Cross-border criminal justice post-Brexit – Operation Yellowhammer
The Organisation for Economic Cooperation and Development (“OECD”)’s Working Group on Bribery recently urged France to tackle bribery, tighten laws and boost fines. It is “seriously concerned that, despite the very significant role of French companies in the international economy”, France has only secured 5 convictions since the bribery ban came into force in 2000.
This included 4 final convictions concerning individuals from small companies and 1 conviction under appeal against a large French group active in aerospace, defence and security. These convictions, which only concerned minor bribes of between €90,000-228,000 in Libya, Congo, Djibouti and Nigeria, gave rise to minimal penalties (suspended prison sentences and a maximum fine of €10,000). There have only been 33 prosecutions in France during that same period (only two of these related to companies).
Severe criticisms for changes to be made by the French parliament, government and judiciary.
The OECD’s examiners, who prepared the detailed report, found that “these cases did not undergo in-depth investigations that might have revealed more complex evidence involving legal persons linked to the convicted individuals”. They also expressed their great concern regarding the lack of independence of prosecutors who have, despite being under the Ministry of Justice’s control, a quasi-monopoly in deciding whether to investigate matters. Mark Pieth, the Chairman of the OECD’s Working Group on Bribery believes that “this has been a huge issue. There have been lots of cases in the past 20 years which got stuck or were closed for political reasons”.
French authorities have been criticised for too often not pursuing foreign bribery cases on the grounds that the offences took place outside France (despite evidence available in France), for not devoting enough resources towards tackling bribery committed by French entities abroad and for too frequently interpreting what constitutes bribery too narrowly, thus “allowing cases to slip through the cracks”. Patrick Moulette, Head of the OECD’s anti-corruption division, commented that “there are not enough cases to demonstrate so far a willingness to prosecute”.
This is rather surprising as there are many French companies operating at an international level in industries with a high corruption risk such as defence, transport, infrastructure and telecommunications. According to an article recently published in the Financial Times, France is the world’s fourth largest arms supplier. Its biggest clients in 2010 were Saudi Arabia, Brazil, India and Malaysia.
The detailed OECD’s report has also highlighted that the penalties (both available and applied) and the lack of recourse to measures aimed at confiscating the proceeds of corruption were not “effective, proportionate or dissuasive”. France has also been criticised for only pursuing cases which are considered crimes in the countries concerned and for preventing victims of corruption located outside the EU from commencing civil or criminal proceedings.
Despite the fact that some reforms have already been introduced (e.g. to protect whistle blowers, raise companies’ awareness and make bribes non-deductible for tax purposes), the French government is expected to produce an interim report on its implementation of the OECD’s recommendations within a year and a further report on the overall recommendations within the next 2 years.
Whilst progress is hopefully on the way to tackle these tough criticisms, the OECD’s report demonstrates that numerous significant changes still have to be made in France, especially as the risk of fraud is rife at all levels. In France, the state needs to use its considerable influence in a more positive way to combat fraud and bribery within both the private and public sectors.
Passing new legislation in France is not sufficient, the culture must change at all relevant levels and the key powers in place (judicial, legislative and governmental) need to remain pro-active and independent to maximise effective, proportionate and dissuasive enforcement. In contrast to France, authorities in both the UK and the USA have developed a culture encouraging companies to be pro-active and to cooperate with them.
Despite an increase in recent years in serious allegations of wrongdoing being reported by the French media against politicians and companies and all of the good work carried out by some French entities to raise awareness, the risks of corruption and/or internal fraud do not seem to be taken seriously, not only by companies but also by politicians, judges and prosecutors.
No matter where they are located, businesses should take bribery and fraud risks seriously and carry out regular and proportionate risk assessments and monitoring of their activities and procedures/controls. When doing so, they should take into account their size, resources and circumstances. This is particularly important for companies as ignoring these risks may affect their reputation and/or financial position at some point, especially as statistics have highlighted a significant rise in internal fraud and bribery.
Within companies, there should be a top level responsibility for the bribery/fraud prevention and detection, a clear zero tolerance culture with the effective implementation of internal/external policies being regularly monitored, some due diligence of all business relationships, some effective whistleblowing policies and appropriate guidance/training in place for employees. Allegations of fraud and or bribery should be properly investigated, reported and followed up by appropriate actions (e.g. in case of internal fraud in England and Wales, companies may have claims on both the civil and criminal fronts against alleged wrongdoers).
In my view, UK companies (and the public sector) have generally been quicker than their French counterparts at taking these important requirements on board. This also seems to be reflected in the report produced by the OECD’s Working Group on Bribery.
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