A few weeks ago the French oil and gas company, TOTAL, entered into a deferred prosecution agreement (DPA) with the US Department of Justice (DOJ) and paid $245.2 million in penalties in connection with illegal payments made through third parties to a government official in Iran in order to win valuable oil and gas concessions. The DOJ reported that this was the first time there has been a coordinated enforcement action involving France in relation to bribery offences (perhaps reflecting that hitherto there has not been much enforcement of anticorruption laws in France).
Over 7 years TOTAL paid around $60 million in bribes.
Key points in the DPA include:
- TOTAL agreed to cooperate with the DOJ and foreign law enforcement agencies in order to enable prosecutors to investigate and bring others to justice;
- To retain an independent corporate compliance monitor for a period of three years;
- To continue to implement an enhanced compliance programme and internal controls designed to prevent and detect FCPA violations:
In addition to the fine paid to the DOJ, Total also had to pay $153 million to the Securities and Exchange Commission by way of disgorgement of profits and pre-judgment interest (making almost $400m in total, before adding in legal and other costs of the investigation and compliance efforts or any civil litigation costs.
The DPA sets out how the penalty was calculated and sets out the factors which either increased or decreased the base fine. This is particularly interesting from the UK perspective as the proposal for the UK’s own DPAs and sentencing guidelines, which were published as consultation documents as recently as 27th June and on which we have blogged here and here, are significantly based on the American version of DPAs and also American style sentencing guideline calculations for these economic crimes. The TOTAL DPA can therefore be viewed as a case study for general counsel and compliance counsel around the world who may be susceptible to the UK’s Bribery Act 2010, but who have no such risks in, or experience of, US anticorruption enforcement.
Using the statutory fine calculator, the DOJ demonstrates that the fine range was between $235.2 and $470.4, so that the actual fine of $245.2 is almost at the bottom of the scale, which is the result of Total’s efforts to improve their anticorruption systems.
Interestingly, particularly from the UK perspective where the courts have in the past three years or so been highly critical of what they have termed “private deals” between the SFO and the defendants, the DOJ specifies in the DPA that in the event that Total breaches the agreement and a prosecution later proceeds
“TOTAL further acknowledges that any such sentence is solely within the discretion of the court and that nothing in this Agreement binds or restricts the court in the exercise of such discretion”.
This proviso is presumably an acknowledgment that there has more recently been judicial pushback in the US, as there has in the UK, against prosecutors and defendants doing deals which they expect the court to rubber stamp.
There are plenty of other provisions in the DPA which make it difficult for TOTAL to avoid or get away with breaches of its responsibilities in the agreement. It is well worth reading if the reader is not familiar with the style and content of DPAs as it may give a taste of things to come in the UK when DPAs finally come into being.
The related press release also records that
“ In addition, French enforcement authorities announced earlier today that they had requested that TOTAL, TOTAL's Chairman and Chief Executive Officer, and two additional individuals be referred to the Criminal Court for violations of French law, including France’s foreign bribery law.”
The fact that this is recorded signifies that these individuals may have a personal liability for the illegal acts complained of by the DOJ. In an unrelated case TOTAL was acquitted on 8th July 2013 of corruption charges related to the U.N. oil-for-food program in Iraq by a Paris criminal court. The court also cleared 18 individuals, including TOTAL CEO Christophe de Margerie who was accused of misusing assets in the decade-old case into corruption in the program, in which an illicit $1.8 billion flowed to Saddam Hussein's government.
These cases reinforce the vast size, cost and duration of the legal issues which arise for a company and the individuals involved where illegal payments have been made in order to win business. For the company, it is all avoidable, in the UK at least, if you have a robust compliance programme in place.