The French National Financial Prosecutor’s Office (Parquet National Financier - PNF) published new Guidelines on public interest judicial agreements (Convention Judiciaire d’Intérêt Public - CJIP) on its website on 16 January 2023, updating those published jointly with the French Anti-Corruption Agency (AFA) on 26 June 2019.
The Guidelines, intended for economic entities as well as foreign judicial authorities, aim to improve predictability and legal certainty of this judicial settlement available to corporate entities since 2017 and reinforce cooperation of targeted entities with the judicial authority.
The PNF notably specifies the conditions for entering into negotiations and sets out the details of the calculation of the public interest fine.
Reinforcement of the requirement of good faith on the part of the company
Three previous circulars applicable to the CJIP (2016/F/0138/FA1, 2020/F/0028/FA1 and 2021/F/0122/FC4) already provided that whether a CJIP is appropriate or not is assessed with regard in particular to the entity’s past record, the spontaneous nature of the disclosure of facts to the PNF and the degree of cooperation shown by the entity.
In 2019, the AFA and the PNF indicated that the spontaneous implementation of a compliance programme and the conduct of an internal investigation – the conclusions of which should be provided to the authorities – were viewed favourably.
The Guidelines reaffirm and specify each of these incentives, which are referred to as “good faith conditions”. While refraining from imposing, beyond the legal criteria, other prerequisites for entering into a CJIP, the PNF invites the entity wishing to enter into negotiations to:
- spontaneously disclose to the PNF the facts discovered, within a reasonable period of time from the moment when the entity discovered them, it being noted that the disclosure of facts that the PNF was not aware of is particularly taken into account;
- actively participate in establishing the truth by conducting an internal investigation of the facts, the persons involved and, where applicable, the malfunctions in the compliance system that led to the offences. The entity is encouraged to provide this internal report to the PNF or a detailed presentation of its content and in particular the details of the investigative acts.
Other criteria of good faith are taken into account, such as the rapid adoption of corrective measures, adaptation of the group’s strategy to the risks identified, changes in the management team if necessary, and identification and compensation of victims.
Clarification on the confidentiality of communications
Article 41-1-2 of the French Code of Criminal Procedure provides that if the president of the court refuses to validate the CJIP or that the entity withdraws from the agreement, the public prosecutor may not refer to the statements made or the documents handed over by the entity in connection with the unsuccessful CJIP, in proceedings before the investigating judge or trial court.
The PNF notes that this does not prevent the prosecutor from using documents and information obtained through judicial investigative acts.
The Guidelines specify that, in practice, and in agreement with the entity:
- oral exchanges are conducted under a principle of confidentiality and “foi du palais” (the unwritten principle of confidentiality between justice professionals) that governs exchanges between lawyers and magistrates;
- evidence obtained through requisition or seizure can still be used in the proceedings;
- documents submitted during the negotiations by the entity or its lawyers are not used in the proceedings.
Calculation of the public interest fine
Maximum fine incurred
The PNF now considers that the turnover to be taken into consideration for calculating the maximum fine may be that of the group and not that of the company strictly concerned by the breaches, thus changing the indications given in the 2019 circular which stated that “furthermore, the turnover taken into account is the worldwide turnover of the sole entity that is the subject of the proposed agreement. For example, if the legal entity likely to be the subject of an agreement is a subsidiary of a large group, only the turnover of this subsidiary will be taken into account” (aforementioned Circular no. 2016/F/0138/FA1, p. 17). As a result, the public interest fine paid to the Treasury by a subsidiary could, in theory, reach 30% of the average annual turnover of the group to which it belongs.
Method of calculation
The public interest fine is presented as consisting of two parts, already observed in practice: a disgorgement part (“partie restitutive”), based on the benefits derived from the offence and an “afflictive” part (“partie afflictive”) (previously referred to as the punitive part), dependent on various mitigating and aggravating factors.
The PNF sets out the approach adopted in practice:
- first, the list of direct and indirect benefits resulting from the breaches is established with the company (these may include expected future gains or the benefits derived from a mere attempt);
- secondly, the principles and methods of evaluating those benefits are discussed; such evaluation may, according to the PNF, be carried out by the company under the PNF’s supervision
- finally, the proposed estimate is cross-checked on the basis of available information.
Regarding the afflictive part of the fine, the PNF confirms the applicability of the mitigating factors already detailed with respect to corruption in the 2019 AFA joint guidelines, which are: spontaneous disclosure of the facts, active cooperation of the company in the investigation and relevance of the internal investigations carried out by the company, establishment of an effective compliance programme and implementation of corrective measures(Joint AFA and PNF Guidelines of June 2019, p. 13). In addition to these factors, the PNF confirms that the following elements are now taken into account: the fact that offenses are a one-off incident, the effectiveness of the internal alert system, the unequivocal recognition of the facts by the legal entity and the prior compensation of the victims.
As aggravating factors, it is confirmed that the criminal record of the legal entity, the use of corporate resources to conceal the acts and the repeated or systematic nature of the breaches are taken into account (Joint AFA and PNF Guidelines of June 2019, p. 13). The PNF provided further details of the following factors: any form of obstruction of the investigation, the large size of the company, the inadequacy of the compliance programme, the creation of instruments to conceal the breach, the involvement of a public official and the seriousness of the disruption to public order.
Each of these factors is assigned a multiplier, which is subject to a cap specified by the PNF. This method seems to be inspired by the multipliers used by the US Department of Justice in the context of negotiated agreements such as Deferred Prosecution Agreements.
Clause covering facts discovered subsequently
The Guidelines propose the inclusion in the agreement, on an exceptional basis and if the acts of bribery or influence peddling could not all be listed at the time of signature, of a clause covering acts of the same nature committed in a given territory and during a given period that may be discovered subsequently, provided that these acts were not knowingly concealed.
The inclusion of such a clause will require at least a detailed investigation report to be submitted to the PNF and will lead to an increase in the fine.
These Guidelines reflect evolutions in practice of the PNF – which signed its fifteenth CJIP in December 2022 – and set out foreseeable developments. Some of these developments will undoubtedly give rise to extensive discussions with practitioners in the context of future negotiations.