Unlawful Taking of Interest: When a Town Clerk May Be Convicted

Imagine: you are the owner of a building in Digoin, and the town hall issues a call for tenders to renovate the roof of the village hall. You apply, but a competitor wins the contract without you understanding why. Do you suspect that the general secretary of the town hall, who prepared the file, is also the brother-in-law of the winner? How far can his involvement go without falling into unlawful taking of interest? This is the question decided by the Court of Cassation on 20 April 2005.

This decision, N° 04-83.017, clarifies that the general secretary of a local authority, even if he does not vote on the award of the contract, may be prosecuted if he has the power to intervene in the procedure. In short, preparing or proposing decisions is sufficient to be considered a 'representative or agent of a territorial authority' within the meaning of Article 432-14 of the Criminal Code.

For an owner, tenant, or property professional in Louhans, this case is a reminder: transparency in public contracts is not an empty phrase. But concretely, what does it change for you?

The Facts: A Story Like Many Others

In 1995, the municipality of X... launched renovation works, divided into 21 lots. The tender commission awarded the contracts to several companies, including that of Milan Z... But the fact is: the latter benefited from privileged information about the upcoming lots, information that other candidates did not have. The general secretary of the town hall, Mr Y..., is suspected of having provided this information.

Milan Z... obtained several lots, and the additional works – linked to unforeseen technical constraints – were entrusted to him without a new competitive process. The question arises: did Mr Y... commit an unlawful taking of interest?

The public prosecutor prosecuted Mr Y... before the criminal court. He was convicted at first instance but appealed. The Court of Appeal acquitted him, considering that he had not personally awarded the contracts – that was the role of the commission. The Court of Cassation quashed this judgment: even without voting, preparing or proposing the decisions is sufficient. The case was referred to another Court of Appeal.

The Reasoning of the Court – Analysed

The Court of Cassation relies on Article 432-14 of the Criminal Code. This provision punishes 'unlawful taking of interest': the fact, by a person holding public authority or entrusted with a public service mission, of taking or receiving an interest in an undertaking with which he has a decision-making or influence link.

But who is targeted? The article refers to 'representatives or agents of territorial authorities'. Does the general secretary of a local authority fall within this category? Yes, answers the Court, as soon as he has the power to intervene in the course of the contract award procedure, by preparing or proposing the decisions taken by others.

Imagine the situation: the general secretary is the head of the municipal administration. He prepares the files, analyses the offers, drafts the reports. Without him, the tender commission cannot work. If he favours a candidate, he distorts the process. It does not matter that another body formally votes.

The Court also clarifies that the unjustified advantage must be substantiated. In this case, the Court of Appeal had not sufficiently verified whether the additional works were genuinely necessary or whether they concealed favouritism. The Court of Cassation therefore referred the case back for this evidence to be provided.

What This Changes for You – Concretely

If you are a landlord in Louhans and you rent a property to the town hall, this decision protects you: public contracts must be awarded transparently. If you suspect favouritism, you can challenge it.

For a tenant of social housing in Digoin, this means that works in your building must comply with competition rules. If the social housing office awards a contract without a call for tenders to a company linked to its director, it is illegal.

For a purchaser of a property, check that the works carried out by the municipality before the sale were awarded regularly. A hidden defect could be linked to a rigged contract.

In practice, if you are in this situation, you should:

• Gather evidence (tender documents, emails, witness statements);
• Bring the matter before the administrative or criminal court within the time limits (5 years from the discovery of the facts for criminal matters);
• Claim compensation for the loss suffered (e.g., loss of profit if you had applied).

A concrete example: a craftsman from Louhans who lost a contract worth €50,000 was able to obtain €15,000 in damages after proving that the town clerk had favoured his competitor.

Four Tips to Avoid This Type of Dispute

• Check family or business ties: Before applying for a public contract, find out about the people who prepare and award the contracts. A potential conflict of interest must be declared.
• Demand transparency: Request disclosure of the scoring criteria and the reasons for rejecting your bid. The law requires written reasons for public contracts.
• Keep your evidence: Retain all documents relating to your application and exchanges with the authority. In case of a dispute, they are essential.
• Report anomalies: If you notice favouritism, report it to the public prosecutor or the Regional Chamber of Accounts. You can also take legal action.

Further Reading: Related Case Law and Developments

This decision is part of a consistent line: the judgment of the Court of Cassation of 14 October 1998 (N° 97-85.351) had already held that a civil servant preparing acts fell within the scope of Article 432-14. The 2005 decision confirms and extends this logic to general secretaries of local authorities.

Since then, the Sapin II Law of 9 December 2016 has strengthened transparency obligations and created the French Anti-Corruption Agency. Local authorities must now adopt codes of conduct and internal control procedures. For owners and property professionals, this means better protection against abuse.

The trend is therefore towards increased accountability of public officials, even those with only a preparatory role. In the future, judges are likely to be even stricter regarding the characterisation of the unjustified advantage.

Checklist Before Taking Action

FAQ: Frequently Asked Questions

Q: Can I challenge a public contract if I believe it was awarded fraudulently?
A: Yes, you can bring the matter before the administrative court (pre-contractual or contractual interim proceedings) within 31 days of the publication of the award, or before the criminal court within 5 years.

Q: What must I prove to obtain compensation?
A: You must demonstrate that the public official had a personal interest in the successful company, and that this interest influenced the award decision. Written evidence is essential.

Q: What are the time limits for taking action?
A: For criminal matters, the limitation period is 6 years from the discovery of the facts (since the law of 27 February 2017). For contractual interim proceedings, it is 31 days after the signature of the contract.

Q: Can I be prosecuted if I benefited from an irregularly awarded contract?
A: Yes, the successful company can be prosecuted for complicity in unlawful taking of interest. It risks fines and a ban from tendering.

Q: Does this case law apply to local elected officials?
A: Yes, elected officials are also covered by Article 432-14. The decision applies to any 'representative or agent' of a local authority.

Do you find yourself in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings – and often much more. Book an appointment →