Every year, Europe loses thousands of millions of euros on cross-border fraud, including at least €50 billion of Value Added Tax.
Availing itself of the opportunity offered by the Treaty on the Functioning of the European Union (“TFUE”) since the adoption of the Lisbon Treaty in 2008, the European Union instituted the European Public Prosecutor’s Office (“EPPO”) on October 12th, 2017.
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French practice of white-collar crime facing globalization
Sapin II law strengthened the French legal framework by implementing measures aiming at legitimizing and extending existing practices in cross-border cases especially through the judicial agreement in the public interest mechanism (convention judiciaire d’intérêt public – CJIP).
Sapin II law strengthened the French legal framework by implementing measures aiming at legitimizing and extending existing practices in cross-border cases especially through the judicial agreement in the public interest mechanism (convention judiciaire d’intérêt public – CJIP). Nevertheless, in this field, French white-collar crime remains under the influence of foreign practices, concepts and issues that have not yet been addressed in French law.
Over the past fifteen years, the French legal environment has been profoundly impacted by foreign proceedings and agreements imposed by foreign jurisdictions (especially by US regulators and the US Department of Justice “DOJ”)1 on French companies.
Facing the extraterritoriality of US rules and the globalization of the defense of French companies, French practices of white-collar crime has evolved. Lawyers must now take into account foreign practices (such as internal investigations) and new types of defense strategies (such as cooperation with the authorities and regulators).
White-collar crime and internal investigations
Internal corporate investigations carried out by specialized and independent law firms recruited for this purpose aims at shedding light on the facts of the matter in order to avoid a lengthy, costly lawsuit with potential damaging consequences on the commercial strategy and the reputation of the company. Such proceedings could also be very risky for companies engaged in regulated activities as they could lead to the withdrawal of their license.
Internal investigations are standard practice in the US and have been imported into France while French companies were prosecuted by US authorities. This kind of private investigations carried out by law firms raises several issues as there is no standard governing it.
Indeed, this pragmatic self-investigative approach disrupts the traditional balance of French criminal procedure in the course of which the investigation is carried out by the police under the authority of a judge2 and in which the person being heard during the investigation benefits from specific rights3.
De facto, rules where applied, whether inspired from Anglo-Saxon practices or adapted from existing French rules.
Hence when an internal investigation is launched, several issues are analyzed under French law including compliance with personal data protection and labor law. As an example, if the data from a professional email is copied and analyzed, messages tagged as private by the employee are discarded in accordance with French rules on the subject4. The French Blocking Statute also applies in the context of internal investigations where mutual legal assistance treaties (MLAT) are used to communicate economic, financial, industrial, commercial or technical information to foreign regulators5.
In parallel with this enforcement of French rules, cross-border white-collar crime practitioners has questioned the rules to be applied regarding the confidentiality of exchanges or the protection of employees’ rights in the course of an interview. They had then transposed US practices notably the Upjohn Warning6.
The rule has emerged from the practice. On September 13, 2016 the Paris Bar Council (Conseil de l’Ordre) passed the “Vademecum for Attorneys in charge of carrying out an internal investigation”.
In addition to a reminder of the deontological principles of the lawyer in charge of an internal investigation, this vademecum requires the lawyer to explain his/her mission and its non-coercive nature to the person being heard.
The lawyer must also explain to the person being heard that their exchanges are not covered by attorney-client privilege as he/she acts on behalf of the client who retained him/her to carry out this investigation and that consequently the information gathered in the course of the interview could be used and or transcribe in the lawyer’s report.
Finally, the lawyer in charge of the investigation has a duty to inform the interviewee that he/she may be assisted or advised by a lawyer when it appears that the individual could be held accountable for the facts being investigated7.
Internal investigations still raise questions. How to remain independent when the investigation is carried out under the authority and the instructions of the DOJ or the SFO (Serious Fraud Office)8?
Cooperation between and with authorities, a new factor to take into account in the defence strategy
The new possibility implemented by Sapin II law for companies to settle with French prosecuting authorities under a CJIP9 (unfortunately not possible yet for natural persons) has opened up a new avenue in the defence strategy of companies by assisting (or anticipating) prosecution, in particular through internal investigations designed to obtain the most detailed possible view of alleged malpractices and criminal offences. But above all, in a non-anticipated way, it paved the way for judicial cooperation in the negociation of the settlement. From now on, two authorities can coordinate and settle agreements with one single company thus extending cooperation with an authority to cooperation between authorities.
The CJIP between the National Financial Prosecutor (PNF) and the French bank Société Générale10 illustrates the coordinated action of the French authority with the DOJ and the Federal Prosecutor of the New York district. In this case, a deferred prosecution agreement (DPA) and a CJIP were signed simultaneously even though the fact-finding investigation was solely conducted by the US authority.
In cross-border case, white-collar crime practitioners thus have to foresee the concerted, coordinated and joint action of several prosecution authorities. Prosecution progressively becomes multijurisdictional. This leads to a real strategy game for the company’s counsel in the globalized negotiation that he will have to conduct at the same time with the authorities.
This change of legal paradigm is consistent with the globalization of the economy. The rules are spreading and are uniformizing across borders to respond to the globalization of the companies’ economic activities.
Although it may clash with the traditional patterns of a public inquiry conducted by the authority and the historical vision of a white-collar crime practice more focused on defence rather than cooperation, it imposes a renewed practice of economic criminal law in line with the reality of a globalized economy where cooperation and defence are no longer mutually exclusive.
- 20140702, Valérie de Senneville, Numerous “deals” of justice with French companies in Les Echos (“[The New York Times] notes that, of the ten largest agreements since the adoption of the FCPA in 1977, nine have concerned non-US companies, including three in France”).
- Article 14 of the French criminal procedure code.
- Article 61-1 of the French criminal procedure code for the free audition as an example.
- Cass, soc. December 15, 2010, n°08-42486.
- Article 1 of the law n°68-678 of July 26,1968.
- Practice whose name is derived from the decision of the Supreme Court of the United States, Upjohn Company v. United States, 449 US 383 (1981).
- http://www.avocatparis.org/mon-metier-davocat/publications-du-conseil/nouvelle-annexe-xxiv-vademecum-de-lavocat-charge-dune.
- This question has been raised several times in the US, cf. United States v. Stein (2008) and Gilman v. Marsh & Mac Lennan Cos (2016).
- Article 22 of the law n°2016-1691 of December 9,2016 addressing transparency, anti-corruption and economic modernization.
- Signed on May 24, 2018 and validated by the President of the Tribunal of Grande Instance of Paris on June 4,2018.
