Category Archives: French Liability and Enforcement

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

Sapin II: Is the Era of Compliance and Criminal Settlements Upon France?

by Margot Sève

This post is an abstract of the article published under the same title in the Revue Trimestrielle de Droit Financier / Corporate Finance and Capital Markets Law Review (Thomson Reuters), as part of the thematic section edited by Michel Perez and Margot Sève entitled “International Financial and White Collar Crime, Corporate Malfeasance and Compliance.”

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On December 9, 2016, France adopted law n° 2016-1691 on transparency, the fight against corruption, and the modernization of the economy.  The law has been commonly called the “Sapin II” law, after French Minister of Finance Michel Sapin who, in 1993, authored the first Sapin law on transparency in politics and public procurement, and sought in 2016 to further enhance transparency and combat corruption.

While France has in recent years certainly made efforts towards more severe punishment for corruption-related offenses, it has nonetheless been criticized for its weak enforcement track record.  For example, while the sanctions for active and passive corruption of domestic officials, active and passive corruption in the private sector, corruption of foreign officials, and influence peddling were increased in 2013, only one company (Total S.A.) was fined between 2000 and 2016 for acts of corruption of foreign public officials.  This lack of enforcement efficiency has led the OECD, as part of its monitoring of countries’ implementation and enforcement of the OECD Convention on Combatting Bribery, to report serious concerns regarding “the lack of foreign bribery convictions in France.” Continue reading

France’s New Anti-Corruption Framework: Potential Impact for Businesses in a Multijurisdictional World

by Frederick DavisAndrew M. Levine and Charlotte Gunka

Long criticized for ineffective enforcement of their anti-corruption legislation, French authorities are taking steps to enhance their efforts.  On November 8, 2016, France finally passed a “Proposed Law Regarding Transparency, the Fight Against Corruption and the Modernization of Economic Life,”[1] known as the Loi Sapin II.[2]  The French Constitutional Council currently is examining the law,[3] which is likely to be adopted before the end of the year in the form endorsed by the French National Assembly, subject to minor amendments.  The Loi Sapin II provides for some significant changes in the current French anti-corruption legal and regulatory administrative structure, as well as some specific amendments to the general French criminal law and procedures. Continue reading