The French Ministry of Justice publishes additional guidelines confirming that France will continue to be an active player in the fight against corruption | Dechert LLP

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Since the promulgation of Sapin II,1 the main French investigation and prosecution services have concluded eleven Public Interest Judicial Agreements (” CJIP“), Which are the French equivalent of deferred prosecution agreements. On June 2, 2020, the French Ministry of Justice published a circular (the “Circular“)2 this explains what companies must do to be offered a CJIP. The circular reiterates some of the principles set out in the non-binding guidelines issued by the National Financial Prosecutor’s Office (“PNF“) And the French Anti-Corruption Agency (“AFA“) June 27, 2019 (the”Guidelines”).

The circular is important because it comes directly from the executive and has been shared with all prosecutors in France. The circular explains that French prosecutors will carefully consider whether they can prosecute foreign companies for fault in countries outside of France, even if the companies have only tenuous links with France. This therefore confirms that the French authorities intend to continue to actively apply the complex cases of international fraud and corruption. Given this aggressive application environment, companies need to be prepared for increased control and to be aware of the evolving directions and nuances around business cooperation with regulators.

To help readers understand this terrain, this article provides an overview of the key points of the flyer and what it means for business.

Reminder of the CJIP mechanism

As a reminder, a CJIP can only be concluded for specific crimes of corruption, trading in influence and laundering of the products of tax fraud and related or “related” crimes, and must be “validated” by a judge during ‘a public hearing. The judge will determine whether the company should be offered a CJIP by determining (i) whether it is appropriate to reach a settlement; (ii) if all the procedural rules were observed during negotiations between the company and the attorney; (iii) the legality of the fine imposed (fines being capped in France at 30% of the annual turnover of a company in the last three years); and (iv) the proportionality of the fine in relation to the profits resulting from the company’s wrongdoing. If the judge approves the CJIP, the validation order does not constitute an admission of guilt and does not have the effect of a conviction.

Companies have 10 days to reject the validation order from the CJIP. A criminal investigation and trial will follow if the judge rejects the CJIP or if the company uses its statutory right to reject the agreement. The CJIPs are released to the public through a press release, and the fine and validation order, including a brief statement of the facts, are published on the AFA website.

The circular

Eligibility for CJIP

The circular states that the following factors will be taken into account in determining whether a business is eligible for a CJIP:

  • A business should not have previous convictions. This is in line with the guidelines which explain that companies seeking a CJIP will face difficult terrain if (i) the company or one of its subsidiaries or managers has been subject to prior sanctions for “crimes against probity” By a French court or a foreign authority; or (ii) a company has already benefited from a CJIP or a DPA with a foreign authority;
  • If the company “voluntarily disclosed wrongdoing”; and
  • If the company has cooperated with the authorities. The circular does not specify the level of cooperation required, but notes that companies should help prosecutors identify the people “most involved” in the wrongdoing.3

Under Sapin II and the Guiding Principles, a company did not have a mandatory legal obligation to declare itself to the authorities, and voluntary reporting was not a prerequisite for obtaining a CJIP. The guidelines clearly state that self-reporting is a key factor to consider, and the authorities will consider any delay in the disclosure of wrongdoing by a business. The guidelines also do not indicate whether the cooperation of a company will ensure that the company will be allowed to enter into a CJIP. In practice, the French authorities consider cooperation to be a mitigating factor when it comes to assessing the sanctions against a company involved.

The circular notes that even if senior executives / directors of French companies do not have a legal obligation to report wrongdoing to the authorities, it “may be in their interest to do so in order to benefit from a cooperation loan “4 It is interesting to note that the circular refers to the US Department of Justice Yates memorandum which states that in order for a business to receive cooperation credit, it must “fully disclose to the Department of Justice all the relevant facts regarding the individual faults “And” identify all those involved or responsible for the misconduct in question, regardless of their position, status or seniority. “5 The circular recommends that the PNF develop a framework for an exchange mechanism with some of the largest employers’ federations in France such as the Mouvement des entreprises français (MEDEF) and the French Association of Private Enterprises (AFEP), and adopt a practical approach to encourage companies to self-manage. report wrongdoing.6 The fact that the Department of Justice has set out the requirement for self-declaration using stronger language than in the guidelines is a turning point, but the question of whether a business must declare itself in practice to benefit from a CJIP always appears to be open because the circular does not have the same binding effect as a law or a decree. Self-reporting is one of the most serious and consequential decisions a business can make – it needs to be carefully considered with a thorough analysis of the risks and benefits in the short, medium and long term.

