France perennially ranks high on world lists for wines, as a place to visit, and for other charms; for its fight against overseas corruption, not so much. This observation is widely held and not new. In October 2012 the OECD issued its Phase 3 report on France’s efforts to pursue overseas corruption, and noted that the country was falling far behind.1 In October 2014 the OECD bemoaned, yet again, the continued lack of progress.2 France’s poor showing can be linked to very specific elements of French criminal laws and procedures that are impediments and disincentives to more robust prosecution, as well as to more subjective cultural factors that will resist reform efforts.
France’s Performance Pursuing Overseas Corruption
France’s shortfall relative to other countries in the pursuit of overseas corruption is stark. Fourteen years
ago, it adopted legislation criminalizing official corruption committed outside its territory, which had hitherto been largely tolerated and often resulted in a tax deduction. This legislation is roughly comparable to the U.S. Foreign Corrupt Practices Act, and complies with France’s obligation under the OECD Convention.3 In those fourteen years a grand total of one corporation has been convicted for illegal overseas payments: in 2012 the French company Safran was sentenced to
a fine of €500,000 for bribes paid in Africa to obtain a contract worth more than
€170 million. That case is now on appeal and its outcome uncertain.4
No other corporation has been convicted, or is now awaiting trial, in France under this legislation.5 This cannot be explained by a hypothesis that French companies are so law-abiding that there was nothing to investigate or prosecute. During that period, that is, since 2000, at least three large French
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- See Organization for Economic Cooperation and Development (“OECD”), Working Group on Bribery in International Transactions, Phase 3 Report on Implementing the OECD Anti-Bribery Convention in France (Oct. 2012), http://www.oecd.org/daf/anti-bribery/ Francephase3reportEN.pdf.
- See OECD, Statement of the OECD Working Group on Bribery on France’s Implementation of the Anti-Bribery Convention (Oct. 23, 2014), http://www.oecd.org/newsroom/statement-of-the-oecd-working-group-on-bribery-on-france-s-implementation-of-the-anti-bribery- convention.htm.
- France ratified the OECD Convention on Combating Bribery of Foreign Public Officials (“OECD Convention”) in 1999 and adopted national legislation prohibiting overseas corruption in 2000. See OECD, Steps Taken to Implement and Enforce the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions: France (May 2011), http://www.oecd.org/daf/anti-bribery/anti- briberyconvention/42098468.pdf.
- See Patricia McKinstry, “Safran Found Guilty of Corruption by French Court,” SAI Global Blogs: European Perspective (Sept. 6, 2012), http://compliance.saiglobal.com/community/blogs/item/3994-safran-found-guilty-of-corruption-by-french-court; The International Investigations Review 145 n.11 (Nicolas Bourtin ed., 4th ed. July 2014) (citing Paris Criminal Court, 5 September 2012, No. 060992023).
- There have been a number of investigations concerning domestic corruption, which is regularly pursued in French courts, and there have been investigations and trials relating to different international issues such as alleged violations of the U.N.’s Oil-for-Food Program.
The Fight Against Overseas Corruption: Why Does France Lag? Continued from page 13
companies — Total,6 Alcatel,7 and Technip8 — reached public agreements with the U.S. Department of Justice (“DOJ”) in which they admitted having made large, and clearly illegal, overseas payments, and French industrial
giant Alstom, whose business is now in the process of being purchased in
significant part by General Electric, has disclosed that it is the subject of a U.S. investigation9 in which one of its former officers has already pleaded guilty to
U.S. corruption charges.10 So why are French companies being pursued more vigorously by U.S. authorities than by their own?
corporate prosecutions. First, it is somewhat more difficult to prosecute a corporation in France than it is
in the United States. In the United States, corporations can very rarely claim that anyone connected with the organization — whether an officer, an employee, or even a contractual agent
—andwhomadeapymentdidnot bind”thecorotionandsujectitto criminlliabiliyundertheprincipleof respondeat superior.Inance,Article 121-2ofthePenldeismoesecific. Thecorotioncanecriminly esonsibleonyifanidentifiableogan orepesenttie”commitsacriminl
“Although France’s anti-corruption laws are generally comparable to the FCPA, two differences in the general substantive criminal laws inhibit corporate prosecutions.”
The Impact of Substantive Criminal Laws
Although France’s anti-corruption laws are generally comparable to the FCPA, two differences in the general substantive criminal laws inhibit
act “for the account” (or, perhaps, “for the benefit”) of the corporation.
