Bastille Day Newsletter 2017

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Bastille Day Newsletter
Génie de la liberté


Editor’s Note

Legislative Updates

Enforcement / Court Decisions

Paris Bar vademecum for lawyers carrying out internal investigations

Editor’s Note

Happy 2017 Bastille Day!

Lawyers at Navacelle thought you might be interested in reviewing a selection we made of noticeable events which occurred in France in the fields of corporate criminal liability, criminal procedure and compliance over the past year so we put together the very first Bastille Day Newsletter!

We hope you will find some use to it and will be happy to answer any inquiry you might have in one of the five languages we speak.

Best wishes,

Stéphane de Navacelle

Legislative Updates

The Sapin II law, a new source of liability for companies and individuals

The “Sapin II” law has been designed as a defensive law against the extraterritoriality of foreign legislation (FCPA, UKBA). This new legislation is aimed at strengthening French judicial sovereignty by preventing – through the consolidation of the anticorruption framework – the sanctioning of French companies by foreign judicial and regulatory authorities. The law also aims at avoiding leaking of strategic information and economic espionage when a foreign monitor is appointed.

Starting on June 1st, 2017, large French companies and foreign subsidiaries of French groups (over 500 employees and an average annual turnover over €100 million) have to implement mandatory compliance programs to prevent and detect corruption (code of conduct, internal reporting procedure, risk mapping, etc.).

Compliance with these provisions will be monitored and sanctioned by the new French Anticorruption Agency (AFA) – whose organization is somewhat clarified by the Decree of March 15, 2017 – endowed with increased resources and headed by judge Charles Duchaine. The AFA will have the power to impose injunctions and fines of up to 200.000€ for individuals and €1 million for legal persons.

An additional compliance-related penalty (monitorship) may also be imposed to legal persons convicted for offences of corruption or influence peddling.

If medium and small-sized companies do not yet fall within the scope of this compliance obligation, they are already subject to the implementation of internal reporting procedures.

Companies with over 50 employees will have to ensure whistleblower protection (broadly defined by the law) and implement graduated internal reporting procedures under the penalty of incurring civil or criminal liability. Companies will have to guarantee the anonymity of the whistleblowers and of the person identified as well as the confidentiality of information.

The “Sapin II” law also introduces into French law the possibility of signing a convention judiciaire d’intérêt public (‟French DPAˮ) – proposed by the Public Prosecutor before the initiation of criminal proceedings or by the investigating magistrate when an instruction is ongoing – for select probity offences [See on this topic CJIP: the French DPAˮ].

The “Sapin II” law also provides a framework for lobbyists with the creation of a digital register of “interest representatives” (i.e., lobbyists) to the High Authority for the transparency of public life (HATVP). The draft Decree which has been leaked to the press, however, shows significant shortcomings. Interest representatives will have no obligation to mention their public statements, the names of parliamentarians met or the date of their meetings, and the information covered by the register would only be published once a year.

The “Sapin II” law finally prohibits all – direct or indirect – advertisements for high-risk financial products sent by email and likely to reach individual investors. Operators incur a fine of up to €100.000. The French Financial market authority (AMF) recently defined the categories of financial contracts covered by this measure (binary options, contracts for difference (CFD) and financial currency contracts (Forex)).

These new compliance obligations imposed on companies are part of a wider trend towards transparency and corporate accountability, as outlined by the enactment of the law No 2017-399 on the duty of care of mother companies on March 27 [See on this topic Duty of care of parent and contracting companies law”].

CJIP: a French DPA

Article 22 of the law which came into force on the 9th December 2016 regarding transparency, the fight against corruption and the modernization of economic life – otherwise known as “Sapin 2” – has confirmed the introduction of a deferred prosecution agreement into French criminal law.

The public interest judicial convention (CJIP) comes after the convention concerning public interest compensation which was criticized by the French Council of State (Conseil d’État) as not enabling the criminal justice system to ensure fully its mission, namely to restore public peace and to prevent repeat offenders.

