French financial prosecutors released new guidelines regarding CJIP

On 16 January 2023, France’s National Financial Prosecutor’s office (the “PNF”) – the leading French authority in the field of transnational corruption offences enforcement in accordance with the circular of 2 June 2020 on transnational corruption¹ – has updated its guidelines on the implementation of corporate settlements (known as the “CJIP”) published initially on 29 June 2019 jointly with the French Anti-Corruption Agency (AFA).

These new guidelines were expected by French practitioners to clarify the terms of negotiation with the PNF and to provide more predictability for companies. They were also expected to clarify the situation of the individuals concerned, especially for the corporate representatives. Please find below a summary of the main contributions and key impacts of this update.

1. Purpose and scope of application.

In their original version published on 29 June 2019, the PNF-AFA guidelines expressly 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"². It should be noted that the CJIP covering “environmental” offences³ is expressly excluded from the scope of these updated guidelines, as these offences fall outside the jurisdiction of the PNF.

The CJIP, a "negotiated justice" tool introduced by the "Sapin 2" law, enacted on 9 Dec. 2016, can be proposed by the PNF to any legal person involved in the context of a preliminary investigation or a judicial investigation for the offences mentioned above as well as "any related offence". It may include an undertaking by the legal person to pay a public interest fine, to implement a compliance programme under the monitoring of the AFA and to compensate any damage caused to the identified victims.

2. Benefits of the mechanism.

The PNF enumerates the various known benefits businesses can draw from the conclusion of such settlement, among which the absence of a conviction decision and the extinction of the public prosecution against them, the relative speediness of the proceedings, reputational impacts...

In the context of simultaneous investigations led by foreign enforcement authorities, the PNF presents the CJIP as a mechanism likely to create "the conditions for coordination with the other authorities, favouring the simultaneous conclusion of coherent settlements".

This update occurs alongside the US DoJ’s announcement on 17 January 2023 of a revised Corporate Enforcement and Voluntary Self-Disclosure Policy applicable to all FCPA cases and all other corporate criminal matters handled by the Criminal Division⁴. In this respect, it appears that these recent publications tend in their respective revisions to amplify their incentive mechanism for companies to (i) voluntarily and promptly self-report to the relevant authorities, (ii) fully cooperate with them, and (iii) develop and maintain robust compliance programmes.

3. Commencement of the negotiating process.

Pursuant to Articles 41-1-2 and 180-2 of the French Code of Criminal Procedure (CCP), it is the responsibility of the Public prosecutor to initiate the process by proposing a settlement to the identified businesses. Nevertheless, aware that such a step may seem contradictory in view of the transparency expected from the legal entities concerned by the mechanism, the PNF has admitted, in practice since 2019, that the application may come from the legal representative of the legal entity or its counsels. In this regard, the PNF now expressly clarifies that its prosecutors are willing to open informal talks, it being specified that a formal writing is not required at this stage. The PNF nevertheless sets certain conditions for this approach:

• No discussion will be possible in "cases which involve serious personal injury";

• Cooperation in "good faith" from the legal entity is required: It should be emphasised that prior recognition of the related facts, as well as acceptance of the criminal qualification proposed by the prosecutors in the light of these facts, is no longer a condition for implementing entering into a CJIP – even though, according to the PNF, an "unequivocal" acknowledgement of the related facts is a sign of cooperation as well as a factor that reduces the amount of the fine.

  Spontaneous reporting within a "reasonable period of time" is considered a guarantee of such good faith. In particular, the PNF expects the legal entity "to have actively participated or to be willing to participate in the establishment of the truth by means of an internal investigation" and to provide its prosecutors with all the elements related to these investigations (investigation report or its detailed content, internal investigation acts carried out during the judicial proceedings, etc.).

  Also, the voluntary and spontaneous implementation of a compliance programme for businesses not covered by Art. 17 of the Sapin II law (the anti-corruption compliance obligation), the adaptation of the group's strategy to the identified risks, the possible modification of the lead management team and the prior indemnification of the victims are among the factors taken into account under the heading of good faith according to the public prosecutor.

• As regards to the offence of tax fraud, the legal person will have to settle its situation with the Tax administration before entering into discussions with the public prosecutor.

4. Confidentiality.

A key issue in the implementation of the CJIP is the complex question of the confidentiality of the information and elements provided to the public prosecutor's office when accessing the case file and negotiating the settlement.

