Unlawful taking of interest: when a mayor is convicted for favouring his own property company

Imagine: you are a property owner in Billère, in the suburbs of Pau, and you learn that the mayor of your commune has sold a plot of land to a company in which he himself is a shareholder. A scandal? Yet this is exactly what happened in Saint-Malo in 1971. A case that went all the way to the Court of Cassation and established essential rules on unlawful taking of interest (the act of an elected official deriving personal advantage from a decision he has made or influenced).

You may be wondering: can an elected official really be convicted merely for participating in a deliberation that benefits a company he controls? The answer is yes, and the decision of 7 October 1976 forcefully reminds us of this. It specifies that the offence is not a single event: each time an act of interference occurs, a new offence is committed. A lesson in law that applies to all elected officials, from the smallest village to the largest city.

In this article, I will tell you the story behind this decision, break down the judges' reasoning, and above all explain what it changes for you, whether you are an elected official, a citizen or a property professional. And because the law is never abstract, I will take a detour via Bayonne and Billère to show you how these principles apply near you.

The facts: a story that could happen every day

In June 1971, the wife of a politician submitted a planning application in the name of a property company (SCI). Nothing unusual, you might say. Except that this SCI was run by her husband, who was also the mayor of the commune of Saint-Malo. And that's not all: on 9 September 1971, the same mayor participated in a meeting of the municipal council that authorised the transfer of a communal plot of land to the same SCI. The plot in question? The very one that the mayor owned in the district and which he had sold to the SCI of which he was the manager and shareholder.

You see the problem: the mayor made a decision (the resolution authorising the transfer) that directly benefited a company in which he had an interest. This is known as unlawful taking of interest, an offence provided for in Article 175 of the Criminal Code (now codified in Article 432-12 of the Criminal Code).

Prosecuted before the criminal court, the mayor was found guilty. He appealed, then appealed to the Court of Cassation. His main argument? He had no personal interest in the matter because the transfer of the land had not been made to himself, but to a separate company. The Court of Cassation disagreed. It upheld the conviction, holding that the link between the mayor and the SCI was sufficient to constitute a taking of interest. A case that shows that the most sophisticated legal structures do not always allow one to escape the law.

The court's reasoning — explained

The question before the Court of Cassation was a delicate one: is the offence of unlawful taking of interest an instantaneous offence (consummated in a single act) or a continuing offence (renewed as long as the situation persists)? The judges decided: it is an instantaneous offence, but it is renewed each time a new act of interference is carried out. In other words, if an elected official votes for a resolution that favours him, the offence is consummated at that moment. But if he votes for a second similar resolution, a new offence is committed. This prevents the elected official from being protected by the limitation period (the time after which prosecution is no longer possible) for repeated acts.

In practice, the Court applied this reasoning to the mayor of Saint-Malo. It held that all the elements of interference were present: the mayor had an interest (he was manager and shareholder of the SCI), he participated in the decision (the municipal council resolution), and that decision benefited the SCI (transfer of the land). It did not matter that the land was sold to the SCI and not to him personally: the indirect link was sufficient.

This decision is a confirmation of earlier case law. It did not create a new principle, but it clarified the renewable nature of the offence. For elected officials, it is a warning: each act of interference is a new offence, and the limitation period runs only from each act. For citizens, it is a safeguard: repeated abuses can be punished, even if the first acts are old.

What it changes for you — in practice

If you are a local elected official (mayor, deputy, councillor), this decision directly concerns you. You must be extremely careful when participating in a deliberation concerning a company or association in which you have an interest, even indirectly. For example, if you are a member of an SCI that buys a plot of land, do not vote on the resolution authorising the sale of that land by the commune. Better still: recuse yourself (do not participate in the vote) and declare your interest. In Bayonne, an elected official who had voted for a subsidy for an association of which he is treasurer could be prosecuted on the same basis.

If you are a property owner or developer, be wary of structures involving elected officials. Even if the transaction seems regular to you, the mere fact that an elected official has an interest in the purchasing company can lead to the cancellation of the sale or criminal prosecution. For example, if you buy land from a commune whose mayor is a partner in your SCI, the sale could be challenged. In Billère, a developer who had set up an SCI with a local elected official to buy communal land would see his operation blocked.

If you are an ordinary citizen, this decision gives you a means of control. If you suspect an elected official of having favoured a company in which he has an interest, you can refer the matter to the public prosecutor. The limitation period for criminal proceedings is 6 years (the general period for criminal matters), but since each act of interference constitutes a new offence, you can act even if the first acts date back several years. For example, if you discover that a mayor voted for a resolution 5 years ago, and another 2 years ago, you can still act in respect of the second.

Four tips to avoid this type of dispute

• Systematically recuse yourself: if you are an elected official and a deliberation concerns a company, association or person with whom you have a link (however tenuous), do not participate in the vote and do not take part in the debates. Have this recorded in the minutes.
• Declare your interests: keep an up-to-date declaration of interests with the High Authority for Transparency in Public Life (HATVP) if you are a major local elected official, or with the mayor for small communes. This proves your good faith.
• Avoid opaque structures: if you are a developer, do not set up an SCI with an elected official to buy communal property. Even if the transaction is substantively regular, the appearance of a conflict of interest is enough to create a criminal risk.
• Consult a lawyer before any sensitive transaction: before voting on a resolution or signing a document, seek legal advice. It will cost you a few hundred euros, but it will save you years of proceedings and a conviction that could deprive you of your civic rights.

Further reading: related case law and developments

The 1976 decision is part of a consistent line of authority from the Court of Cassation. As early as 1955, the Criminal Chamber had held that the taking of interest could be indirect (through a company). More recently, in 2015, the Court specified that the offence is committed even if the elected official did not vote, but simply participated in the preparatory debates (Crim., 18 November 2015, No. 14-85.467).

The trend is therefore towards a broad interpretation of the offence, in order to combat corruption and conflicts of interest. The courts do not hesitate to reclassify acts that might seem innocuous. For example, an elected official who merely suggested to a colleague that they should vote for a subsidy for an association of which he is a member could be prosecuted.

In future, we can expect case law to continue to extend the scope of the offence, particularly with the development of civil companies and complex structures. Elected officials must therefore be doubly vigilant, and citizens can rely on these decisions to protect the public interest.

Checklist before acting

If you are an elected official and must vote on a resolution:

• ☐ Do I have a direct or indirect interest in the company or person concerned? (e.g. board member, shareholder, spouse)
• ☐ Have I declared this interest in writing before the meeting?
• ☐ Have I recused myself (left the room) during the vote and debates?
• ☐ Do the minutes mention my non-participation?

If you are a citizen and suspect an elected official:

• ☐ Do I have evidence (resolution, company articles, declaration of interests)?
• ☐ Are the facts time-barred? (6-year period from the last act of interference)
• ☐ Have I contacted a lawyer to assess whether to report to the prosecutor?

FAQ:

• Can an elected official be convicted even if he did not vote? Yes, if he participated in the debates or influenced the decision.
• What is the penalty? 5 years' imprisonment and a fine of €500,000, with disqualification from civic rights.
• Can I challenge a municipal resolution for unlawful taking of interest? Yes, before the administrative court, within 2 months of its publication.
• What should I do if I am an elected official and discover a conflict of interest after the vote? Consult a lawyer immediately to regularise the situation (for example, by cancelling the resolution).

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