The introduction of this mechanism illustrates the legislator’s desire to respond to criticisms of the OCDE, amongst which was the absence of sanctions towards businesses for corruption in France, and respond to the harsh fines imposed upon French businesses in the United States.

The CJIP can be proposed to a legal entity being questioned over a breach of probity (corruption, influence peddling, money laundering, laundering of tax fraud proceeds and other related offences) by the public prosecutor, as long as no investigating magistrate in involved, in other words at the inquiry stage, or after transmission of the file by the investigating judge once, as part of judicial information, the legal entity being questioned acknowledges the facts and accepts the criminal qualification held.

The decree of April 27, 2017 regarding the CJIP and judicial obligations specifies that the proposed settlement agreement is addressed to the representatives of the legal entity by registered letter and includes a deadline by which the offer must be accepted.

Simultaneously, the public prosecutor will inform the victim, if identified, of his/her decision to propose the conclusion of a CJIP to the legal entity in question. The public prosecutor will then outline a period within which the victim can transmit to him/her any evidence establishing the reality and extent of his harm.

The convention proposed by the public prosecutor can impose one or more obligations upon the legal entity whose financial sanction is considered to be of public interest to the Treasury and the amount of which will be proportional to the advantages wrongly gained from the misconduct identified, but will be capped at 30% of the average sales revenue of the last three years, as well as the implementation of a compliance programme for a maximum duration of three years and compensatory damages once the victim is identified.

Once the convention is accepted by the legal entity, a validation request emanating from the public prosecutor, accompanied by the accepted CJIP and of the procedure will be transmitted to the President of the Tribunal de Grande Instance (TGI).

Both the entity’s legal representatives and the victim are notified of the request by registered letter with acknowledgement of receipt. They are also informed of the date, time and address of the hearing.

During the public hearing, the President of the TGI will conduct the hearing of both the legal entity and the victim(s) as well as counsel.

Following the hearing, a decision of validation or non-validation is notified to the representatives of the legal entity and the victim. The decision cannot be contested.

In the case of an ordinance of validation, the legal entity has a ten-day period to exercise his right to withdraw by sending a registered letter with receipt of acknowledgement to the public prosecutor. If the entity decides not to exercise its right to withdraw, the obligations laid out in the CJIP come into play.

The legal entity will then have to pay the public interest fine to the Public Finances General Directorate by sending a certified cheque within a year and it will have to put in place its compliance program under the supervision of the French Anti-corruption Agency (AFA), the recipient of the decision of validation and of the convention.

If the obligations are properly executed then the public prosecutor will notify the legal entity and the victim’s representatives that the public proceedings have ended. However, if these obligations are not properly carried out then the public prosecutor will declare the execution of the convention as being interrupted and will be free to resume the proceedings.

In this case, and in contrast to what happens if the summons procedure fails due to a predetermined guilty plea, the CJIP procedure is joined to the file for the procedure which the jurisdiction is handling so that the partial execution of the obligations imposed upon the legal entity, in the case of a conviction, can be taken into account.

In the same way as a US DPA mechanism and conversely to the summons procedure for a predetermined guilty plea, the CJIP doesn’t deliver a statement on the defendant’s culpability and is not of the same nature as a conviction judgment. The CJIP is, therefore, not registered on the criminal record of the legal entity.

Duty of care of parent and contracting companies law

The idea for this text stems from the necessity to adapt “the legal framework to the new reality of globalization” after the Rana Plaza disaster on April 24, 2013.

According to the authors of the bill filed at the National Assembly on February 11, 2015, the aim of this text is to give more responsibilities to “transnational companies in order to prevent the occurrence of disasters in France and abroad and to obtain reparation for the victims in case of violations of human rights and environmental damage”.

Obligation for parent and contracting companies to implement a monitoring program

Companies which have their registered office in France and which, at the end of two fiscal years employ at least 5000 people within the company and their French subsidiaries or employ at least 10 000 people within the company and their French and foreign subsidiaries, have the obligation to implement a monitoring program.

The law also aims at subsidiaries or controlled companies which exceed the thresholds mentioned as soon as the company which controls them implements and executes a monitoring program on the activities of the company and the activities of all of its subsidiaries or controlled companies.

