Category Archives: French Liability and Enforcement

New CJIP Implementation Guidelines Further Align France with the US Anti-Corruption Enforcement Regime, But Key Differences Remain

by Laurent Cohen-Tanugi and Ann Y. Du

In December 2016, to strengthen its position in the international fight against corruption, the French government adopted a new anti-corruption law known as “Law Sapin 2.”  Law Sapin 2 introduced several innovations, including a new negotiated instrument labeled “convention judicaire d’intérêt public” (“CJIP”), modeled on the US deferred prosecution agreement (“DPA”).

On June 27, 2019, the Financial Prosecutor’s office (Procureur de la République financier, or “PRF”) published jointly with the French Anti-Corruption Agency (“AFA”) a set of guidelines on the implementation of CJIPs (the “Guidelines”). The Guidelines further align the new French enforcement regime with its US counterpart, notably with respect to its emphasis on cooperation and internal investigations, a centerpiece of the US enforcement system. However, several critical differences with US practice remain that may prove problematic in a multi-jurisdictional context.

While the Guidelines are not legally binding, they provide useful insight into future French enforcement policy and practices.

I. Increased Convergence Between the French and US Enforcement Regimes

a. Prerequisite of Company Cooperation and Internal Investigations

Among the factors to be taken into account by the authorities for purposes of assessing the consistency of the CJIP with the public interest as mandated by Law Sapin 2, the Guidelines highlight company cooperation with the authorities’ investigation and an internal investigation as prerequisites for the availability of a CJIP. These two critical components of US and international enforcement practice were not explicitly addressed by the provisions of Law Sapin 2. These Guidelines fill that gap.

According to the Guidelines, the PRF will consider the quality of the company’s cooperation when deciding whether to propose a CJIP or prosecute the company, as well as when calculating the amount of the monetary fine. An evaluation of the quality of the cooperation takes into account the effectiveness of the internal investigation, the level of the company’s participation in the official investigation, and its willingness to supply the prosecutor with requested information, including evidence of individual liability. The PRF will also look at whether the company self-reported and the timeliness of this reporting. These are all factors that are already present in the US regime.

b. Calculation of Monetary Fine

A second area of alignment between the French and US regimes is the method of calculating the fine associated with a CJIP. In both France and the US, the purpose of the fine is to disgorge a company of profits improperly obtained as well as to sanction it. Under the Guidelines, the fine may be increased if the company has previously been condemned by French or foreign authorities for corruption, or if there is evidence of repeated or systematic corruption. On the other hand, certain factors may reduce the fine: the presence of a pre-existing effective compliance program, and self-reporting to the prosecutor within a reasonable timeframe. If the case involves prosecutions by other jurisdictions for the same facts, the French prosecutor may consider the fines imposed by other countries when fixing its own fine.

II. Areas of Potential Concern

The Guidelines diverge from the US anti-corruption enforcement practice in several critical respects, which may raise concerns in multi-jurisdictional cases.

a. Legal Privilege and Confidentiality

As in-house counsel are not considered independent attorneys in France, the attorney-client privilege does not apply to internal investigations conducted by company lawyers. Moreover, the Guidelines indicate that the attorney-client privilege with outside counsel may be set aside in the context of an internal investigation. The PRF may, therefore, request the disclosure of certain information obtained through an internal investigation. Should a company refuse to communicate requested information, the PRF will determine whether such refusal is justified and take this into consideration in assessing the company’s quality of cooperation.

Under the French Code of Criminal Procedure, if the sanctioned company retracts its agreement to a CJIP or if a CJIP is not approved by the court, the prosecutor may not make use of the information supplied to it by the company after an offer to enter into a CJIP has been made. However, the Guidelines take the position that information supplied by the company to the prosecutor during the investigative phase prior to the formal proposal of a CJIP is not covered by such protection and can be used by the prosecutor under these circumstances. This may leave companies exposed and even disincentivize conducting thorough internal investigations, if there is a risk that the information may be used against the company in court, should the CJIP process fail.

b. Monitoring of Compliance Obligations

The Guidelines also provide useful information as to how the French enforcement authorities view compliance monitoring in the French context. Law Sapin 2 entrusts the AFA with the monitoring of compliance programs imposed as part of a CJIP. The scope, duration, and costs of the compliance obligations are determined by the PRF and the AFA based on a number of factors, including the existence of prior audits by the AFA or foreign authorities. The agency’s views on its monitoring operations are detailed in an annex to the Guidelines and seem fairly consistent with what a FCPA independent monitorship would entail.