Relations with other enforcement authorities

The circular provides that the PNF will continue to develop relationships with and act in partnership with other law enforcement authorities in the future. The PNF is likely to use the wide jurisdictional powers granted by Sapin II to conduct global investigations and impose fines. Businesses must therefore be prepared to take into account cross-border concerns from the start of any investigation, including how and when to engage with different regulators and work towards a coordinated global resolution.

The circular notes that:

  • If requests for mutual legal assistance refer to French companies or to companies carrying out an activity on French territory, the PNF (in addition to responding to the request for mutual legal assistance) will examine the advisability of also opening an investigation. criminal;
  • The PNF will carefully review national and international press articles and will independently verify the information contained in these articles to determine whether to initiate a criminal investigation;
  • French prosecutors will carefully consider whether they can prosecute foreign companies for fault in countries outside France, even if the companies have only tenuous links with France (for example, subsidiaries, branches, commercial offices or other establishments even if they do not have a separate legal personality). ).

Before the Organization for Economic Cooperation and Development (“OECD») Review of France in 2021, the circular confirms that French prosecutors have committed to actively prosecute international fraud and corruption cases.

Targeted sectors

The circular notes that the PNF will focus on the following sectors identified by the OECD and the European Union as being the areas presenting the greatest corruption risks:

  • Construction;
  • Mining industries;
  • Transport;
  • Telecommunications;
  • Pharmaceutical industries;
  • Energy sector;
  • Military equipment.7

Companies operating in these sectors should therefore pay particular attention to the fact that:

  • Their compliance programs are adequate and proportionate to the risks they face;
  • If companies discover potential corruption-related violations, they should conduct in-depth internal investigations and, if necessary, determine whether wrongdoing should be self-reported in order to benefit from the cooperation credit of competent authorities who may have jurisdiction;
  • If a business decides not to report wrongdoing itself, it must ensure that the appropriate measures have been taken so that if the authorities knock on their doors, the businesses can demonstrate that they have taken action and corrected wrongdoing (if applicable).

Role of the PNF

The Ministry of Justice clearly specifies in the circular that regional prosecutors in France should systematically inform the PNF of any investigation where there are “credible suspicions of international corruption”, regardless of:

  • The status of the case;
  • Persons potentially involved in the wrongdoing; and
  • The financial dimension of the business.8

The Ministry of Justice anticipates that the PNF will continue to play a key and leading role in the fight against international corruption and notes that the PNF is “recognized and respected by international authorities because of its technical and legal expertise”.9, has established close ties with key international anti-corruption actors in recent years and has gained an understanding of the economic and judicial mechanisms in place in other countries.

The circular therefore establishes clear lines on how the PNF and the 164 regional prosecutors of France should work together and envisages a more organized, coordinated and centralized approach. The prosecution system in France is currently decentralized, which means that local prosecutors can open investigations into financial crimes as they see fit, even when the PNF may be better placed to investigate. This can lead to tensions between the PNF and other prosecution services. The circular should encourage local prosecutors to share more information with the PNF and establish more consistency in the way investigations are handled, a change that will be welcomed by businesses.

Compliance program

The circular states that if a company is eligible for a CJIP, particular attention should be paid to the company’s compliance program and the amount of the fine imposed, which is in line with the guidelines.

The PNF calculates the fines as a multiple of the benefit that the criminal conduct brings to the business. Since trials in French courts have resulted in substantial fines, the possibility of reducing penalties through a CJIP is certainly something that companies should take into account when evaluating their options.

Sapin II requires companies with more than 500 employees and revenues over 100 million euros to implement effective compliance programs. The guidelines explain that the effectiveness of a company’s compliance program will be a key factor in determining whether to conclude a CJIP and that it is the responsibility of the company’s executive management, once made aware of the offenses. corruption or influence peddling committed inside the company, to take “the corrective measures necessary to reinforce the effectiveness of the compliance program”. This will be “carefully considered by prosecutors when considering the possibility of concluding a CJIP”.

Conclusion

The French Ministry of Justice is sending a clear signal that France has and will continue to actively apply Sapin II. The PNF has proven to be procedurally agile and pragmatic in closing deals with significant financial penalties and establishing himself as active executors in complex international fraud and corruption cases. The PNF has successfully developed relationships with and acted in partnership with other law enforcement authorities.

Businesses must be prepared for increased control in this aggressive application environment and be prepared to navigate multiple legal regimes, authorities and application procedures. It will be important to assess strategic considerations from the outset to maximize the coverage and protection that can be obtained.

The authors also wish to thank Fergus Barratt, paralegal, for his contribution to this OnPoint.

Footnotes

1) Law n ° 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernization of economic life

2) Ministry of Justice circular

3) Circular, p.15

4) Circular, p.8

5) Memorandum from the Yates Department of Justice, p. 3

6) Circular, p.8

7) Circular, p.9

8) Circular, p.5

9) Ibid

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