This program includes reasonable monitoring measures allowing the identification of risks and the prevention of severe violations of human rights and fundamental freedoms, damage to the health and security of individuals or to the environment resulting from the activities of the company, the activities of the companies it controls as well as subcontractors and suppliers with whom these companies have an established commercial relationship.

Among these monitoring measures, the following are cited:

  • Risk mapping aimed at identification, analysis and prioritization of risks
  • Regular evaluation procedure of the situation of subsidiaries, subcontractors or suppliers with whom an established commercial relationship is maintained
  • Actions for risk mitigation or prevention of several violations
  • A mechanism for warning and collection of reports relating to the existence or the realization of risks established in coordination with the company’s representative labor organizations.
  • A mechanism allowing the monitoring of measures implemented and the evaluation of their efficiency

This program is now part of the business report mentioned in Article L225-102-1 of the Commercial Code.

Removal of the fine provision by the Constitutional Council

Initially, the text provided that a company which would violate this obligation could be ordered to respect them after a formal notice and that it could be sentenced to pay a civil fine of 10 million euros.

This possibility of issuing a fine was rejected by the Constitutional Council in its decision dated March 23, 2017 since the terms of the obligation imposed to the company was not defined in sufficiently clear and precise terms.

Henceforth, in case of non-compliance with the duty of care, the company may be receiving formal notice to comply with the obligations set forth in this law. If the company does not comply with its obligations within three months from the receipt of the notice, the competent court may, at the request of a person having a legitimate interest in this regard, order the company to respect its obligations under financial compulsion.

The law also provides that any person who can establish a legitimate interest in this regard may take action against the company in order to obtain compensation of the damage that compliance with its obligations could have helped to avoid.

Commentators have regarded this new possibility as a new type of vicarious liability. However, it should be noted that the existence of a direct causal link between the infringements and the damage remains a condition to hold the parent company liable. Still, under this new law, a parent or a contracting company may be held liable for a damage which first originated in the acts of one of its subsidiaries as soon as its failure to implement a monitoring program is a direct cause of the damage.

Transposition of the EU’s Fourth Anti-Money Laundering Directive

The European Union’s Fourth Anti-Money Laundering Directive (the Directive) came into force on 26th June 2015. Its aim was to prevent the use of the Union’s financial system for the purpose of money laundering and terrorist financing. It required European member states to update their respective money laundering laws and “transpose” the new requirements into local law by 26th June 2017.

A key role was given to the principle of risk analysis and adequate safeguards. Among its main elements, the Directive required Member states to carry out a national risk assessment of their exposure to money laundering and terrorist financing and to maintain central registers on the beneficial ownership of corporations, reinforce the rules on Customer Due Diligence, widen the definition of Politically Exposed Persons (PEP) and include tax crimes as a predicate offence for money laundering.

The ordinance n°2016-1635 (the Ordinance) reinforcing the French anti-money laundering and terrorist financing dispositive was passed on December 1st, 2016 to transpose the Directive.

The prerogatives of the French Financial Intelligence Unit (Tracfin) have been widened. Tracfin’s right of communication with other obliged entities has been extended to entities which are not subject to anti-money laundering regulations. As an example, the right of communication now applies to the institution in charge of managing attorneys’ pecuniary settlements (CARPA). The Ordinance also allows Tracfin to transmit collected information to several administrative authorities and to foreign Financial Intelligence Units and reinforces Tracfin’s right to oppose any suspicious transaction not yet executed.

The Ordinance also imposes the obligation on companies and other legal entities to record their ultimate beneficial owners with the Companies Register. This register is notably accessible to Tracfin, customers, tax administration and professionals.

The scope of the anti-money laundering legislation has been widened by the inclusion of payment or virtual money institutions conducting business in France, authorized banking intermediaries, virtual money converting platforms, providers of gambling services (for transactions above €2000), traders of precious commodities accepting large cash payments and crowdfunding intermediaries.

