France

France Corruption Report

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Snapshot

France_250x163.jpgCorruption is a low risk for business operating or planning to invest in France. The country’s investment climate is very favorable, and there exists a strong legal framework to counter corruption. Corruption is perceived to be a problem in public procurement and whenever business and politics overlap. Cases involving illegal political funding have tainted the careers of several high-ranking French politicians. The Penal Code (in French) criminalizes active and passive bribery, the bribery of national and foreign officials, and gifts and facilitation payments. The 2017 introduction of the Sapin II law is expected to strengthen the anti-corruption fight in France and crack down on the bribery of foreign officials. Demands for irregular payments are very unlikely in France.

Last updated: October 2017
GAN Integrity

Judicial System

European_Commission.svg.pngCompanies do not contend with any significant corruption risks when dealing with the courts in France. The judiciary is perceived as independent and the levels of integrity of prosecutors and judges are deemed to be very high, with a very low number of corruption cases (GCR 2017-2018; FER 2014). Companies have moderate confidence in the efficiency of the legal framework in settling disputes and in challenging government actions and/or regulations (GCR 2017-2018). More than half of citizens indicate a high-level of trust in the judicial system (European Commission, Feb. 2014). However, slightly over a third of citizens perceive judges as somehow or very corrupt (TI 2017). International rulings are enforced by the local courts, provided that the foreign courts in question have been declared ‘executor’ by a French judge (ICS 2017). Companies are free to attempt to settle disputes through arbitration subject to minimal standards of due process and principles of procedural efficiency and fairness (ICS 2017). Enforcing a contract takes significantly less time and is less costly compared to other OECD high-income countries (DB 2017).

Evidence from a corruption case involving former president Nicolas Sarkozy included secret wiretaps of Sarkozy’s phone conversations. The wiretaps revealed discussions between him and lawyer Thierry Herzog, over whether to offer a magistrate a lucrative job in exchange for insider information in the Bettencourt affair – relating to alleged illegal campaign financing. The court ruled, to the detriment of Sarkozy, that the wiretaps would be used as evidence in his corruption case, despite the bugs being a breach of lawyer-client confidentiality. Although the magistrate was never given the job, he and Thierry Herzog were also charged (RFI, May 2015). In February 2017, Mr. Sarkozy was ordered to stand trial in the matter; Herzog has said he would appeal the decision (BBC, Feb. 2017).

France is a member of the International Centre for Settlement of Investment Disputes (ICSID) and is a signatory to the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

Police

There is a low to moderate corruption risk for businesses dealing with the French security sector. The police are well-trained and the levels of integrity within the institution are fairly high (EUACR 2014). Businesses consider the police reliable in enforcing law and order (GCR 2017-2018).  Around half of respondents from a survey perceive instances of bribery and abuse of office within the police to be widespread (European Commission, Feb. 2014). The government has effective control over the police force and adequate mechanisms exist to punish abuse and corruption (ICS 2017). Impunity is not widespread (ICS 2017). The Inspectorate General of National Police (IGPN) actively investigates and prosecutes allegations of police corruption; citizens can report abuses, on the condition that they provide their identity, on the website of the Ministry of Interior (HRR 2016). Citizens reported abuses 2,958 times in 2015 (HRR 2016).

Michel Neyret, a high-profile member of the police in Lyon, was sentenced to 30 months in prison by Paris’ Criminal Court in 2016 (BFMTV, Jul. 2016). Neyret was convicted on corruption charges; notably accepting bribes from a former police informant in return for lavish gifts and bribes amounting to EUR tens of thousands (France24, May 2016).

Public Services

Businesses investing in France face low to moderate corruption risk when dealing with public services. Irregular payments are rare (GCR 2015-2016). Notwithstanding, almost half of companies report that they would experience minor delays upon refusal of paying facilitation payments (Control Risks 2015-2016). Half of surveyed businesses report bribery and the use of connections often being the easiest way to obtain a public service (European Commission, Feb. 2014). Around a third of citizens perceive inspectors and officials dealing with licensing to be involved in bribery and abuse of office, yet none report to have paid a bribe to obtain a public service (European Commission, Feb. 2014). In August 2017, the National Assembly adopted a bill abolishing constituency funds for lawmakers, which are said to have encouraged patronage in the relationship between lawmakers and their constituents (Reuters, Aug. 2017).

Companies believe that the burden of government regulations and inefficient bureaucracy negatively affects levels of competitiveness in France (GCR 2017-2018). Companies are able to manage administrative tasks online, such as establishing, selling or taking over a company through the one-stop-shop at Guichet-entreprises.fr. Starting a business in France is less time-consuming and less costly on average compared to other OECD countries (DB 2017).

Land Administration

Companies dealing with France’s land administration face low to moderate corruption risks. Property rights are perceived by businesses as well protected (GCR 2017-2018). Almost half of surveyed citizens perceive bribery and corruption to be widespread among officials issuing building permits, yet none report having paid a bribe (European Commission, Feb. 2014). Expropriation is permitted under French law for public purposes, provided it is accompanied by a just and prompt payment (ICS 2017). Half of real estate agencies that participated in a survey indicate that someone has tried to bribe them at some point in their career, suggesting prevalent corruption in the sector (Agilebuyer 2015). Allegations of bribery and other corruption activities by France Pierre, a real estate group, have entangled several mayors and other public officials, who reportedly were bribed to approve several housing projects (Le Parisien, Jan. 2017).

Registering property in France is on average more costly and almost three times as time-consuming compared to other OECD countries (DB 2017). France made transferring property more expensive by increasing the property transfer tax in 2016 (DB 2017).

