Soft Law of the French ANTI-CORRUPTION AGENCY is swiftly developing – should we comply or not?

Soft Law of the French ANTI-CORRUPTION AGENCY is swiftly developing - should we comply or not?

Created by the so-called “Sapin II” Law of 9 December 2016 (the Law), the French Anti-Corruption Agency (Agence française anticorruption, the AFA) is at the heart of the new French anti-corruption framework

Not only is it in charge of (i) monitoring compliance with the eight anti-corruption measures set out in Article 17 of the Law, (ii) issuing injunctions against supervised entities and their top-level managers to implement remedial actions and (iii) referring the latter persons to its Enforcement Committee where it suspects non-compliance, it is also entrusted with the task of drawing up recommendations and guidelines aimed at helping both private and public entities to prevent and detect corrupt practices (the Recommendations).

The Law specifies that the said Recommendations must be (i) adapted to the size of the entities concerned and the nature of the risks identified, (ii) regularly updated in order to take account of evolving practices and (iii) published in the French Official Journal (Journal officiel).    

However, the Law remains silent on the exact nature and effects of these Recommendations. Although pursuant to French law basic principles, they should not, per se, be binding on the entities they are designed to “help”, these Recommendations are not simply issued for informational purposes. It therefore remains to be seen, in particular, how the AFA’s Enforcement Committee, but also French public prosecutors and investigating judges throughout their investigations, as well as French criminal courts handling corruption cases, will perceive, interpret and rely on such Recommendations.

Whilst it is clear that under French law and in particular the principle of legality, soft law cannot ground a criminal or regulatory conviction, it may be relied on by criminal judges and the members of enforcement committees, in order to interpret a particular legal or regulatory requirement. Likewise, although such reasoning is highly disputable and also breaches the principle of legality, soft law may be referred to by French regulatory and criminal decision making bodies in order to characterise the mens rea component of an offence, on the basis that the accused could not have ignored the various ways of preventing and detecting corrupt practices set out publicly therein.  

Hence, the need to closely monitor the swift development and construction of a genuine French ‘ABC soft law’. As of today, the AFA has published the following soft law for private economic actors[1]:

  • Draft guide on mergers and acquisitions (in French, drawn up in April 2019, currently under consultation);
  • Guide on the anti-corruption compliance function in a company (in French, drawn up in January 2019);
  • Charter for supporting economic actors (in French, drawn up in September 2018);
  • Recommendations aimed at helping public and private entities to prevent and detect corrupt practices (French and English versions available, published in December 2017 following a consultation procedure);
  • Scope of the controls provided by Article 17 of the Law (in French, drawn up in December 2017);
  • Charter of rights and duties of the parties taking part in the control (in French, drawn up in October 2017);
  • Questionnaire and documents to be provided in the context of a control (in French, drawn up in February 2018).

In these documents and draft, the AFA acknowledges in particular that:

  • Under the terms of the Act of 9 December 2016, the Agency’s Guidelines shall be published in the Official Journal, but they are not legally binding.”[2]
  • The only obligations regarding the implementation of anti-corruption programs are those which result from the law or from judicial or administrative decisions.”[3]
  • The AFA recommendations are not legally binding and are provided for informational purposes only.”[4]

That being said, the AFA also defines the “anti-corruption benchmark” (référentiel anticorruption) as being composed of (i) the Law, (ii) its implementing legislation, (iii) the AFA’s recommendations aimed at helping public and private entities to prevent and detect corrupt practices, (iv) practical forms and guides as well as (v) Q&As of general interest published on the AFA’s website.[5]

By complying with the Law and implementing legislation alone, the said benchmark may not be reached. But what consequences could arise from such shortcoming?

As a matter of fact, the AFA goes beyond the requirements of the Law and implementing legislation in its soft law. To name but a few examples:

  • The AFA states in its Recommendations that “The scope of due diligence should be broader than the priorities set in Article 17-II-4 of the [Law].”[6]
  • The draft guide on mergers and acquisitions recognises that “Article 17 of the [Law] requires entities falling under its scope to assess, in connection with their corruption risk mapping, the situation of their clients, lead suppliers and agents. This obligation is not applicable to companies which envisage to acquire others, absorb others or merge with them.[7] And yet within the same draft guide, the AFA strongly recommends assessing the target companies’ anti-corruption framework and assessing in particular the targets’ distributors, commercial agents, intermediaries, relationships with PEP, shareholders and their beneficial owners, directors, persons holding managerial and key functions, intermediaries, co-shareholders and joint venture partners, clients and significant and strategic suppliers.[8]

Moreover, the AFA’s considerations sometimes appear to go beyond the mandate entrusted to it by the Law.

As highlighted in its 2017 annual report, “the AFA intervenes only as a preventive authority. Although it can detect offences, it is not a judicial authority and is therefore not required by law to investigate, record or prosecute criminal offences.”[9]

Yet, in its Guide on the anti-corruption compliance function in a company, the AFA sets out, using affirmative language, what would or would not trigger the head of compliance’s criminal liability, as a main perpetrator or an accomplice.[10]

Irrespective of the AFA’s legitimacy to make such considerations, one should bear in mind the fact that the AFA is entrusted by the Law to inform the public prosecutor of any facts of which it is aware during the exercise of its duties which may constitute an offence.[11]

Failing any decisions published by the AFA’s Enforcement Committee or references in the decisions handed down by the French criminal courts, it is still difficult to anticipate how much weight should be given to the soft law of the AFA at this stage. However, in doubt, we would recommend the entities and their senior management falling under the scope of Article 17 of the Law to comply with it.

The White Collar Crime and Regulatory Enforcement team at Allen & Overy Paris will be closely monitoring any developments regarding the AFA and French anti-corruption legislative framework and looks forward, as always, to assisting you in this field.


Written by:

Dan Benguigui
Avocat à la Cour, Counsel
Allen & Overy, White Collar Crime and Regulatory Enforcement

Rebecca Harris
Avocat à la Cour,Associate  
Allen & Overy, White Collar Crime and Regulatory Enforcement


Notes:

[1]               In accordance with the Law, the AFA has also published an annual report for 2017 (available in French and English). The 2018 annual report should be published shortly.

[2]               Recommendations aimed at helping public and private entities to prevent and detect corrupt practices, English version, page 4.

[3]               Charter for supporting economic actors, French version, page 4, free translation.

[4]               2017 annual report, English version, page 27.

[5]               See the Guide on the anti-corruption compliance function in a company, French version, page 2. See also the Charter for supporting economic actors, French version, page 3.

[6]               Recommendations aimed at helping public and private entities to prevent and detect corrupt practice, English version, page 19.

[7]               Draft guide relating to mergers and acquisitions, French version, free translation, page 6.

[8]               Ibid, page 14.

[9]               2017 annual report, English version, page 11.

[10]             Guide on the anti-corruption compliance function in a company, French version, page 17.

[11]             Article 17, 6°.