Finally, the ordinance reinforces supervision schemes by imposing new obligations upon companies in terms of internal procedures and by implementing due diligence requirements. The ordinance also reinforces the range of sanctions which can be taken. The ACPR is now allowed to exercise control and take police measures. It may impose pecuniary sanctions (up to €100mn or 10% of the annual turnover). Sanctions may also be taken against individual directors or employees in charge of the anti-money laundering structure.

Double Jeopardy

Cumulation of criminal and administrative penalties

On March 30, 2017, Paris’ Criminal Court refused to convict the company “Altran” and several of its former executives for ‟forgery and use of forged documentsˮ, ‟dissemination of misleading informationˮ and ‟inaccurate financial statementsˮ, considering that if criminal offences were characterized, prosecution was barred by reason of a first conviction handed down by the French Financial Market Authority (AMF) in 2007.

This recent decision follows the progressive evolution of domestic case law, protective of legal certainty and inspired by European decisions.

Since 2013, the Court of Justice of the European Union has prohibited the cumulation of criminal and administrative penalties equivalent to criminal sanctions on the ground of Article 50 of the Charter of Fundamental Rights of the European Union (Åklagaren v. Åkerberg Fransson, February 26, 2013).

This jurisprudential stance was quickly confirmed by the European Court of Human Rights (Grande Stevens v. Italia, March 4, 2014) on the grounds of Article 4 of the Additional Protocol No 7 of the Convention, and by the French Constitutional Council (John L. and others, March 18, 2015) which considered double jeopardy as unconstitutional in stock market matters –pending EADS proceedings for insider trading.

These decisions repealed de facto the French Supreme Court’s position which held, in a decision of January 22, 2014 that the achievement of general interest objectives recognized by the European Union allowed not to extend the scope of non bis in idem protection in stock market matters.

Cumulation of criminal and tax penalties

The scope of the non bis in idem principle, however, does not extend to the case of criminal and tax penalties, as held by the French Constitutional Council in its preliminary ruling on constitutionality (question prioritaire de constitutionnalité) on June 24, 2016 in the Cahuzac and Wildenstein cases.

Double jeopardy may hence apply for the most serious cases, the threshold of seriousness depending on ‟the amount of the evaded or defrauded duties, the nature of the prosecuted person’s behaviors or the circumstances of its interventionˮ.

By a landmark decision on February 22, 2017, the French Supreme Court confirmed the possibility of cumulating criminal and tax penalties by explicitly specifying that the prohibition of double jeopardy for the same facts may only be raised when offences fall within the jurisdiction of criminal courts.

This decision is in line with European case law (Åklagaren c/ Hans Åkerberg Fransson, ibid) according to which the non bis in idem principle does not preclude Member States from pronouncing tax and criminal sanctions for the same facts – violation of VAT reporting obligations – insofar as the tax penalty is not deemed criminal in nature.

In its decision on November 15, 2016 (A. and B. v/ Norway), the European Court of Human Rights, however, indicated that double jeopardy was only allowed when it resulted from an integrated, perfectly organized and predictable system – tax increase in administrative proceedings and conviction for tax fraud in criminal proceedings – and when both proceedings were linked by ‟a sufficiently close material or temporal connectionˮ.

Non bis in idem and guilty plea / DPA

French protection against double jeopardy also extends at the international level and several recent decisions confirmed that the non bis in idem principle applies to guilty-pleas entered into in the United States of America (Paris Court of Appeal, September 21, 2016) or to DPAs (Paris Criminal Court, Oil for food II, June 18, 2015), such agreement qualifying as a judgment under French law.

Similarly, it is most likely that the prohibition of double jeopardy will apply under the provisions of the new Sapin II law for transparency, the fight against corruption and the modernization of economic life providing for a French DPA (convention judiciaire d’intérêt public) in case of probity offences (corruption, influence peddling, etc.).

Data Protection

On December 17, 2015, the European Parliament and Council of the European Union agreed on the final draft of the EU General Data Protection Regulation (GDPR). This regulation, which will become applicable on May 25, 2018, brings significant changes to EU data protection laws and will require businesses to adapt their practices in terms of data protection (appointment of a data protection officer, data mapping, prioritization of compliance actions, risk management, organization of internal processes, keeping documents on compliance measures).

