Selim Brihi
President, Observatoire de la Justice Pénale, Paris
sbrihi.avocat@gmail.com

Pauline Dufourq
Soulez-Lariviere, Paris
pauline.dufourq@gmail.com

On 16 January 2023, France’s National Financial Prosecutor’s office (PNF) updated its guidelines on the implementation of corporate settlements (known as the CJIP), which were initially published jointly with the French Anti-Corruption Agency (AFA) on 29 June 2019. On the following day, the US Department of Justice (DoJ) published a revised Corporate Enforcement and Voluntary Self Disclosure Policy.

Preliminary insights into the CJIP’s scope

In their original version published on 29 June 2019, the PNF–AFA guidelines specifically restricted their scope to CJIPs ‘implemented in the context of cases involving corruption and influence peddling’.

In its update, the PNF specifies that this new version is intended to apply to CJIPs implemented ‘in relation to corruption, influence peddling, tax fraud and laundering of these offences’.^[1] It should be noted that the CJIP covering ‘environmental’ offences is expressly excluded from the scope of these updated guidelines,^[2] as these offences fall outside the PNF’s jurisdiction.

Opening of the negotiation process: the ‘good faith’

According to the updated guidelines, companies are required to act in good faith to benefit from a CJIP.^[3]

To demonstrate good faith, companies must, for instance:

• self-report information to the PNF within a ‘reasonable timeframe’, taking into account the time elapsed between becoming aware of the wrongdoing and disclosing it to the PNF;
• disclose information which the PNF was not previously aware of;
• conduct an internal investigation that uncovers the truth, identifies individuals involved in the alleged wrongdoing, and audits the compliance system which enabled the offences to identify and address any issues;
• safeguard evidence;
• coordinate with the authorities before conducting interviews with individuals potentially involved in the wrongdoing;
• provide the PNF with a copy of any investigation report prepared or communicate the findings from the internal investigation in detail;
• implement changes to the compliance programme spontaneously to remedy failings and establish adequate mechanisms to address identified risks;
• potentially modify their management team;
• pay prior compensation to victims.

In the case of tax evasion, prerequisites for a CJIP include the recovery of the evaded duties by the tax authorities, interest on late payment, and penalties. This is why CJIPs do not, in principle, cover compensation for damage caused to the public treasury.

Confidentiality

One of the main challenges in implementing a CJIP is determining how to maintain confidentiality when sharing information and negotiating a settlement with the public prosecutor’s office.

The PNF differentiates between informal discussions and those protected under Article 41-1-2 of the Code of Criminal Procedure (CCP).

If negotiations have not been formalised, as determined by mutual agreement with the company, then in principle no information shared is considered confidential. However, information exchanged during informal discussions that solely pertain to the suitability of the CJIP process may be used by the public prosecutor if negotiations fail.

The PNF then specifies, in practice, on a case-by-case basis with the concerned legal entity and its counsels, the terms and statute of their exchanges as regards enforceability and confidentiality:

• talks are confidential and fall within a specific unwritten principle of confidence between the actors of the French judicial system, including lawyers and prosecutors (called ‘la foi du palais’);
• evidence remains available when obtained by way of requisition or confiscation;
• elements provided during the discussions phase, such as emails, financial statements, extracts of digital data, presentations and lawyers’ memos are not included in the proceedings unless the legal entity so agrees.^[4]

While these clarifications have the advantage of being clear, it cannot be entirely ruled out that these elements, which the public prosecutor may have become aware of, will not be used to position or influence any investigative actions outside the framework of the CJIP, for example in the context of a parallel preliminary investigation.

In these circumstances, it is essential that such aspects are considered with prudence, otherwise, the defence of the legal person – as well as that of its legal representatives and managers, if appropriate – could be, if not totally undermined, considerably weakened.

Clarifications about the public interest fine

Maximum fine

Article 41-1-2 of the Code of Criminal Procedure set a maximum fine of 30 per cent of a company’s annual revenue over the previous three years. The amount of the fine was determined by considering the benefits the company derived from its criminal activity and factoring in various mitigating and aggravating circumstances.

The 2023 guidelines add that if the accounts of the company have been consolidated under the applicable accounting regulations, the turnover taken into account is that shown in the consolidated accounts of the group to which they belong.^[5] This approach would potentially subject subsidiaries of large multinational corporations to significant fines.

