bribery Ministerial Meetings on March 16 in Paris, Transparency International, Corruption Watch, Global Witness and the UNCAC Coalition called on the OECD to create and impose global standards for settlements in foreign bribery cases that would ensure a proper level of deterrence.
Raising the standards on pre-trial agreements could encourage countries like France to start using them, perhaps under limited circumstances. Although there are valid criticisms against negotiated resolutions, the fact remains that not a single company has been convicted in France of overseas bribery through traditional justice.
The parliament will still have the option to discuss the issue of settlements as part of the bill, but it is very unlikely that it will happen.
Elisabeth Danon is a legal analyst at the World Bank, where she specializes in public procurement. She previously worked at the Anti-corruption Division of the OECD. She can be contacted here.