Changes to the Statute of Limitation

The new law No 2017-242 of February 27, 2017 doubled the statutes of limitations for the prosecution of criminal offences, extending them to 20 years for the prosecution of crimes (felonies) and to 6 years for the prosecution of délits (misdemeanors).

The statutes of limitations for the prosecution of contraventions (petty offences) remains unchanged as well as the derogatory statutes of limitations for the prosecution of particularly serious felonies and misdemeanors.

Concerning clandestine offences (breach of trust, misappropriation of corporate assets, tax fraud and other financial and economic offences), the law introduced a deadline of 12 years for misdemeanors and 30 years for felonies after which the prosecution of offences, even if not discovered, is time-barred. This period starts running from the date on which the offence was committed.

The Law does raise a number of issues concerning, in particular, the preservation of evidence and court congestion.

Moralization of public life

On June 1, 2017, the French Government presented a new draft bill on the moralization of public life, imposing a control over the parliamentary expense allowance (IRFM) and prohibiting any member of the Parliament to hire a member of his/her family. The draft bill also removes parliamentary reservation.

A future constitutional draft bill will enshrine the limitation of the number of multiple directorships and functions, remove the Republic Court of Justice and the right for former Presidents of the Republic to sit at the Constitutional Council.

Some expected provisions were however absent from the bill, notably the impossibility to run for an election with a criminal record, a tighter framework for lobbyists’ practices, the strengthening of political parties’ control, the suppression of the monopoly of prosecution in case of tax fraud, and the suppression of the inviolability of the President of the Republic and Parliamentarians.

Enforcement / Court Decisions

Iran sanctions not a complete green light yet. In January 2016, the Council of the European Union lifted all nuclear-related economic and financial EU sanctions against Iran. However, some restrictions remain in force: asset freezes and visa bans for individuals and entities responsible for grave human rights violations and ban on exports to Iran of equipment which might be used for internal repression and of equipment for monitoring telecommunications. These measures are regularly updated and will remain in place. The last update, from 11 April 2017, extended them until April 13, 2018. On June 7, 2017, the U.S. Senate advanced a package of new sanctions on Iran.

Panama Paper triggers enforcement action. Since April 2016, French magistrates are investigating 26 institutions and individuals believed to have laundered money through Panama. These investigations arise out of the multijurisdictional scandal of the Panama Papers.

Data Protection creates new grounds for increasing corporate liability. In July 2016, the CNIL served a formal notice to Microsoft Corporation following on site and online inspections for excessive collection of personal data, tracking of user’s web-browsing without their consent and a lack of security and confidentiality of users’ data. Microsoft implemented several measures in order to comply with the requirements stated in the formal notice which led the Chair of the CNIL to consider the company had complied with the French Data Protection Act and the formal notice could therefore be closed.

New trial after DPA violates human rights. On September 21, 2016, Paris Court of Appeal held that the “muzzle clause”, a standardized clause included in most DPAs which prevents the defendant from making statements contradicting the statement of facts, deprived the accused of the right to a fair trial under article 6 of the ECHR as it prevented him from denying his guilt before the Court. The Court thus considered that the defendant could stand a fair trial and that public action was therefore extinct in France.

Lack of state of the art safeguards can lead to liability in case of fraud. On September 23, 2016, the Versailles Appeal Court slashed the damages due by the former trader Jérome Kerviel to Société Générale. His fine was cut to €1 million from €4,9 billion. The Court held that the patchy nature of Société Générale’s control systems, which created a high degree of vulnerability, was to blame and that the trader was only partly responsible for the losses.

Lava Jato reaches France in several matters. In October 2016, French financial prosecutors (PNF and OCLCIFF) launched an investigation into a €6,7 billion 2008 contract between French naval supplier DCNS and Brazil which included the sale of five submarines, concerning potential ‟corruption of foreign officialsˮ. This probe only disclosed last May that it is linked to the wider Brazilian ‟Lava Jatoˮ investigations initiated in 2014 to investigate alleged bribery involving hundreds of politicians and public figures.

