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Wednesday
Nov072012

For France, mixed grades in the battle against bribery

The Palais de Justice, located in the Ile de la Cite in central ParisThe OECD Working Group on Bribery has published its latest assessment on France's fight against overseas graft. The Phase 3 report on implementing the Anti-Bribery Convention lauds France for stepping up anti-corruption efforts but calls on Paris to tighten laws and boost fines.

This report, the BBC said, comes two years after the Alcatel settlement, in which the Paris-based communications company paid $137 million, one of the top ten FCPA enforcement actions of all time. The case involved alleged illegal payments to officials in Costa Rica, Honduras, Taiwan and Malaysia.

Stating that it is "seriously concerned that despite the very significant role of French companies in the international economy, only 33 foreign bribery proceedings had been initiated,” the Working Group paints a rather bleak picture. However, this view seems diluted by the OECDs applauding France on several aspects of its fight against graft.

The Working Group welcomes reforms announced by the French Minister of Justice aimed to promote greater impartiality of the Public Prosecutor’s Office. It hails the work of two specialized agencies that should facilitate seizure and confiscation of tainted assets, along with government efforts to prevent corruption and raise awareness. 

With regard to the non-deductibility of bribes paid to foreign public officials, France is described as “an example of good practice.” Indeed, 18 reimbursements have been requested since 2008 by the tax administration for disallowed deductions related to overseas corrupt payments. And the Working Group congratulated France for introducing whistle-blower protections -- a potentially significant contribution to the detection and punishment of foreign bribery.

On the negative side however, the OECD found a significant number of issues hindering enforcement.

Although France introduced legislative change in 2007 and 2011 aimed at further combating graft, the changes didn't eliminate the so-called dual criminality requirement, which remains an obstacle to the prosecution of overseas bribery. The OECD noted with regret the special regime of common law that prohibits victims of foreign bribery (except corruption occurring within the EU) from being civil parties to proceedings and therefore able to initiate criminal cases.

The report recommends increasing the maximum fines under the law and making full use of confiscation and penalties available under the law, in particular debarment from public procurement.

The OECD wants more judicial reforms to guarantee greater independence for prosecutors. And France should ensure that secrecy rules applicable to certain documents don't not create an obstacle to investigations and prosecutions in foreign bribery cases.

Finally, the report found the French authorities too often did not pursue foreign bribery cases on the grounds that the offense took place outside French jurisdiction -- a problem overcome by the extra-territorial application of the FCPA and U.K. Bribery Act, but not explicitly stated in French law.

It's clear from the Working Group's comments that achieving a level-playing field, an unabashed aim of the OECD Anti-Bribery Convention, is a mighty task. The Working Group report points France in the desired direction.

_______________

Philip Fitzgerald is a contributing editor of the FCPA Blog.

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