However, the Guidelines take the position that in multi-jurisdictional proceedings, the appointment of a single monitor is preferable and that, whenever a sanctioned company has its headquarters or conducts all or part of its operations on French territory, the AFA must be that single monitor under the French Criminal Code, a position that is bound to be met with resistance from foreign authorities.

c. Blocking Statute

Transnational cases may implicate the French blocking statute, which prohibits the communication by French nationals or habitual residents of sensitive business information to foreign authorities. Under Law Sapin 2, the AFA is entrusted with ensuring that the provisions of the blocking statute are complied with. The Guidelines further specify that before a company subject to the blocking statute can communicate information to a foreign authority, it must first submit this information to the AFA. However, the AFA is obligated to disclose this information to the French prosecutors, which may lead to the French authorities opening their own investigation on the underlying matter.

An English translation of the key provisions of the Guidelines will be available on the Firm’s website later this month.

Laurent Cohen-Tanugi is the Founder and Managing Partner and Ann Y. Du is an associate at Cohen-Tanugi Avocats.

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The views, opinions and positions expressed within all posts are those of the author alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of New York University School of Law.  PCCE makes no representations as to the accuracy, completeness and validity of any statements made on this site and will not be liable for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with the author.

Policing Your Own Jardin – France Signals Eagerness to Take Control of Its White Collar Enforcement

by Antoine F. Kirry, Alexandre Bisch, Frederick T. Davis, Robin Lööf, Line Chataud, Ariane Fleuriot, Fanny Gauthier, and Alice Stosskopf

In light of well-publicized U.S. enforcement actions against French companies (Alstom, Total, Technip, Alcatel, BNP), the French government asked MP Raphaël Gauvain to consider measures to protect French companies faced with foreign extraterritorial judicial and administrative procedures. His long-awaited report was published on June 26, 2019. Entitled “Restoring French and European Sovereignty and protecting our companies from extraterritorial laws and measures,” this 100-page document points out the lack of effective legal tools available to French companies faced with extraterritorial proceedings. Drawing on this, the report makes several recommendations. Continue reading

French Anti-Corruption Authority Raises Alarm About M&A Transactions

by Antoine F. Kirry, Frederick T. Davis, and Alexandre Bisch

The French Anti-Corruption Authority (AFA) is zeroing in on corruption risks hidden in acquisition targets of French companies, in France and overseas.

In a statement reported yesterday, AFA representatives alerted would-be acquirers to the need to conduct in depth pre-acquisition anti-corruption due-diligences.  The AFA observed that most companies and investment bankers seem insufficiently aware of this need, and urged them not to underestimate the reputational damage that may result from potential corruption issues in target companies, in addition to potential sanctions. Continue reading

Settlement Agreements under French Sapin II Law: In Search of the ‘Public Interest’

by Luca d’Ambrosio

This post is an abstract of the article forthcoming in the Revue de sciences criminelles et droit comparé (n° 1/2019) under the title L’implication des acteurs privés dans la lutte contre la corruption: un bilan en demi-tente de la loi Sapin 2.

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Much has been reported about the adoption, on December 2016, of the new French anticorruption framework, Sapin II, which  stands out for the creation of a new set of ex ante and ex post measures aiming to strengthen the prevention of corruption and the enforcement of administrative and criminal sanctions.

Among the ex post measures, Sapin II introduced a procedure permitting a negotiated outcome for legal persons: under the name of “convention judiciaire d’intérêt public” (CJIP), this procedure emulates DPAs as practiced in the United States and in the United Kingdom. The legal transplant of this procedure into the French enforcement system has received far from unanimous consent.   

On the one hand, French scholars were divided among those who considered this procedure as a “gift” to corporations and those who considered it as a milestone of a new and effective corporate enforcement policy based on compliance and cooperation. According to this view, settlement agreements would enhance corporate enforcement policy for three reasons. Firstly, they would help enforcement authorities to resolve quickly and costless complex criminal cases. Secondly, they would enhance specific deterrence of future misconduct through remedial compliance programs. Finally, settlement agreements would trigger anticorruption cooperation and enforcement with US authorities: this argument was particularly sensible in France where important and strategic companies – such as Alstom, Société Générale, Total et Alcatel – have been involved in FCPA investigations and are in the “top ten” of the most important fines settled by the DOJ. Continue reading

Is a European Anti-Corruption Prosecutor Needed?

by Jonathan J. Rusch

In a January 17 interview with the French news-magazine L’Obs, former French Prime Minister Bernard Cazeneuve argued that a European anti-corruption prosecutor is needed “to restore a balance, to correct the asymmetry of the Euro-Atlantic relationship in the fight against corruption from which European companies are currently suffering.”