Tax Fraud and Money Laundering: no hiding for French public officials. On December 8, 2016, the former French budget minister was sentenced to three years in prison for money-laundering and tax fraud for holding an undeclared Swiss bank account.

Diesel emissions scandal is not for German car manufacturers only. On February 9, 2017, after investigating on polluting emissions from diesel vehicles, the French Consumer Authority (DGCCRF) announced that it provided the results of its investigations on Peugeot Citroën automobiles SA and FIAT Chrysler to the Prosecutor’s office. The DGCCRF also provided information about Volkswagen (February 2016) and Renault (November 2016). Paris’ prosecutor opened criminal investigations in these two cases for deception. The DGCCRF is pursuing its investigations, including those concerning other manufacturers.

Soon to be first French DPA? On February 2017, HSBC, who is being investigated by prosecutors in at least five countries and had received requests from various regulatory and enforcement authorities, denied knowledge of any misconduct. However, the French financial Prosecutor requested a trial for HSBC Holdings and its Swiss private banking unit on suspicions it helped customers dodge taxes in 2006-2007. HSBC is currently negotiating the possibility to resort to a convention judiciaire d’intérêt public.

Extradition requests will receive thorough review. On February 22, 2017, the Paris Court of Appeal rejected a UK Serious Fraud Office extradition request for Stephane Esper, a former Société Générale trader, who the authority wants to stand trial for manipulating the benchmark rate for the euro on the grounds that Esper’s alleged conduct, which took place in France, wasn’t illegal a decade ago when it occurred.

Arbitration procedure leads to criminal liability. On March 8, 2017 in the case of the 400 million-euro payout by the French state to businessman Bernard Tapie in 2008, Stéphane Richard, Orange Chief executive and former chief of staff to Christine Lagarde, then French finance minister, was summoned to testify in IMF chief Christine Lagarde’s trial before the Cour de Justice de la République in December 2016. As he was also under investigation in this same case, he refused at the last minute to appear as witness.

Settling the matter is not the only option. On March 20, 2017, it was announced that UBS AG and UBS France will face trial for tax fraud after UBS refused the Financial prosecutor’s proposal for settlement (reportedly a $1.1bn fine).

French PNF will not sit and watch other prosecutors do their job. On March 16, 2017, French authorities joined the U.K. in a corruption investigation of Airbus Group SE targeting fraudulent practices related to sales of planes and aircraft financing. The probe by the Parquet National Financier followed steps by the U.K.’s Serious Fraud Office to look into possible bribery and corruption in Airbus’s civil aviation business related to third-party consultants, the Toulouse, France-based plane maker. Terrorist financing. In April 2017, Paris prosecutors opened a preliminary inquiry into alleged dealings between Lafarge Holcim and sanctioned groups in Syria following a complaint by the French Finance Ministry. Lafarge CEO (Eric Olsen) resigned after the world’s largest cement maker admitted having paid armed groups to keep a factory operating in war-ravaged Syria.

False Testimony. On May 14, 2017 Michel Aubier, former chief of the pneumology department of the Bichat hospital in Paris, was conditional sentenced to 6 months and 50,000 euros fine for “false testimony under oathˮ for having declared before the senatorial commission of inquiry on the cost Economic and financial consequences of air pollution that he had “no connection with the economic playersˮ of the sector while he was employed since 1997 by the Total group.

Business calls should be discussed with counsel: Prosecutors otherwise. In April 2017, Paris prosecutors opened a preliminary inquiry into alleged dealings between Lafarge Holcim and sanctioned groups in Syria following a complaint by the French Finance Ministry. Lafarge CEO (Eric Olsen) resigned after the world’s largest cement maker admitted having paid armed groups to keep a factory operating in war-ravaged Syria.

Make sure your expert actually is not conflicted: first major expert found guilty. On May 14, 2017 Michel Aubier, former chief of the pneumology department of the Bichat hospital in Paris, was conditional sentenced to 6 months and 50,000 euros fine for “false testimony under oathˮ for having declared before the senatorial commission of inquiry on the cost Economic and financial consequences of air pollution that he had “no connection with the economic playersˮ of the sector while he was employed since 1997 by the Total group.