While more flexible than the “controlling or directing mind” requirement applicable in the United Kingdom,11 this provision — which was
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- See DOJ Press Rel. 13-613, French Oil and Gas Company, Total, S.A., Charged in the United States and France in Connection with an International Bribery Scheme (May 29, 2013), http://www.justice.gov/opa/pr/french-oil-and-gas-company-total-sa-charged-united- states-and-france-connection-international.
- See DOJ Press Rel. 10-1481, Alcatel-Lucent S.A. and Three Subsidiaries Agree to Pay $92 Million to Resolve Foreign Corrupt Practices Act Investigation (Dec. 27, 2010), http://www.justice.gov/opa/pr/alcatel-lucent-sa-and-three-subsidiaries-agree-pay-92-million-resolve- foreign-corrupt.
- See DOJ Press Rel. 10-751, Technip S.A. Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $240 Million Criminal Penalty (June 28, 2010), http://www.justice.gov/opa/pr/technip-sa-resolves-foreign-corrupt-practices-act-investigation-and-agrees- pay-240-million.
- See Tom Schoenberg, “Alstom Said to Face Wider Bribery Probe and Record Fine,” Bloomberg (Mar. 27, 2014), http://www.bloomberg.com/ news/2014-03-27/alstom-said-to-face-wider-bribery-probe-and-record-fine.html.
- See DOJ Press Rel. 14-752, Former Executive of French Power Company Subsidiary Pleads Guilty in Connection with Foreign Bribery Scheme (July 17, 2014), http://www.justice.gov/opa/pr/former-executive-french-power-company-subsidiary-pleads-guilty-connection- foreign-bribery.
- See Amanda Pinto & Martin Evans, Corporate Criminal Liability (3rd ed. 2013) at 35-61.
The Fight Against Overseas Corruption: Why Does France Lag? Continued from page 14
adopted only in 1994, and is still being interpreted by the French courts — adds a burden that U.S. prosecutors do not face.
And the requirement is more than theoretical. Following the crash of a Concorde in 2000, an investigation led to the criminal conviction of Continental Airlines for negligence in maintaining an aircraft that took off just before the Concorde, resulting in litter on the airstrip that contributed to the crash.
On appeal, the conviction was vacated because the Court of Appeals concluded the negligent Continental employee
did not have a status that bound the corporation.12
Far more important, however, is the fact that the financial penalties applicable to corporate corruption are a fraction of fines payable under the FCPA in the United States. The basic
provision under French criminal law is that a corporation may be sentenced to a maximum of five times the penalty applicable to individuals for the same crime,13 which for overseas corruption (applying a maximum sentence increased in 2013 applicable to crimes committed thereafter) yields a maximum sentence of €5,000,00014
—hadyaterrifyingposect, particulary whencompaedto .S. l, which authorizesa fine ofup to wicethegainorloss”ccasionedy thecriminlmisconduct,asellas civildisgogementofill-gottengains and,conceiab, estitutionas ell tocrimevictims. urthe,theeis
no tradition or recognized procedure comparable to the U.S. approach of adding separate “counts” for each act of corruption and resulting in a high
cumulative penalty, so that this amount is likely to be the “worst case” outcome a corporation can contemplate. The result: a corporate criminal investigation in France is simply not a major threat to a corporation.15
The Impact of French Criminal Procedures
Far more nuanced is the effect of a number of French procedures that inhibit an environment of aggressive prosecution. Perhaps the most important is the relatively unimportant status of the prosecutor and the absence of negotiated outcomes.
While roughly 90% of all criminal cases in France are handled in the first
Continued on page 16
- See International Investigations Review at 144 n.10 (citing Versailles Court of Appeals, 29 November 2012, RG 11/00332).
- “The maximum amount of a fine applicable to legal persons [e.g., corporations] is set at five times the maximum fine applicable to individuals, according to the law criminalizing this offence . . . .” Code pénal [C. pén.] art. 131-38 (Fr.).
- Code pénal [C. pén.] art. 435-3 (Fr.).
- Art. 131-39 of the Criminal Code provides a sentencing judge with a very wide array of non-financial penalties applicable to corporations; these include total dissolution, but also more nuanced remedies such as preclusion from certain markets or certain business activities, and up to five years of “judicial supervision.” Code pénal [C. pén.] art. 131-39 (Fr.). These penalties are, however, very rarely imposed; and in a
big corruption case where the result may come as much as a decade or more after the relevant facts, it would generally be too late to impose them productively. If actual plea negotiation were to become possible in France, this choice of non-financial outcomes could provide a
basis for discussion, although since they only apply to a convicted corporation, they do not, as such, provide a basis for a DPA or other non- criminal outcome.