In the interview, Cazeneuve — now a partner with the August Debouzy law firm specializing in compliance issues – stated that “it cannot be ruled out that in a context of rising protectionism under the Trump Administration, ‘compliance’ rules are also used to protect the economic and industrial interests of certain powers.  Faced with such a reality, it would be very naive not to seek to protect our own interests!”  At the same time, Cazeneuve said that “in a global economy, corruption is a long-term factor that impoverishes companies and distorts competition. Only the law can regulate what needs to be and create the conditions for a global level playing field. Preventing corruption in French companies is still the best way to protect them from the often intrusive procedures of U.S. prosecuting authorities.” Continue reading

Sustainable Finance and ESG reporting – EU pushing ahead, SEC cautious

by Dr. Katja Langenbucher

The market for “sustainable finance” has grown exponentially over the last few years.  The term usually denotes investment approaches that consider environmental, social and governance factors (“ESG”) in portfolio selection and management.  Following up on the Paris Agreement of 2016, the European Union has ambitious plans to mobilize private capital for contribution to sustainability concerns such as climate change and pollution.

In January 2018, the EU High-Level Expert Group on Sustainable Finance published its final report. [1]  It suggests focusing on common taxonomy and standards, investor duties, transparency of asset managers, governance of companies, and enhanced powers of the European Supervisory Authorities.  In March 2018, the European Commission went ahead with an action plan, announcing a number of short and long-term legislative steps that should be taken. Continue reading

France Boosts Tax Fraud Prosecution

by Antoine F. Kirry, Frederick T. Davis, Eric Bérengier, Alexandre Bisch, Robin Lööf, Aymeric D. Dumoulin, Alice Stosskopf, Fanny Gauthier, and Line Chataud

On October 23, 2018, the French Parliament enacted a law aimed at combatting fraud (the “Law”).[1] The most innovative provisions of the Law change key procedural aspects of tax law enforcement, which is likely to result in an increased number of criminal tax fraud prosecutions against both individuals and legal entities. The Law also addresses customs and social security frauds.

Tax Fraud Prosecution: Open the Floodgates Continue reading

First French DPAs for Corruption Offences

by Antoine Kirry, Karolos Seeger, Alex Parker, Alexandre Bisch, and Robin Lööf

On March 5, 2018, French prosecutors published two Judicial Conventions of Public Interest (“CJIPs” or “French DPAs”) approved by the President of the High Court of Nanterre on February 23. The CJIPs, entered into between prosecutors and two sub-contractors to state-owned utility EDF, SAS Kaefer Wanner (“KW”) and SAS SET Environnement (“SET”), allege that these companies had ceded to solicitations to pay bribes to an EDF procurement manager, and that this behaviour amounted to corruption by them of an individual charged with a public service. KW and SET admitted these facts and their legal qualification[1], and agreed to pay financial penalties of €2,710,000 and €800,000 respectively and compensation to EDF of €30,000 each. In addition, they agreed to submit to monitoring by the French Anti-corruption Agency (“AFA”) for, respectively, 18 and 24 months.

The KW and SET CJIPs are the first to be concluded in respect of corruption offences. Helpfully, they provide (1) detail on the financial incentive of entering into a French DPA for companies with potential exposure for corruption-related offences in France, (2) clarification that co-operation and remediation can significantly reduce the financial penalty, as well as (3) the first examples of monitorships to be supervised by the AFA. However, the crucial question of how a company can qualify for a French DPA remains largely unanswered. Continue reading

Global Anti-Bribery Year-in-Review: 2017 Developments and Predictions for 2018

by Kimberly A. Parker, Jay Holtmeier, Erin G.H. Sloane, Lillian Howard Potter, Tetyana V. Gaponenko, Victoria J. Lee, and Roger M. Witten

This past year marked the 40th anniversary of the U.S. Foreign Corrupt Practices Act (“FCPA”).  Since its enactment in 1977, the U.S. Department of Justice (the “DOJ”) has brought approximately 300 FCPA enforcement actions, while the U.S. Securities and Exchange Commission (the “SEC”) has brought approximately 200 cases.[1]  This anniversary year, the first year of the Trump administration, demonstrated that the FCPA continues to be a powerful tool in combating corruption abroad and encouraging compliance at global companies.

Below are six key take-aways regarding FCPA enforcement in 2017: Continue reading

A French Court Authorizes the First-Ever “French DPA”

by Frederick T. Davis

In December 2016 the French government finally passed the so-called “Loi Sapin II” in order to bolster its ability to penalize overseas bribery. Its unstated but clear goal was to achieve some degree of parity with US efforts in this area, which had led to a number of highly publicized cases where well-known French companies had paid fines totaling well over $2 billion to the US treasury to resolve criminal matters that could well have been resolved in France.  A key provision of the new law is a procedure that permits a negotiated outcome, similar in concept to a US Deferred Prosecution Agreement (“DPA”), that avoids a criminal conviction.  On November 14, 2017, the first such agreement was announced by the National Financial Prosecutor of France.  While many details of the deal will not be known until the release of the court’s opinion approving it, which may be available as early as the end of November, the fact of the outcome and its known parameters are very significant. Continue reading