Navigating French Internal Investigations And Self-Reporting - French Authorities Issue New Guidance

Author:Mr Timothy Bowden, Roger A. Burlingame, Laurent Martinet, Jacques Sivignon and Karen Coppens
Profession:Dechert
 
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France is off to a strong start enforcing Sapin II, its December 2016 anti-corruption legislation. Since the enactment of the statute, the lead French investigating and prosecuting agencies, the Parquet National Financier (PNF), and the Parquet de Nanterre, have entered into six deferred prosecution agreements, called Convention Judiciaire d'Intérêt Public (CJIPs), and there is little doubt that French authorities will continue apace.

Despite this flurry of activity, until recently, companies facing investigation have received limited guidance about the French authorities' expectations and the CJIP framework. On 27 June 2019, however, the PNF and French Anti-Corruption Agency (AFA)1 published guidelines (the Guidelines) setting forth the conditions companies must meet to be eligible to enter into a CJIP, as well as details about how financial penalties are determined.2

Though not legally binding, the Guidelines provide much-needed clarity for companies seeking to resolve an investigation by entering into a CJIP. Among other things, the Guidelines make clear that a passive approach is no longer acceptable to French authorities, and that companies hoping to resolve investigations on favourable terms are expected to perform thorough internal investigations, self-report wrongdoing, and cooperate with the authorities.

The Guidelines overlap significantly with similar guidance issued by the U.S. Department of Justice (DOJ) and the UK's Serious Fraud Office (SFO), providing further evidence of the French commitment to joining the ranks of the U.S. and UK in fighting corporate corruption. In this era of increasing cross-border cooperation between prosecuting authorities, clients with any plausible criminal exposure in France must now contend with the French authorities when seeking a coordinated global settlement.

In this OnPoint, we provide an overview of the emerging French CJIP regime and compare and contrast it with the U.S. and UK approaches.

THE CJIP FRAMEWORK

Under Sapin II, CJIPs are available to companies under investigation for specific offences of corruption, influence peddling, and laundering the proceeds of tax fraud or related offences. The Guidelines direct the Public Prosecutor to evaluate on a case-by-case basis whether a company should be offered a CJIP "where it appears in the public interest not to pursue a criminal prosecution" and public proceedings have not begun.

FACTORS TO BE CONSIDERED

The Guidelines outline the factors the PNF will consider before exercising its discretion to enter into a CJIP.

Cooperation

Cooperation with the authorities' investigation is a "necessary pre-requisite" to be eligible for a CJIP. This is consistent with U.S. and UK emphasis on cooperation as a critical factor in determining a company's eligibility for a Deferred Prosecution Agreement (DPA).

Self-reporting and voluntary disclosure

Self-reporting is not a precondition to obtaining a CJIP, but it is one of the key factors French authorities are required to consider. The Guidelines make clear that self-reporting must be timely and the authorities will scrutinise any delay in a company disclosing wrongdoing. If any delay is found, authorities will assess any impact the delay may have had on the investigation, including any impact on the preservation of evidence and the risk of collusion.

U.S. and UK guidance also strongly encourages voluntary disclosure of misconduct, but recent cases confirm that a failure to self-report is not fatal to DPA prospects in either country if a company cooperates with the investigating authorities.

Comprehensive internal investigation

In order to be eligible for a CJIP, a company is expected to have "actively engaged in discovering the truth through an internal investigation or a detailed audit on the facts and malfunctions of the compliance system...

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