It remains to be seen whether the French courts will accept the PNF’s new interpretation of the law.

Method of calculation

The penalty for non-compliance consists of two components. The first part, referred to as ‘restitutive’, requires the company to repay the amount of profits obtained through the identified wrongdoings. The second part, known as ‘afflictive’, is intended to punish the company and is based on profits earned from the non-compliance.

Aggravating and mitigating factors are applied in order to assess the afflictive part of the fine.

The new aggravating factors identified by the PNF are:

• obstruction of the judicial inquiry;
• creation of tools to conceal the facts;
• existence of a serious disturbance to public order;
• company size; and
• shortcomings in the company’s anticorruption compliance programme.

The new mitigating factors are:

• the unique occurrence of the offences;
• the unequivocal recognition of the offences by the company;
• victims’ previous compensation; and
• the relevance of internal investigations.

The French authorities have taken steps to enhance the transparency of calculating the ‘afflictive’ part (AP) of the fine. The primary objective is to ensure that it is proportional to the amount of benefits obtained from the wrongdoings. Additionally, the multiplier coefficients (which range from ten to 50 per cent and depend on mitigating and aggravating circumstances) are expected to be more predictable and to incentivise companies to cooperate.

As a result, the calculation of the AP, relative to the ‘restitutive’ part (RP) of the fine, can now be summarised as: AP = RP x (1 + increasing factors – reducing factors).

Disclosure

The new guidelines state that a few days prior to the hearing for the validation of the CJIP, the PNF will release the date of the hearing as well as the name of the company that benefits from the CJIP.

This is expected to increase media attention during the validation hearing. As a result, it will be crucial for a company and its legal team to have a well-planned communication strategy in place before the CJIP is finalised and validated.

The lasting lack of clarity regarding individuals

The new guidelines do not resolve the ambiguity surrounding the connection between the CJIP procedure, which is exclusively applicable to legal entities, and the procedure called Comparution sur reconnaissance préalable de culpabilité or CRPC, which applies to individuals. This issue was highlighted in a high-profile case where, even though the court approved the CJIP for the legal entity, it rejected the CRPC proposed by the PNF for certain managers of the same entity.^[6]

As a result, these individuals were prosecuted in criminal court for the same allegations that were resolved in the corporate settlement, with potential negative repercussions on their defence and strategy.

The PNF specifies that, except in certain cases that are not detrimental to them, individuals are not named in the settlement agreement itself. Additionally, the PNF prefers a joint settlement of the legal entity and the individuals whenever the evidence and the facts allow.

Nevertheless, these clarifications do not alleviate practitioners’ concerns about the legal protection of individuals in the implementation of a CJIP. This is because the law explicitly states that the conclusion of a CJIP does not prevent or exclude the possibility of legal action against individuals.

Alignment with foreign prosecuting agencies

The updated guidelines emphasise that the PNF will collaborate with foreign prosecuting authorities as necessary, ensuring that a comprehensive global settlement is reached within one day, and will also oversee the implementation of a unified compliance programme under the supervision of the AFA.^[7]

The new guidelines also affirm the PNF’s commitment to prevent companies from being prosecuted twice for the same set of facts, in adherence to the principle of ne bis in idem.

If a DPA is reached and the PNF receives a request for mutual legal assistance pertaining to the same set of facts, the PNF will only provide assistance if the foreign prosecuting authorities give assurances that they will not pursue the company for the same set of facts covered by the DPA.

Access to the case file

The updated guidelines clarify that the PNF will decide on a case-by-case basis whether the entire or a portion of the case file documents should be provided to the lawyers representing the company.

To make this decision, the PNF will assess whether granting access would harm the ongoing investigation. If granted, the company and its legal representatives will have the right to make a copy of the documents. This is a significant improvement as it could provide companies and their lawyers with earlier access to the case file, informing them of the allegations and charges they may face.

Furthermore, if the CJIP is agreed upon during the investigation stage, the parties who have been charged or have the status of an assisted witness will be permitted to access the case file and make a copy.^[8]

Conclusion

The publication of these new guidelines is to be welcomed as it endorses in writing the practice that the PNF has developed in recent years around the implementation of CJIP. These guidelines are a guarantee of transparency and legal security. Although one part is devoted to the situation of individuals, the guarantees offered remain insufficient at this stage and it is up to the legislator to reinforce their protection, in particular by offering an adversarial phase or by modifying the CRPC system.