Tax Administration

There is a low to moderate risk of corruption in France’s tax administration. Companies complain that tax regulations and tax rates are a major obstacle to doing business (GCR 2017-2018; European Commission, Feb. 2014). Nonetheless, irregular payments and bribes when making tax payments are perceived to be rare (GCR 2015-2016). Almost half of surveyed businesses perceive tax fraud in France to be widespread (European Commission, Feb. 2014). In effect, tax evasion is a problem in France; French authorities are investigating over four hundred individuals after revelations stemming from the Panama Papers (RFI, Apr. 2017).

France recently decreased the costs required to pay taxes by introducing a credit against corporate tax and reducing labor tax rates (DB 2016). Companies pay taxes eight times a year which is slightly below the OECD high income average (DB 2017).

Customs Administration

There is a low risk of corruption when dealing with France’s customs administration. Bribes and irregular payments during customs procedures are rare (GETR 2016). The time predictability of import procedures is adequate, but the efficiency of the clearance process is rated as poor by businesses (GETR 2016). Burdensome import procedures are frequently cited by companies as a problematic factor for importing (GETR 2016). Only one document is required for exporting and importing across the borders of France, while the time required to deal with trading across borders is minimal (DB 2017). France recently eased the process of trading across borders by introducing an electronic customs declaration and by eliminating the need to submit certain documents (DB 2017).

A customs agent at the Port of Marseille was sentenced to three years in prison in 2017 for allowing traffickers to smuggle in cartons of cigarettes in exchange for a bribe of 50 to 100 euros each time (France info, Apr. 2017).

Public Procurement

Companies face a moderate to high risk of corruption in France’s public procurement sector. Public procurement is the most corruption-prone sector in France (ICS 2017), despite the strong legal framework regulating the sector. Businesses perceive that government officials sometimes show favoritism when deciding on contracts (GCR 2017-2018; European Commission, Feb. 2014). Most surveyed French managers report that practices of favoritism and corruption hamper competition, and a little over one-third report that they have lost contracts due to competitors resorting to corruption (Control Risks 2015-2016). Corruption risks identified by companies include overly bureaucratic and burdensome procedures and tailor-made criteria for certain companies (European Commission, Feb. 2014). France’s procurement provisions are in-line with the EU Directive on Remedies to protect bidders from unfair competition (ICS 2017). Companies are recommended to set up and strengthen integrity systems and conduct due diligence when investing or planning to invest in France.

French defense firm DCNS is facing scrutiny for two alleged corruption cases. The company has been accused of bribing intermediaries close to Malaysian Prime Minister Najib Razak in a USD 1.2 billion deal for the sale of French Scorpène submarines (World Peace Foundation, May 2017). The bribes allegedly amounted to USD 130 million (Reuters, Aug. 2017). An aide to Razak has been placed under formal investigation in France (Reuters, Aug 2017). In an unrelated case, DCNS has been placed under investigation by French authorities for alleged bribery of foreign officials in the USD 7.5 billion sale of five submarines to Brazil (Reuters, May 2017).

Legislation

The Penal Code of France (in French) criminalizes active and passive bribery of national and foreign officials, with the punishment for bribery reaching 10 years’ imprisonment and a fine of up to EUR 150,000 for individuals and EUR 750,000 for legal entities. The Penal Code also criminalizes facilitation payments, giving and receiving gifts to influence officials, influence peddling, money laundering, extortion and abuse of office. Government officials are required to declare their assets upon taking and leaving office (HRR 2016). The French government has been criticized for the low numbers of convictions in transnational bribery committed by French companies abroad. Since signing the OECD convention in 2000, France has only prosecuted four foreign bribery cases – three of which were minor with fines of less than EUR 10,000 – compared to the seventy prosecutions in Germany (Metis, Feb. 2015). In an effort to strengthen anti-corruption efforts, the Sapin II law (in French), addressing transparency, anti-corruption and economic modernization, entered into force in July 2017. The law criminalizes bribery of foreign officials by any entity having at least 500 employees and a turnover of more than EUR 100 million or belonging to a group or parent company of this size with headquarters in France. The Law removes the dual criminality requirements and imposes on companies the implementation of internal controls and risk mapping among other requirements. Companies are also required to implement a whistleblower hotline (Lexology, Aug. 2017). France is a signatory to several anti-corruption conventions, including the UNCAC, the OECD Anti-Bribery Convention, the Council of Europe Criminal Law Convention on Corruption, the Council of Europe Civil Law Convention on Corruption and is a member of the Council of Europe Group of States against Corruption (GRECO).

Former presidential candidate and leader of the Front National political party, Marine Le Pen, stands accused of illegally using funds from the European Parliament to pay for her staff based in France (The Guardian, Jun. 2017). In addition, former presidential candidate François Fillon was also accused of using parliamentary funds for paying his wife and two children for jobs that did not exist (FT, Mar. 2017).

Civil Society

French law provides for freedom of the press, and the government respects this right (FotP 2016). Public media outlets are popular in France, and independent media outlets have flourished, operating independently and without any government restrictions. France’s strict defamation laws are sometimes used to pressure journalists (FotP 2016). A military programming law gives broad powers to government agencies to monitor internet content, potentially jeopardizing the confidentiality of journalists’ sources (FotP 2016). Concerns have also been raised over an intelligence law that expands the government’s powers to monitor communications (FotP 2016). France’s press environment is considered ‘free’ (FotP 2016).

Civil society in France operates freely, and domestic and foreign NGOs operate in France without government restrictions (HRR 2016). According to an analysis of French civil society published by Donor Tracker, the influence that civil society groups exercise on decision-making and policy development is limited, despite it being an active sector (Donor Tracker 2017).

Sources

The site provides a wealth of practical anti-corruption resources to support a solid preventative approach, covering subject such as processes, due diligence, practical tools to support compliance program implementation and also compliance and integrity training.

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