France Adopts ABAC Laws and Joins Global Efforts at Combatting Corruption
France has the sixth largest economy in the world, but it has never prosecuted a French company for corruption in a foreign country. That work has been left to countries such as the United States, which fined French oil company Total $398 million for Anti-Bribery/Anti-Corruption (ABAC) violations in 2013 and the French power and transportation company Alstom $772 million for ABAC violations in 2015. The lack of anti-corruption scrutiny French companies received at home might explain why France ranks only 23rd in Transparency International’s Corruption Perceptions Index for 2015.
Now the French government is taking action. In early November 2016, it passed a new Anti-Bribery/Anti-Corruption law known as “Sapin 2” after Michel Sapin, the French Minister of the Economy, Finance, and Industry, who originally proposed anti-corruption legislation in 1993. The bill allows for companies to strike financial settlements with prosecutors, just as they can in the United States. Penalties for bribery and corruption can be steep: the bill allows penalties to reach 30% of a company’s annual turnover.
The bill is significant not only for the scrutiny it will bring to French companies, but also because it demonstrates the momentum that ABAC legislation is achieving globally. France now joins the U.S., the UK, Brazil, Canada, Russia, and most OECD countries in passing strict ABAC legislation.
The bill is also another reminder that global enterprises need to take control of their Third Party Risk Management programs to ensure that ABAC laws are never violated. The costs, as the Alstom penalty shows, can be steep.
There are other benefits to adopting ABAC legislation and reducing ABAC risk. The French Treasury expects the new legislation to help grow the French economy 0.2% by improving business confidence. In an uncertain EU economy, that’s a welcome development.