Published in 2016, the Sapin 2 law was born of the State’s desire to strengthen the fight against corruption in France. A river law, it comprises 169 articles relating to transparency, the fight against corruption and the modernization of public life. At the heart of the law are economic players, who are on the front line in the fight against influence peddling, corruption, illegal interest-taking, embezzlement and favoritism. The anti-corruption obligations incumbent upon them are summarized in a single article: Article 17. A point-by-point reading of the law.
Number I.: Which public and private players are affected by the Sapin 2 Act?
I. of Article 17 sets out which players are covered by the Sapin 2 law, with the obligation to deploy internal anti-corruption measures. These include :
- Companies with at least five hundred employees, or belonging to a group of companies whose parent company is headquartered in France and has at least five hundred employees, and whose sales or consolidated sales exceed 100 million euros. The obligations apply to the parent company, its subsidiaries and the companies it controls.
- Public industrial and commercial establishments with at least five hundred employees, or belonging to a public group with at least five hundred employees and sales or consolidated sales in excess of 100 million euros.
These obligations apply directly to the chairmen, managing directors and general managers of these entities. Article 17 specifies that it is the directors who are recognized as being responsible for combating corruption. Specifically, it is they who “are required to take measures to prevent and detect the commission, in France or abroad, of acts of corruption or influence peddling, in accordance with the procedures set out in II. They incur financial penalties for failure to comply with the anti-corruption compliance obligations of the Sapin 2 law.
Word for word, the law specifies that this also applies to “members of the management boards of public limited companies governed by Article L. 225-57 of the French Commercial Code and employing at least five hundred employees, or belonging to a group of companies with at least five hundred employees, and whose sales or consolidated sales exceed 100 million euros”.
Number II. What anti-corruption measures should public and private players implement?
II. of Article 17 details the eight measures – still referred to as pillars – that the entities concerned must deploy internally to comply with the Sapin 2 law. They must thus put in place :
- An internal code of conduct: this defines and illustrates behaviors that are characteristic of corruption or influence peddling, and are to be prohibited within the organization. Integrated into the internal regulations, it must be the subject of consultation with employee representatives.
- An internal whistle-blowing system : the aim of this procedure is to receive, in complete confidentiality, reports from employees concerning behavior that is contrary to the code of conduct.
- Risk mapping : regularly updated, risk mapping identifies, analyzes and prioritizes the corruption risks to which the entity may be exposed. It takes into account the business sectors and geographical areas in which the entity operates.
- An assessment of the situation of third parties : this involves evaluating the integrity of customers, first-tier suppliers and intermediaries, and the risks of corruption to which the entity could be exposed through them.
- Internal or external accounting control procedures: the aim is to ensure that books, registers and accounts are not used to conceal corruption or influence peddling.
- A training program : to raise awareness of the risks of corruption and influence peddling among the most exposed managers and staff.
- A disciplinary system : proportionate and graduated, designed to punish employees for breaches of the internal code of conduct.
- An internal control and evaluation system for anti-corruption measures.
The law reiterates that liability is borne by managers as individuals, but also by the entity as a legal entity.
Number III. who monitors compliance with anti-corruption measures?
Article 17, III specifies that it is theFrench Anti-Corruption Agency (AFA) which has the authority to monitor compliance with the anti-corruption measures and procedures detailed in the law.
The control procedure is detailed in another article of the Sapin 2 law: Article 4. This specifies the procedures for documentary and on-site inspections, carried out by authorized agents. They are bound by professional secrecy. Any attempt to hinder their action is punishable by a fine of 30,000 euros.
A report is drawn up following the inspection. The report sets out AFA’s observations on the quality of the corruption prevention and detection system deployed within the audited entity. Where appropriate, AFA makes proposals and recommendations for improving existing procedures.
Number IV. What is the penalty procedure for non-compliance with the obligations of the Sapin 2 Act?
IV. deals with sanctions in the event of non-compliance with the obligations of the Sapin 2 law. The French Anti-Corruption Agency has a scale of three sanctions, proportionate to the seriousness of the breaches observed. After offering the executive the opportunity to respond to the conclusions of the report, the AFA Director may either :
- Issue a warning to the company’s management.
- Bring the matter before the AFA’s Sanctions Committee toorder the company and its representatives to adapt, deploy or reinforce internal compliance procedures.
- Refer the matter to the AFA Sanctions Committee to impose a financial penalty.
Number V. what are the penalties for non-compliance with anti-corruption obligations?
V. of Article 17 formalizes the penalties applicable in the event of failure to comply with the obligations of the Sapin 2 Act.
With regard to the injunction, the text specifies that the entity must comply with the recommendations of the AFA’s inspection report to adapt its procedures for preventing and detecting corruption or influence peddling. The deadline for compliance is set by the supervisory agency and may not exceed three years.
With regard to financial penalties, V. specifies the amounts. The fine may not exceed 200,000 euros for a natural person and one million euros for a legal entity. It is determined according to the seriousness of the breaches in question. The AFA must also take into account the financial situation of the sanctioned individual or legal entity. The fine is paid to the French Treasury and recovered as “State debts unrelated to taxes and property”.
Article 17 allows the Sanction Commission to decide whether or not to make the sanction public. The means of publication are determined by the agency, and any costs incurred are paid by the sanctioned person.
The Sanction Committee’s decisions must be substantiated. The natural or legal person concerned must have been heard beforehand or, failing that, duly summoned.
The final points, VI. and VII., are very short and provide two further clarifications on sanctions. The first, VI., clarifies the statute of limitations for action by the French Anti-Corruption Agency. Specifically, it states that it “shall be time-barred after three years have elapsed from the day on which the breach was established if, within this period, no action has been taken to sanction the breach”.
VII. specifies that appeals against decisions of the Sanction Commission are full jurisdiction appeals, i.e. lodged with an administrative court.
The scope of anti-corruption obligations under the Sapin 2 law is summarized in a single article: Article 17. In around sixty lines, it specifies who is concerned, the measures to be put in place, control procedures and sanctions.
Why are we talking about the Sapin 2 law?
The Sapin 2 Act is the big sister of the Sapin 1 Act, promulgated on January 29, 1993 by the Minister of the same name, Michel Sapin. The Sapin 2 Act broadens and strengthens the initial anti-corruption measures introduced by the Sapin 1 Act. The latter was less ambitious, focusing on political and public corruption. The Sapin 2 law breaks new ground by placing companies at the heart of the fight against corruption, influence peddling, misappropriation of funds and favoritism. Article 17 provides a precise framework for their anti-corruption obligations, which translate internally into the implementation of a compliance program.
To help private and public players comply, Values Associates offers software dedicated to the Sapin 2 law, discover it here!