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.
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