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DPAs <i>à la française:</i> Win:win for companies in France?
DPAs <i>à la française:</i> Win:win for companies in France?
14 August 2019
Series
Blogs
14 August 2019
Judicial public interest agreements ("CJIPs") are a creation of the Sapin II Law of 9 December 2016 and can be described as deferred prosecution agreements (“DPA”) à la française. In a nutshell, CJIPs can be proposed by public prosecutors in cases involving, notably, the offences of corruption, bribery, influence peddling and tax fraud, as well as related offences such as money laundering. A company entering into a CJIP will have to: (i) pay a fine of up to 30% of its annual turnover over the last three years; (ii) if necessary, implement a compliance programme under the supervision of the French Anticorruption Agency ("AFA"); and (iii) repair the harm caused to potential victims. The CJIP will be approved by a judge but will not constitute a criminal conviction for the company.
On 27 June 2019, the AFA and France's National Financial Prosecutor ("PNF") released joint guidelines on the conclusion of CJIPs (available here in French). The 18-page document starts with a long exposé of the advantages for companies entering into CJIPs. The French authorities maintain that the procedure is quicker than a regular criminal investigation, the outcome is more predictable with none of the negative consequences attached to the imposition of a criminal sentence and the reputation of the company tends to be better preserved. Furthermore, the AFA and the PNF contend that the negotiation of a CJIP will encourage the conclusion of DPAs in other jurisdictions, should foreign authorities be conducting simultaneous investigations into the company’s activities.
The guidelines stipulate that to be eligible for a CJIP, companies have to self-report any wrongdoing as soon as possible after the representative of the company becomes aware of the facts. Moreover, companies have to conduct robust internal investigations with high standards in terms of evidence preservation and truthfulness of witness statements. The guidelines make it clear that an incomplete or an insufficient internal investigation will bar the company from negotiating a CJIP. The PNF will need to be provided with a full investigation report and the relevant evidentiary documentation. The guidelines insist that internal investigations must establish individual liabilities. Indeed, natural persons cannot enter into a CJIP and could therefore be criminally tried if the public interest so demands. Furthermore, the guidelines stress that even if a judicial investigation is ongoing, companies are required to conduct their own internal investigation in cooperation with the French authorities as a sign of good faith.
The guidelines also set out that all the documents and evidence provided to the PNF before the conclusion of a CJIP could be used in subsequent proceedings, including if the negotiations for a CJIP fail or if the CJIP is not approved by the judge. This interpretation of Article 41-1-2 of the French criminal code may pose a risk for companies willing to approach the PNF with a full internal investigation, hoping to enter into a CJIP. Should such an approach fail, the PNF would consider themselves free to launch a criminal investigation on the basis of the incriminating documentation provided by the company.
Last, but not least, the guidelines provide guidance on the calculation of the fine to be imposed on companies entering into a CJIP. In essence, the amount of profit derived from the misconduct is taken into account as the basis for the calculation of the fine, minus some costs directly linked to the corrupt project. The guidelines specify that non-financial benefits should also be taken into account, such as gains in market share or increased visibility of the company. Aggravating factors such as prior criminal convictions, and mitigating ones such as early self-disclosure or full cooperation with the authorities, are also mentioned in the guidelines, even though there is no indication on the extent to which such factors would impact the calculation of the fine.
The joint guidelines of the AFA and the PNF are an interesting guide for companies and their lawyers wishing to negotiate a CJIP. They encourage an early approach to the PNF, even on an informal basis and promote full cooperation to conduct an extensive investigation, the conclusions of which will then be given to the authorities. This is a radical shift of paradigm in the realm of French criminal law. It is presented by the AFA and the PNF as a win-win situation: the company benefits from the advantages of the CJIP while the PNF can save time and resources by relying on investigations conducted by corporations themselves. But it is also a potentially dangerous scenario, since companies are expected to take a leap of faith when providing the PNF with incriminating documents that could be used in a criminal investigation if no CJIP is finally concluded. This could ultimately put a brake on the cooperation that the authorities are so passionately calling for.