The Fight Against Overseas Corruption: Why Does France Lag? Continued from page 15
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instance by the police, who turn over the fruits of their investigation to the Public Prosecutor, in complex cases such as overseas corruption the investigation is conducted by a judge known as an investigating magistrate.16
The investigating magistrate is formally obligated to establish, in essence, “what happened,” and is tasked with finding (and putting in a formal file) all exculpatory as well as incriminating evidence. Although the Public Prosecutor will be asked for that officer’s views on whether the magistrate’s file contains sufficient evidence to merit prosecution, the ultimate decision on that question remains with the investigating magistrate, who can (and sometimes does) order that a case go to trial over
the opposition of the Public Prosecutor.
This structure creates at least two disincentives to aggressive prosecution of corporate crime. First, the process simply takes a very long time. Corporate investigations frequently take 10 years or more, basically because the investigating
magistrates are thinly staffed and become logjams. And second, both formally and practically, investigating magistrates
are not in a position to negotiate with corporations being investigated. Their role is to “establish the truth,” not to bargain, and they would find any offer to enter into plea negotiations to be entirely improper. As a result, there is virtually no opportunity for any form of negotiation of criminal outcomes
in France: a corporation can neither negotiate a “Deferred Prosecution Agreement” or similar result that avoids a criminal judgment, nor even negotiate a “guilty plea” with a limited, agreed- upon penalty.
Corporations being investigated thus have little choice but to wait for the matter to be brought to trial in the distant future; there is no environment of “carrots and sticks” creating an
incentive to bring a matter to a head for the simple reason that the “stick” (in the sense of a worst-case likely outcome)
is not at all fearsome, and there is no “carrot” of obtaining a better result through negotiation.
The result: while in the United States corporations more often than not enter into some form of discussion with prosecutors that leads to a negotiated (and relatively prompt) outcome — often with an element of “cooperation” that may include providing evidence against individuals, as well as promises to undergo strict supervision or a monitor into the future — virtually the only procedurally acceptable outcome in France is to await a full-blown investigation, trial, and appeal many years hence.
This procedural structure may inhibit preventative efforts as well. There is much discussion in France today of the need for corporations to create compliance departments to implement and supervise measures to detect and deter illicit payments by employees. Significant groups of compliance managers and
- Code de procédure pénale [C. pr. pén.] arts. 79-84 (Fr.).
The Fight Against Overseas Corruption: Why Does France Lag? Continued from page 16
service providers have been established to promote this approach.17 But a compliance program has relatively little legal status in France in the context of an assertion of corporate criminal responsibility. In the United Kingdom a robust compliance program may be a complete defense to the so-called “corporate crime” prosecutable under the UK Bribery Act, and in the United States the existence of a strong program is considered a very strong
Will Things Change?
There are a number of reasons to believe that the situation will not change any time soon.
First, as noted above, French corporations have little incentive to do anything other than await the end of a very lengthy process because the “worst case” corporate penalties are relatively low. There is little indication of a political will to increase these penalties.
“In France, by contrast, a compliance program is not a defense, and while it might be considered by a sentencing judge . . . or possibly contribute to an argument that the payer of a bribe was acting ultra vires . . . [,] there is little immediate incentive for corporations to implement such a function.”
mitigation element in discussions that can lead to a decision by the prosecutor not to pursue corruption charges against the corporation at all.18
In France, by contrast, a compliance program is not a defense, and while it might be considered by a sentencing judge as a mitigating factor in determining a corporate fine (which, as noted, is already quite low), or possibly contribute to an argument that the payer of a bribe was acting ultra vires and did not bind the corporation, in the absence of the opportunity for plea negotiations there is little immediate incentive for corporations to implement such a function.
Second, there is considerable hostility to the U.S. notion of a negotiated outcome of a criminal matter. “Deferred Prosecution Agreements” as they have developed in the United States have been a matter of discussion in France since their relatively recent emergence in the U.S. prosecutor’s toolbox, and
by and large the commentary has been negative. Such “deals” are often viewed as unsavory privatizations of justice that are inconsistent with French principles.19
And third, there is deep, although generally unstated, hostility to the notion of active “cooperation” with a prosecuting authority. Even in civil
Continued on page 18
- See, e.g., Le Cercle de la Compliance, www.cercledelacompliance.com; ETHIC Intelligence, www.ethic-intelligence.com.