The PNF makes a distinction between prior informal talks and those that fall under the protection of Article 41-1-2 of the CCP. As long as no formal character has been given to the negotiations – the date of which is fixed by mutual agreement with the company – no information is in principle covered by confidentiality.

Information provided during the informal discussions phase which only concern the appropriateness of the CJIP procedure may be used by the public prosecutor if the 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 under a specific unwritten principle of confidence between the actors of the French judicial system, including lawyers and prosecutors (“la foi du palais");
• Evidence remains available when obtained by way of requisition or confiscation;
• Elements provided during the discussions phase, such as e-mails, financial statements, extracts of digital data, presentations and lawyers' memos are not, unless the legal entity so agrees, included in the proceedings.

While these clarifications have the virtue 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 orientate or influence any investigative actions outside the framework of the CJIP, e.g. in the context of a parallel preliminary investigation. In these circumstances, it is essential that such aspects be 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.

Focus on the situation of the potentially concerned individuals (corporate representatives, managers): These new guidelines do not eliminate the uncertainty surrounding the interconnection between the CJIP procedure, applicable exclusively to legal persons, and the "guilty plea" procedure applicable to individual (“Comparution sur reconnaissance préalable de culpabilité” – “CRPC”), which especially emerged from a recent high-profile case in which, despite the validation of the CJIP for the legal entity by the court, the latter had refused to validate the CRPC proposed by the PNF for certain managers of the said legal entity – these managers were therefore referred to the criminal court for the same alleged facts as those that were the subject matter of the corporate settlement, with the likely negative consequences that this situation entailed in terms of strategy and defences.

In a dedicated final section of its updated guidelines, the PNF mentions that "except in specific cases that would not be unfavourable to them, no individual is identified" in the settlement itself and recalls, with regard to the question of the initiation of the public prosecution, that "a simultaneous and joint settlement of their situations [i.e. the legal person and the individuals] is preferred whenever the evidences and the facts concerned make it possible".

These few clarifications do not address practitioners' concerns about strengthening the legal certainty of individuals in the implementation of a CJIP, since the law itself provides that the conclusions of a CJIP does not extinguish nor exclude potential proceedings against the individuals.

5. Calculation of the fine.

The PNF clarifies its interpretation of the calculation of the maximum fine that can be imposed on a company in the context of a group of companies. While the law provides that the fine cannot exceed 30% of their average annual turnover over the previous three financial years, the PNF specifies that if the financial records of the companies concerned by a CJIP are consolidated, the turnover taken into account will be that reported in the consolidated financial records of the group to which they belong.

In addition, the methods for setting up the amount of fine are reviewed and detailed, allowing the PNF to rank the increasing and decreasing factors it applies. Thus, each relevant criterion for a particular case gives rise to the determination of an increasing or decreasing factor within the limit of its cap, e.g.:

• Among the increasing factors: repeated nature of the acts (50%), any form of obstruction to the investigation (30%), involvement of a public official (30%), etc.
• Among the decreasing factors: spontaneous disclosure (50%), prior compensation of victims (40%), active cooperation (30%), effectiveness of the internal whistleblowing system (10%), etc.

The PNF also unequivocally warns businesses that it may increase or decrease the amount of the fine if it deems that there is a "significant difference between the estimated benefits derived from the offences at the date of the CJIP and their estimated value at the date of the offences". Similarly, it may reduce the amount if the concerned legal entity establishes financial difficulties substantiated by an appropriate documentation.

Conclusion.

While these updated guidelines are in line with those published in 2019, they appear to be supplemented with useful clarifications to the attention of practitioners as regards a mechanism which is often criticised for its lack of legibility, mainly in order to reinforce its predictability for businesses. Within the framework imposed by the law, these guidelines also remain a tool providing the PNF, and to some extent businesses, with some flexibility in the negotiation process.

The situation of natural persons remains an outstanding issue that remains to be clarified by lawmakers, who might also consider it as a way of enhancing the attractiveness of entering into a CJIP for companies, especially taking into account the scope of application of the mechanism which was lastly extended to environmental offences.

Pour lire la version française, cliquez ici.

^{1 https://www.simmons-simmons.com/en/publications/ckdg3kw619k060943t35wxbm2/comment-la-france-intensifie-la-lutte-contre-la-corruption
2 Guidelines PNF-AFA on the implementation of the CJIP, published on 29 June 2019
3 Law No. 2020-1672 of 24 Dec. 2020
4 9-47.120 – FCPA Corporate Enforcement Policy, Jan. 2023}