The French, like the Americans, have a saying: Plus ça change, plus c'est la même chose. "The more things change, the more they stay the same." Yet, the recent coordinated resolution by the U.S. Department of Justice ("DOJ") and France's National Financial Prosecutor's office (the Parquet National Financier or "PNF") with Société Générale le SA brings that old adage into question when anticipating and mitigating cross-border regulatory and enforcement risks.
The coordinated resolution between the DOJ and the PNF-the first coordinated resolution between the DOJ and French authorities in a foreign bribery case represents a new era in cross-border enforcement and cooperation between U.S. and French authorities. While France historically has not established a record of aggressive enforcement of its anti-corruption laws, with the recent implementation of a new anti-corruption law known as the Loi Sapin II, and its agreement to enter into a coordinated anti-corruption enforcement action with the DOJ against one of its largest financial institutions, France is demonstrating its commitment to enforcing international anti-corruption norms and its determination to monitor and regulate companies operating within its jurisdiction.
Following the coordinated resolution against Société Générale, companies conducting cross-border business in the United States and France should be on notice that they may be subject to active anti-corruption regulation and enforcement in both jurisdictions. In this new era of coordinated resolutions among U.S. and foreign regulators, multinational companies will need to implement processes to understand new and developing cross-border risks and develop global regulatory and enforcement strategies that anticipate and balance risks across multiple jurisdictions.
THE U.S. DOJ AND FRENCH PNF'S COORDINATED RESOLUTION WITH SOCIÉTÉ GÉNÉRALE
On June 4, 2018, the DOJ and PNF announced a coordinated settlement with Société Générale relating to violations of U.S. and French anti-corruption laws.1 In connection with the settlement, Société Générale acknowledged having made payments to high-level Libyan government officials, through a Libyan broker, to secure investments from certain Libyan state-owned financial institutions. To resolve the DOJ's charges, Société Générale entered into a deferred prosecution agreement and a wholly-owned subsidiary pleaded guilty to violations of the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act (the "FCPA"). Société Générale and its subsidiary agreed to pay a combined total criminal penalty of $585 million to the DOJ. In related proceedings, Société Générale also entered into a criminal resolution with the PNF.
As part of the global resolution, the DOJ and PNF agreed to a coordinated penalty, through which the United States and France each will receive 50% of the total criminal penalty amount. Specifically, the DOJ has agreed to credit the $292.8 million that Société Générale will pay as part of its settlement with the PNF against the total criminal penalty of $585 million payable to the DOJ. Notably, while the DOJ has entered into coordinated penalty arrangements with foreign regulators in the past, this coordinated penalty arrangement is the DOJ's first with a foreign regulator since announcing a new internal policy and guidelines in May 2018 intended to help prosecutors avoid the "piling on" of fines and penalties by multiple regulators for the same criminal conduct.2
THINGS HAVE CHANGED IN FRENCH ANTI-CORRUPTION ENFORCEMENT
The PNF's agreement to enter into a coordinated enforcement action with the DOJ represents a remarkable evolution in France's anti-corruption enforcement policy. In fact, France has long faced criticism for its lackluster enforcement of French anti corruption law and international anti-bribery conventions.3 For instance, while the DOJ has charged several of France's largest companies with FCPA violations, including Alcatel-Lucent S.A., Alstom S.A., Technip S.A. and Total, S.A, France has not brought corresponding enforcement actions against any of these companies until now.
France's recently implemented anti-corruption law, known as the Loi Sapin II, signaled France's move towards meaningful anti-corruption regulation and enforcement and expanded French prosecutors' extraterritorial enforcement authority. Even after the passage of the Loi Sapin II in November 2016, however, questions remained about whether France's newly established anti-corruption agency (the Agence française anti-corruption or "AFA") and the French prosecutors' offices would be sufficiently funded and how vigorously the new anti-corruption standards would be enforced.
Moreover, French officials and the French press have been openly critical of the DOJ's enforcement of U.S. laws against French companies,4 and press reports have hinted at tensions between the DOJ and French enforcement authorities in connection with the DOJ's investigations of French companies.5
Through this coordinated settlement, France has demonstrated its commitment to enforcing international anti-corruption standards and its determination to regulate companies operating within its jurisdiction. Indeed, recognizing France's renewed commitment, the DOJ specifically cited the AFA's "ongoing monitoring" of Société Générale as one of the factors in its determination not to impose a compliance monitor as a condition of settlement.6
IMPLICATIONS FOR COMPANIES CONDUCTING CROSS-BORDER BUSINESS
The DOJ and PNF's coordinated settlement with Société Générale does indeed represent a new era in enforcement and cooperation between U.S. and French authorities. More broadly, the coordinated settlement serves as a reminder to companies conducting cross border business that U.S. and foreign regulators are no longer merely sharing evidence with one another, but increasingly are bringing coordinated enforcement actions through which they share in the criminal penalties.
Companies need to be in a position to understand how strategic decisions in one jurisdiction could raise or mitigate cross-border regulatory, enforcement and litigation risks. For instance, what are the potential benefits and risks of voluntary self-disclosure and cooperation with the DOJ (which could result in "cooperation credit" in the event of a settlement) when French law and procedures have no mechanisms for rewarding self-disclosure or cooperation? Could a company's decision to settle with U.S. authorities rather than litigate be viewed by regulators and investors in other jurisdictions as an admission of guilt? Could a company's decision to settle or litigate a regulatory action in one jurisdiction lead to correlated civil litigation or regulatory risks in that jurisdiction and others?
Going forward, therefore, multinational companies will need to prepare strategies for developing compliance programs and responding to regulatory inquiries that anticipate, understand, and mitigate regulatory, litigation and reputational risks across multiple legal systems.