- See Debevoise & Plimpton, “The UK Bribery Act 2010: A Guide to the New Offenses” (May 19, 2010), http://www.debevoise.com/insights/ publications/2010/05/the-uk-bribery-act-2010-a-guide-to-the-new-offen__ (follow “Download PDF” hyperlink).
- See, e.g., Antoine Garapon & Pierre Servan-Schreiber, Deals de justice: Le marché américain de l’obéissance mondialisée (2013).
The Fight Against Overseas Corruption: Why Does France Lag? Continued from page 17
litigation in France, there is no concept of “discovery” in the U.S. sense, nor any obligation of one party to turn over to an adversary information that could be harmful to it. Discomfort with the idea
that a person or company should provide adverse evidence is particularly acute in
a criminal context: although neither the phrase nor the concept appears in any formal text, judges and other participants in the criminal justice system openly refer to a criminal defendant’s so-called “right to lie,” pointing out that at criminal trials a third-party witness testifies under oath while an accused does not.20 In the
Some of the concerns voiced by French observers critical of U.S. criminal procedures relating to Non-Prosecution Agreements, Deferred Prosecution Agreements and negotiated corporate guilty pleas are also expressed in the United Kingdom, where judges do not support the notion of a criminal “deal” negotiated solely between a prosecutor and a private corporation. The United Kingdom, however, has addressed this issue in an innovative way by adopting legislation, which went into effect in February 2014, allowing the rough equivalent of a DPA but under strict
“Even in civil litigation in France, there is no concept of ‘discovery’ in the U.S. sense, nor any obligation of one party to turn over to an adversary information that could be harmful to it.”
particular context of a corporate structure, the notion that a corporation would agree to “cooperate” by providing evidence that could implicate its own officers
or employees is likely to be completely rejected. U.S. authorities have expressed a suspicion that French companies may have strung out their response to U.S. criminal investigations until the statute of limitations may have run against individual officers or employees.21
judicial supervision so that a judge, and not simply adversarial parties, determines whether the process and the result are in the public interest.22 Such an approach would appear to go a considerable way to addressing French concerns that are now firm roadblocks to progress and the fight against corruption. It is not, however, the subject of much discussion in France.
There are some changes, and voices urging more. In December 2013, the
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- See, e.g., Paroles de juges (blog), “En procédure pénale le droit de se taire, oui, mais le droit de mentir ?” (Sept. 27, 2014), http://www. huyette.net/2014/06/en-procedure-penale-le-droit-de-se-taire-oui-mais-le-droit-de-mentir.html.
- See United States v. BNP Paribas, S.A., No. 14-cr-460, Statement of Facts (S.D.N.Y. June 28, 2014), http://www.justice.gov/opa/documents/ paribas/statement-of-facts.pdf (guilty plea entered by French bank BNP Paribas to charges concerning evasion of U.S. sanctions relating to Iran, Sudan, and Cuba).
- See Debevoise & Plimpton, “Client Update: Deferred Prosecution Agreements Enter into Force in the UK” (Feb. 24, 2014), http://www. debevoise.com/insights/publications/2014/02/deferred-prosecution-agreements-enter-into-force__ (follow “Download PDF” hyperlink).
The Fight Against Overseas Corruption: Why Does France Lag? Continued from page 18
legislature established a new national prosecutorial office to take the lead in complex financial crimes, including those that are “geographically dispersed,” and also extended whistleblower protection and gave standing to some voluntary organizations to instigate criminal investigations.23 The French chapter of Transparency International regularly joins the OECD in expressing concern about France’s track record, and urges stronger prosecutorial efforts.24 An inter- ministerial body, the Service Central pour la Prévention de la Corruption, was created in 1993 to coordinate efforts relating to corruption (both domestic and overseas), and issues annual reports summarizing the situation and urging greater efforts.25 But given the ingrained nature of the existing procedures and traditions summarized here, real change
may take time. In the meantime, French corporations must remain vigilant about the risk of prosecution for overseas illicit payments — but for the moment the biggest risk is that their activities may provide a jurisdictional hook to U.S. and
U.K. prosecuting authorities.
Frederick T. Davis Antoine Kirry
Frederick T. Davis is of counsel and Antoine Kirry is a partner in the firm’s Paris office. They are members of the Litigation Department and White Collar Litigation Practice Group. The authors may be reached at email@example.com and firstname.lastname@example.org. Full contact details for each author are available at www.debevoise.com.