Analysis
29 November 2021

The French Anti-corruption Agency’s practical guide to preventing conflicts of interests

On 18 November 2021, the French Anti-Corruption Agency (“AFA” or “the Agency”) published its definitive guidelines to preventing conflicts of interests. These guidelines aim at assisting private companies, industrial and commercial public establishments as well their representatives and compliance actors in identifying and addressing situations where conflicts of interests may arise. The guidelines are illustrated with examples of good practices observed by the Agency since its creation, in 2016.

 

Traditionally, the notion of “conflict of interests” is associated with the duty of probity and implies a contradiction between the personal interest of a public agent and the public interest that he or she must defend with independence, impartiality and objectivity.[1] Thus, the only legal definitions of conflict of interests are limited to the public sphere, such as those given by the Organization for Economic Co-operation and Development (OECD)[2] or by the Law on transparency in public life, which are almost identical.[3] There was no formal definition of conflict of interest in the private sector.

 

I. A welcome definition of conflict of interests in the private sector

Situations of a conflict of interests within companies can lead to criminal consequences for both the legal entity and its executives. Although breach of probity offenses solely relate to the public sector, the complicity, the laundering and the concealment of such offenses may relate to conflict of interests within the private sector.[4] Additionally, the actus reus of the offence of breach of trust or misappropriation of corporate assets correlate to situations of conflict of interests.[5] Therefore, it is necessary to define what constitute a conflict of interests within the private sector to minimize the occurrence of criminal acts which can be significantly prejudicial to companies’ interests or image.

The Agency’s guidelines define conflicts of private interests as an “existing personal interest whose interference with the activities carried out within the organization is such as to influence or appears to influence the impartial, objective and independent execution of the activity on behalf of that entity”.[6] For there to be a situation of conflict of interests, the ascertained or apparent interference[7] of the personal interest over the corporate interest has to be sufficiently serious[8], as a personal interest is not in itself incompatible with the pursuit of the company’s interests.

The guidelines recommend that detection measures and preventive measures extend beyond situations of conflict of interests that are proven to exist and that such measures take into consideration those that are apparent and likely to damage the company’s image.[9]

 

II. Identifying situations of conflict of interests within the private sector through risk-mapping

 The Agency stresses that it is impossible to exhaustively detect all risks of conflict of interests as personal interests and corporate interests are numerous and diverse, and do not necessarily clash.[10] The company must identify individuals who, due to their positions within the company, can make decisions that may create obligations for the company, as well as individuals who can exercise significant influence over the company’s decisions, and whose personal interests, because of their nature or importance, may be detrimental to corporate interests.[11]

The AFA’s guidelines provide companies with multiple options in identifying risks of conflicts of interests. The Agency recommends the creation of a risk-mapping specific to conflict of interests, to identify such risks as part of the corruption risk-mapping pursuant to the Law “Sapin II” or even to include the detection process in the operational risk-mapping.[12]

The guidelines also recommend identifying sensitive positions, processes (purchases, sales, financial investments, HR management), and operations (prospecting, searching for new markets, operations with the public sector, external growth).[13] Additionally, the entity can hold a registry with all recurring situations of conflict of interests.[14]

 

III. Preventing and addressing conflicts of interests

The AFA points out that preventive measures and risk management measures pertaining to conflict of interests depend on the entity’s specific characteristics.[15] While the legislator may set some measures for specific fields of activity, it is commonly up to the entities to define and create their own conflict of interests policies, which may be contained in their anti-corruption policy, or in a dedicated procedure, or in any other document. Among these measures, a clear and precise policy on gifts and invitations is recommended to be able to keep track of goods received from third parties. Proper dissemination of the policies should follow.[16]

The Agency also states that it is possible to adapt employment contracts by inserting specific incompatibility clauses for certain positions or staff rotation procedures for positions identified as presenting risks of conflict of interests.[17] Similarly, the inclusion of contractual clauses creating an obligation for counterparties to declare and address potential conflicts of interests is recommended.[18]

The AFA further reminds entities to provide themselves with the means to detect potential or actual conflicts of interests. The implementation of a disclosure mechanism for such conflicts, together with training and awareness programs for employees and third-party contractors, are necessary to create an environment favorable to the detection of conflicts of interest.[19]

Finally, the guidelines provide several practical examples of remedial measures, such as adjusting the rights and obligations of an individual in a situation of conflict of interest (abstention from voting or participating at board of directors’ meetings)[20] or, in the most sensitive cases, putting an end to the situation of conflict by withdrawing oneself from a specific procedure or action.[21]

Related content

Publication
6 October 2022
Jurisdiction and powers of international arbitral tribunals when dealing with allegations of corruption
Stéphane de Navacelle and Juliette Musso discuss the issues of jurisdiction and powers of international arbitrators when faced with allegations or facts related to corru...
Press review
Press review - Week of 26 September 2022
30 September 2022
Press review – Week of 26 September 2022
In this press review, you will find an analysis of a recent decision of the French Cour de cassation which reiterates the legal obligations of financial institutions rega...
Press review
Press review - Week of 19 September 2022
23 September 2022
Press review – Week of 19 September 2022
In this week's press review, you will discover the criminal initiatives at the European Union level announced by the President of the European Commission, and the new Fre...
Press review
Press review - Week of 5 September 2022
9 September 2022
Press review – Week of 5 September 2022
In this press review you will find two cases regarding the criminal prosecution of foreign nationals. First, the review addresses the conviction confirmed by the French C...
Press review
Press review - Week of 29 August 2022
2 September 2022
Press review – Week of 29 August 2022
In this press review you will find the implications for France following the delay of transposition of the European directive on whistleblowers. The French Conseil d'Etat...
Press review
Press review - Week of 25 july 2022
29 July 2022
Press review – Week of 25 July 2022
In this review, you will discover two CNIL’s recent decisions, the first one aiming at protecting data rental cars’ users and the second one aiming at regulating the ...
Press review
Press review - Week of 18 July 2022
22 July 2022
Press review – Week of 18 July 2022
In this review you will discover a Dalloz study on the growing control of the European Courts on arbitration matters, a campaign of the CJEU against arbitration which is ...
Podcast
reforms suggested by compliance professionals
21 July 2022
Vigilance: reforms suggested by compliance professionals
Simplification of the legal framework, exemption from criminal liability, better coordination of litigation, a future authority responsible for the duty of vigilance and ...
Analysis
Transposition of the European Whistleblowers Directive: Towards a reinforcement of the French protection system
14 July 2022
Transposition of the European Whistleblowers Directive: Towards a reinforcement of the French protection system
The text of the law aimed at improving the protection of whistleblowers, drafted by the Joint Committee, was approved by the National Assembly on 8 February and by the Se...
Analysis
The challenges of environmental criminal law in the light of the deferred prosecution agreement in environmental matters
14 July 2022
The challenges of environmental criminal law in the light of the deferred prosecution agreement in environmental matters
A new deferred prosecution agreement in environmental matters is an opportunity to review the creation of this new mechanism serving French environmental criminal law, bu...
Publication
BDN 2022
14 July 2022
Bastille Day Newsletter 2022
On this 14th of July, lawyers at Navacelle offer you, as it does every year, a selection of noticeable events which occurred in France during the last 12 months in the fi...
Analysis
AFA and PNF Practical Guide on the internal anti-corruption investigation
14 July 2022
AFA and PNF Practical Guide on the internal anti-corruption investigation
The internal investigation, as a modulator in the detection of corruption or influence peddling, represents a fundamental tool for the actors of economic life in terms of...