French anti-graft chief says his agency is powerless against foreigners

By Emmanuel Jarry

PARIS (Reuters) - The head of France's new anti-corruption agency (AFA) says one-year old legislation designed to bolster the fight against corporate graft should be overhauled because he is almost powerless to go after foreign companies.

Charles Duchaine said in an interview on Friday that existing law was too narrow. He warned that firms that merited investigation would slip through the net.

France adopted the so-called Sapin 2 law in November last year. It enables companies to strike negotiated settlements with magistrates, in line with practice in the United States and Britain.

But whereas U.S. authorities have the mandate to investigate foreign companies -- French firms including Alstom and Total have been fined in corruption cases in the United States -- Duchaine said he was restricted.

"One of the law's objectives was to match the actions of authorities abroad. But the legislation fell short of that aim because it boxes us in," Duchaine told Reuters.

"A large number of companies that warrant being checked will escape investigation if the law isn't modified."

Under the law, the AFA can only target public bodies and companies with more than 500 employees and turnover of above 100 million euros ($117.93 million), or subsidiaries of foreign companies that are headquartered in France and meet those two criteria.

France has long been criticised by anti-graft activists and campaign groups for failing to ever convict a French firm for bribery abroad.

AFA's work has got off to a slow start, with the agency's 50 agents launching their first five investigations in October.

Duchaine, appointed in March, said he faced constraints that curbed his agency's power to investigate. His agency is tasked with checking companies put into action eight governance measures defined by the law.

They include a code of conduct, a regular risk analysis of exposure to bribes abroad, anti-graft focused due diligence and staff training.

"It is only through luck that our checks will uncover any evidence of corruption. What makes the American justice system strong is that it is can dedicate significant resources to its investigations," he said.

The bill is dubbed “Sapin 2”, because it was drawn up by former finance minister Michel Sapin, who introduced a first round of anti-bribery measures 13 years earlier under a Socialist government in 1993.

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(Reporting by Emmaunel Jarry; Writing by Richard Lough/Jeremy Gaunt)