France: Anti-Corruption Agency’s Sanctions Committee holds blockbuster hearing

The Sanctions Committee of the French Anti-Corruption Agency (AFA) held its first-ever hearing, meeting on June 25 to consider a company that is facing possible sanctions for failing to implement an effective anti-corruption compliance program.

France’s Sapin II law adopted at the end of 2016 imposed an obligation on certain large companies to establish and implement an anti-corruption compliance program, and allows the imposition of sanctions even if no there has been no actual or alleged corruption-related misconduct.

The hearing on June 25 perfectly illustrates the innovative aspects of the new regulatory framework. One of the first companies that underwent an inspection from the AFA, meant to confirm the existence of an effective compliance program, ended being brought before the AFA’s Sanctions Committee and facing possible sanctions.

This first public hearing was anxiously awaited by the compliance community in France and attracted many interested stakeholders. More than two hours before the opening of the hearing, people began to line up outside the offices of the AFA, and by the time the doors opened, a hundred-meter line had formed. Only the first 35 people were granted access to the hearing, of which we were to lucky to be part.

Three points appear particularly worth noting about this first Sanctions Committee proceeding.

First, the AFA Sanctions Committee is composed of independent professional judges, with the AFA being a party to the proceeding. 

Second, this proceeding is administrative in nature, and therefore must be distinguished from criminal proceedings. The Sanctions Committee is not responsible for determining whether any bribery was committed, but instead has the authority to determine whether companies and/or relevant representatives have implemented an adequate anti-corruption compliance program consistent with the requirements of Sapin II.

Third, this sanctions proceeding was initiated because the AFA considered that, at the time of its inspection, the company did not have any proper compliance program in place. Importantly, the Sanctions Committee will, however, base its decision on the compliance program existing as of the date of the hearing — i.e., 18 months after the inspection.

The June 25 hearing lasted three-and-a-half hours, much of which was taken up by procedural arguments. On the merits, the AFA argued that the company and its president had failed to demonstrate that they had implemented five of the eight pillars of an effective anti-corruption compliance as defined by Article 17 of the Sapin II. The five allegedly missing elements were the code of conduct, risk mapping, due diligence, accounting procedures, and overall control of the program. Most of the debate focused on the third pillar — the company’s failure to implement appropriate corruption risk mapping.

Generally, the AFA stated that corruption risk mapping constitutes the cornerstone and foundation of a company’s anti-corruption compliance program, and that if the company’s risk mapping was inadequate, it should automatically find that the rest of the company’s compliance program per se ineffective.

The President of the Sanctions Committee announced that its decision will be issued within four weeks. 

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Nicolas Tollet, pictured above left, is Counsel at Hughes Hubbard. He joined the firm from Technip, where he served as Vice President for Compliance and was based in Paris and Rio de Janeiro (2012 – end of 2016) and has worked on some of the largest anti-corruption cases in the world. He’s admitted to practice in New York and Paris, and has been teaching anti-corruption compliance at the University of California Berkeley.

Marie-Agnès Nicolas, above right, is Counsel to Hughes Hubbard and a member of its Anti-Corruption & Internal Investigations Group and Litigation Department. She advises large multinational companies on a range of anti-corruption issues in connection with the U.S. Department of Justice (DOJ) and the French authorities (French anti-corruption agency (AFA) and prosecution authorities). She’s admitted in France (Paris).