In December 2016, France enacted an anti-corruption law known as Sapin II. The law was named after Michel Sapin, the then Minister of Finance, who said when presenting the bill: “In the fight against corruption, France cannot just satisfy itself with the existing situation.”
Limited extra-territorial reach, antiquated procedural bars to prosecutions, and the absence of an effective system for settling without trial cases of corporate corruption contributed to a situation where overseas enforcement agencies (notable DOJ and SEC) successfully claimed jurisdictional primacy over the wrong-doing of French companies and financial institutions overseas.
Settlements and disgorgements from French companies to overseas regulators (again, primarily the United States) ran into billions of dollars.
Sapin II — formally titled the “Law Regarding Transparency, the Fight Against Corruption and the Modernization of Economic Life” — brings French laws into alignment with those existing in countries such as the United States and UK. This will now enable French authorities to exert jurisdictional claims in cases of overseas corruption with a French connection and, of course, to participate in discussions over where any penalties or disgorgements should be paid.
Beyond this shift in the geopolitics of multi-jurisdictional corporate corruption cases, Sapin II will also have implications for any internal investigations into suspected corporate bribery. The extra-territorial element to Sapin II expands jurisdiction to the conduct of all French citizens, wherever in the world they may work or reside, and to persons of any nationality resident in France. For corporations, French jurisdiction can now be asserted over legal entities with a footprint in France, wherever else in the world it might operate.
The first consequence of this expanded jurisdictional reach, when added to other Sapin II developments such as protection for whistleblowers and compulsory implementation of hotlines, will be an increase in the number of investigations. Understanding the expansion of French jurisdiction through Sapin II will be critical at the early stages of an investigation when the investigation strategy is being formed and decisions need to be made about selecting the right team. This is not always as easy as it sounds. Robust and rapid screening for a French nexus from the available data sources will be needed to make the right decisions early on. Getting these decisions right can be critical and may pay dividends later when maximising cooperation credit in any negotiated settlement with enforcement authorities.
Continuing the theme of settlement and negotiation options, the availability of DPAs in France, known as Convention Judiciaire d’Intérêt Public “CJIP,” may well resolve tensions that existed in pre-Sapin II internal investigations where strategies directed towards swift cooperation and settlement with some enforcement agencies frequently clashed with the more limited litigious options in France where preserving the ability to defend the company was an important factor.
The settlement option brought in by Sapin II aligns France with other enforcement jurisdictions and enables a unified internal investigation strategy to be deployed. Perhaps this will be at least one less headache in complex cross border corruption investigations.
However, whether France will be able to satisfy itself with the new situation, as Mr. Sapin hoped when presenting Sapin II, remains a very open question. Nevertheless, at least Mr. Sapin’s successors can now expect to see greater coordination with French authorities when overseas regulators look to prosecute French companies.
Simon Taylor, pictured above, is a director at Forensic Risk Alliance (FRA) in the Forensic Accounting team. He is a dual qualified lawyer (solicitor and barrister) and has in-depth experience in white-collar investigations, financial regulatory enquiries, corporate fraud and corruption. He has extensive experience in structuring and delivering advice to corporate clients on all aspects of governance and compliance risks.
Yousr Khalil, pictured above, is a partner at Forensic Risk Alliance (FRA). She’s a forensic accountant with over fifteen years’ experience in matters involving fraud and corruption, government contracts litigation, due diligence, compliance, and governance and risk management in the United States, Latin America, Europe, North Africa, the Middle East and Asia.