On June 4, 2018, Société Générale S.A., together with a subsidiary of the Paris-based global financial services institution, announced an agreement with both French and American authorities to resolve charges relating to bribery of Libyan officials as well as charges relating to the manipulation of the leading benchmark interest rate, the London Interbank Offered Rate (LIBOR). In total, the penalties against Société Générale amount to approximately $1.3 billion.
The announcement is noteworthy because it marks the first coordinated resolution with international authorities in a bribery case, consistent with prior pronouncements of the US authorities that had earlier this year hinted at stronger international cooperation in the prosecution of these types of cases in the future. Of the total $1.3 billion figure, the foreign bribery case accounts for the largest portion of the fine, with a $585 million penalty imposed by the Department of Justice (DOJ) for violations of the Foreign Corrupt Practices Act (FCPA). As part of the resolution of the foreign bribery case, Société Générale Acceptance, N.V., a wholly-owned subsidiary of the company, pled guilty to violations of the FCPA on the day following the announcement of the agreement.
Both French and American authorities claimed jurisdiction over Société Générale for the bribery scheme—France as the home country to the company and the United States based on the presence of a subsidiary in New York as well as business connections with the US. While prior multi-jurisdictional cases had often resulted in “overlapping” or “piling on” of penalties, in this case the total $585 million criminal penalty for the FCPA bribery violations will be equally divided between the US DOJ and the French Parquet National Financier (PNF). This “crediting” by the US for sanctions paid to another country’s authorities for the same conduct is a marked first in FCPA enforcement actions.
It is also worth noting that in the agreement with the PNF, Société Générale also committed to have the French Anti-Corruption Agency (AFA) assess the quality and the effectiveness of the anti-corruption measures it implemented for a two-year period. The Department of Justice, in recognition of the French monitoring that would take place, did not impose a monitoring requirement as part of its settlement.
The coordinated resolution of the investigations with divided penalties between the French and the American authorities is also significant as it allows Société Générale to effectively avoid double jeopardy. International jurisdictions have previously held that the double jeopardy defense does not apply in international bribery cases, in order to prevent the risk of multiple prosecutions and convictions. The coordinated approach taken in this case is also consistent with Article 4-3 of the OEDC Convention on Combating Bribery of Foreign Public Officials in International Business Transactions which states: “When more than one Party has jurisdiction over an alleged offence described in this Convention, the Parties involved shall, at the request of one of them, consult with a view to determining the most appropriate jurisdiction for prosecution.”1
In announcing the resolution of the FCPA matter, DOJ Acting Assistant Attorney General of the Criminal Division John P. Cronan noted the importance of this first-of-its-kind resolution, noting: “Today’s resolution – which marks the first coordinated resolution with France in a foreign bribery case – sends a strong message that transnational corruption and manipulation of our markets will be met with a global and coordinated law enforcement response.”2 Earlier this year, on May 9, 2018, in speech before the New York City Bar White Collar Crime Institute, US Deputy Attorney General Rod Rosenstein stated the DOJ would implement a new policy to discourage multiple regulators from “piling on” penalties.3
While the coordinated imposition of penalties is good news for multinational companies facing cross-border investigations, the US. authorities also made it clear that they would continue to pursue matters within their jurisdiction even where the principal place of business and principal violations occurred off-shore. FBI Assistant Director in Charge William F. Sweeney, Jr., noted “[B]eing geographically out of sight doesn’t mean you’re out of reach from prosecution. No matter who you are, where you are, or how much money you have, the FBI will continue to use all resources at our disposal to find you, uncover your crimes, and reveal them for what they really are.”4
The bribery scheme, which began in or about 2005 and lasted until approximately 2011, followed the lifting of economic sanctions against Libya, freeing Libyan State Agencies to place funds with international financial instructions for investment purposes. According to the company’s admissions in the Deferred Prosecution Agreement (DPA), a “Libyan Intermediary” paid bribes and provided financial benefits to Libyan government officials to secure investments for Société Générale , with the company’s knowledge.5 In total, the Libyan Intermediary was paid more than $90 million by Société Générale, portions of which went to public officials to secure the investments, and Société Générale earned approximately $523 million in profits from the 14 investments made by the Libyan state-owned financial institution, which were secured through the scheme.
The announcement also marked one of the first significant FCPA resolutions since last November’s announced changes to the FCPA Corporate Enforcement Policy, which included significant incentives for companies to self-report bribery violations and cooperate in the investigations by the government into violative conduct.6 According to the DPA, Société Générale did not receive voluntary disclosure credit though it did receive “substantial credit for its cooperation with the [Offices’] investigation of the underlying FCPA conduct.” The DPA specifically cited the following as illustrative of the cooperation efforts: (1) Société Générale conducted a “thorough and robust internal investigation”; (2) Société Générale produced “voluminous evidence” to the government authorities, including evidence gathered from other jurisdictions; and (3) Société Générale provided “frequent and regular updates” to the government regarding the findings of its internal investigation. Despite touting these efforts, the DPA did note that Société Générale did not receive full credit for its cooperation “because of issues that resulted in delay during the early stages of the investigation.”
The $1.3 billion total penalty also includes a $275 million fine imposed by the DOJ to resolve allegations that between May 2010 and at least October 2011, Société Générale “promulgated falsely deflated US Dollar LIBOR submissions to make it look as though Société Générale. The company will also pay the Commodity Futures trading Commission (CFTC) $475 million in connection with the LIBOR scheme.
Takeaway and Looking Forward
Companies subject to enforcement actions by foreign governments or agencies for conduct that may also be investigated by the DOJ may take comfort in the fact that the DOJ does, in fact, seem to be taking foreign investigations and penalties imposed by foreign governments into account when determining what penalty to impose. However, multinational companies in these situations may consider proactive steps during cross-border investigations to encourage the DOJ to participate in or monitor an investigation by another agency or foreign government. Such cooperation may reduce the chances of any misunderstanding about the scope of a particular enforcement action, and thus reduce the chances of any “piling on” of penalties. In analyzing potential strategy, companies should also make sure to weigh the benefits of the FCPA Corporate Enforcement Policy’s directives relating to self-reporting and cooperation.7