Vulnerability to the extraterritorial strategies of its foreign competitors, weakness of anti-corruption tools, lack of political will… More than five years ago, the French anti-corruption system was subjected to much criticism. The repercussions on the country’s economic attractiveness and public confidence were numerous. The Sapin II law was enacted in 2016 to help fight corruption and tax fraud. However, it has its limits, particularly in terms of extraterritoriality. How does the proposed Sapin III law intend to change this?

The Sapin II law, a legal revolution

The Law 2016-1691, known as Sapin II, was introduced to completely reform the legal framework relating to transparency, the fight against corruption and the modernisation of economic life. It requires reporting entities to adopt internal mechanisms for preventing corruption and established a dedicated authority, the Agence française anticorruption (AFA). The Sapin II law has contributed to the progress made in the fight against corruption in France.

The proposed Sapin III law, a new step

But in 2021, the gap between French legislation and European and international standards in the fight against corruption, although reduced, was still palpable. Moreover, France is ranked 21st in the Transparency International world ranking of the least corrupt countries, the Corruption Index 2021. This is about ten points behind its close neighbours, the United Kingdom (11th) and Germany (10th).

On 19 October 2021, the bill nº 4586, thus Sapin III, was tabled by Deputy Raphaël Gauvain. It draws on the conclusions of the evaluation of the Sapin II law in June of the same year to modify the current text. The Sapin III law aims to prevent corruption in companies and within administrations and to strengthen transparency as well as the tools for detecting and punishing corruption.

Quatre axes principaux et comment ils pourraient changer la donne

Four points of particular note:

1. Redistribution of the functions of the HATVP, an independent administrative authority for transparency of public affairs, and the AFA
2. Withdrawal of the condition of residence of the head office of parent companies in France
3. Redefinition of the status of interest representatives
4. Strengthening of the protection of whistleblowers

How the proposed Sapin III law could be a game changer

1. Redistribution of the functions of the HATVP and the AFA

The Sapin III law proposes to entrust the HATVP with the advice and control of public actors. This independent authority would have a sanctions committee. As for the AFA, it will keep the tasks of advising and controlling economic stakeholders.

What is changing?

Public stakeholders, which were not taken into account in the Sapin II law, were lagging behind in the development of an anti-corruption system compared to economic operators who are already engaged in compliance procedures.

The proposed Sapin III law extends the obligations of economic actors to public ones, enabling them to catch up in terms of compliance and anti-corruption.

2. Removal of the condition that the parent company’s registered office should be located in France

This is one of the highlights of the Sapin III bill. Until now, only companies registered in France were subject to the obligations to deploy corruption prevention and detection programmes under Article 17 of the Sapin II law.

The bill proposes to extend the application of Article 17 to small subsidiaries of large foreign groups whose parent company is located in France. These subsidiaries will have to deploy an internal anti-corruption compliance programme. This condition will apply as soon as the parent company exceeds the threshold set by the law, i.e. more than 500 employees and a consolidated turnover of more than 100 million euros.

What is changing?

The withdrawal of the requirement that the parent company’s registered office be located in France would allow for equal treatment between small subsidiaries of foreign companies located in France and French companies. Thus this text, if adopted, will lead to more companies complying with anti-corruption laws.

3. Redefinition of the status of interest representatives

The Sapin III Act proposes to clarify the definition of interest representatives as being based on the activity of the legal person and not that of the individuals who make up the legal person, as recommended by the Sapin II Act.

The proposed Sapin III law also provides for the creation of a register of interest representatives which would be made available to the HATVP and a strengthening of the obligations to which representatives are subject.

What is changing:

This measure will improve the transparency of public decisions.

Interest representatives who do not comply with these obligations would be liable to administrative sanctions ranging from formal notice to appearance before the HATVP’s sanctions committee.

4. Strengthening the protection framework for whistleblowers.

The proposal complements Law 2022-401, which came into force in March 2022, by further strengthening the protection of whistleblowers.

Whistleblowers are defined as “any natural person who has personal knowledge of the facts he or she reports”. The proposed Sapin III law includes, for the public sector, persons who have participated in facilitating the reporting of corruption.

The proposed Sapin III law calls for general protection of whistleblowers against any discriminatory measure, including dismissal. The confidentiality of their identity and the information they provide must be guaranteed.

What is changing?

Currently, difficulties persist with regard to the quality of the treatment of alerts on cases of corruption and other breaches of probity as well as the protection of whistleblowers.

The proposed Sapin III law aims to encourage whistleblowing, while any obstruction to the exercise of the right to report would be punishable by imprisonment and/or a fine.

Another important point is that companies will have to update their internal compliance mechanisms to protect whistleblowers.

Conclusion

The proposed Sapin III law should make it possible to improve the transparency of public decisions, to clean up the French private and public ecosystem by guaranteeing the protection of whistleblowers, to broaden the scope of companies subject to legislation and to bring the public sector to update its internal compliance mechanisms.

Thus, this proposal does not call into question the compliance mechanisms of the Sapin II law. Rather, it will allow them to continue and, in this way, strengthen the fight against corruption in the face of current challenges.

The Kantik solution: digitalizing risks and compliance needs

Inferensia has developed the Kantik plug & play software to enable companies to comply with accounting anomaly detection obligations such as the Sapin II law. Thanks to its automatic analysis technology, Kantik sets up an internal control system to ensure the prevention and detection of accounting anomalies within companies.

Sources

• French National Assembly, Proposed bill n ° 4586
• Transparency International : Corruption Perception Index (2020)
• French National Assembly, Mission d’information sur l’évaluation de l’impact de la loi n° 2016-1691 ( Gauvain et Marleix).