Some Consideration about liability of employees and corporate officer in corruption cases
In 2012, the OECD Working Group on the Implementation of the Convention on Bribery of Foreign Public Officials pointed the finger at France because of the scarcity of prosecutions of legal entities for bribery of foreign public officials.
Indeed, at that time, only natural persons, mostly corporate executives and company directors, had been convicted of this offense.
Since then, this trend has been reversed. The National Financial Prosecutor’s Office (PNF) has demonstrated its willingness to prosecute legal entities by entering into six judicial public interest agreements (CJIPs) with legal entities on corruption charges, and companies have now been definitively convicted.
In spite of this change, the responsibility of natural persons has not been minimized because of the Sapin II Law which has added an administrative liability to the criminal liability of corporate officers in the event of a failure to comply with the obligations to implement a compliance program prescribed by article 17 of the Sapin II Law.
In addition, as the CJIP can’t provide for a clause mitigating or exonerating the criminal liability of corporate officers and employees, the latter support an important risk of being prosecuted when the company agrees to such an agreement with the PNF.
This risk is all the more important because the PNF and the French Anti-Corruption Agency (“AFA”) require that the internal investigations conducted by companies prior to a possible conclusion of a CJIP contribute to establishing individual liability in order to allow the PNF to prosecute the legal representatives of the legal entity.
The Sapin II Law places the obligation of implementing a compliance program aiming at preventing corruption and influence peddling on the chairmen, general managers and directors of the company.
In case of failure to comply with this requirement, they may be subject to financial penalties of up to 200,000 euros. However, this is an administrative liability and not a criminal one. In its recommendations, which are not legally binding, the AFA calls on the governing bodies to commit to a policy of zero tolerance for unethical behaviour in general and any risk of corruption.
According to the AFA, this responsibility couldn’t be delegated de jure whereas the implementation of the system could be de facto delegated to the head of the anti-corruption compliance function.
Generally speaking, in criminal law, the criminal liability of natural persons for acts of corruption may be called into question by virtue of their personal act, pursuant to Article 121-1 of the French Criminal Code, which provides that “no one is criminally liable except for his own act“.
The question is more sensitive when the executive is not the physical perpetrator of the acts.
If there are mandatory provisions applicable to the company, a presumption of liability has been created for corporate officers. In this case, the fault of the director is based on the failure to comply with his duty of supervision.
This presumption is mainly applicable in the event of an unintentional offence as it’s hard to conceive that the intentional element of an offence could be demonstrated only by a simple breach of a supervisory obligation.
The only exception, according to the case law is when two conditions are met :
- The person concerned must be able to prevent offences;
- The person refrains from stopping the offence while having knowledge of it.
Thus, the mere failure to comply with the requirements of the Sapin II law doesn’t involve a potential criminal liability if the corporate officer is not aware of the existence of the offence.
Concerning the employees, the case law puts emphasize on the fact that courts are concerned with determining precisely whether employees had a real decision-making power to prevent the offence.
As an example, in the SAGEM case of 2012, the Court acquitted the sales manager because he didn’t have sufficient autonomy to be held liable for the payment of commissions.
More recently, the Paris Court of Appeal, in the Alcatel case, acquitted two employees because the deliberate dilution of responsibilities in the use of consultants abroad, the purely passive behaviour in the performance of their duties and the assertions according to which the two defendants couldn’t ignore that the sums paid under the guise of consulting contracts were made for illicit payments wasn’t sufficient.