The CNIL reacts to targeted advertising. On May 16, 2017, following inspections on site and online, as well as a documentary audit, Facebook was sanctioned by the CNIL for several violations of the French Data Protection Act. The investigations revealed that Facebook had proceeded to the compiled action of personal data in order to display targeted advertising and that it collected data on its users’ browsing data on third party websites without their knowledge. The Restricted Committee pronounced a public sanction of €150,000 against Facebook Inc. and Facebook Ireland.

Forex manipulation. On May 24, 2017, the New York Department of Financial Services fined French bank BNP Paribas US$350 million for manipulating foreign exchange rates and improperly sharing customer information between 2007 and 2011.

Compliance – AML legislation. On May 30, 2017, the Autorité de Contrôle Prudentiel and Resolution has issued a reprimand against BNP Paribas, with a monetary penalty of € 10 million, due to breaches in its “organization of suspicious transaction reports to Tracfinˮ.

Russia sanctions not gone just yet. On June 19th, 2017, the Council of the European Union voted to extend sanctions so to prohibit EU businesses from investing in Crimea, and introduced measures targeting tourism and imports of products from Crimea for another year.

Bien mal acquis. On July 7, 2017, the first trial on the “Bien mal acquis” case ended. Teodoring Obiang, eldest son of Equatorial Guinea Teodoro Obiang, faces a three-year prison sentence. The Tribunal Correctionnel will render its decision by the end of October 2017.

Paris Bar vademecum for lawyers carrying out internal investigations

Navacelle translated, for information purposes, the Vademecum for Attorneys tasked with carrying out an internal investigation, issued by the Paris Bar on July 12, 2017.


Vademecum for Attorneys tasked with carrying out an internal investigation

Through a resolution passed on March 8, 2016, the Paris Bar Council considered that internal investigations fell within the scope of an attorney’s professional tasks (excluding the activity of research and investigation provided for by article L621.1 of the National Security Code), under the scope of article 6.2 al. 5 of the National Regulations of the lawyers’ profession (RIN) (expertise activity), or under the scope of articles 6.1 and 6.2 al. 2 of the RIN (assistance and counselling activities).

In accordance with this resolution, recommendations were made with respect to this activity for the purpose of their incorporation in the RIBP.

Some of these recommendations are general in scope (1), others are specific to internal investigations carried out in the context of the assistance and advisory activities of attorneys (2) or to the internal investigation carried out by an attorney in his/her capacity as an expert.

 1. General recommendations

1.1 An attorney tasked with carrying out an internal investigation must comply with, under all circumstances, our essential principles (article 1.3 RIN). He/she will comply with the essential principles of conscience, independence, humanity, loyalty, delicacy, moderation, competence and prudence. He/she will refrain from exerting pressure on individuals he/she interviews;

1.2 The attorney will execute, with his/her client or the persons who appointed him/her, a contract which, in addition to the determination of costs, will define the scope of his/her retention;

1.3 Before any contact with third parties for the purpose of carrying out the internal investigation, he/she will explain his/her role and its non-coercive nature; inform them that they may not claim any attorney-client privilege with respect to exchanges and that what they say may be transcribed in his/her report in whole or in part.

2. Specific recommendations for the activity of internal investigation carried out by an attorney in the context of an assistance and counselling activities (articles 6.1 and 6.2 al. 2 of the RIN)

2.1 An attorney tasked with carrying out an internal investigation in the context of an assistance or counselling activity may be the usual attorney of the client who commissioned him/her or an attorney who has not previously worked for him/her;

2.2 In all circumstances, he/she will mention to the individuals he/she interviews in the course of the internal investigation that he/she is not their attorney but that he/she acts on behalf of the client who retained him/her to carry out this investigation;

2.3 He/she will explain to interviewees and to other persons contacted for the needs of the investigation that the attorney-client privilege binds him/her but not the client. Therefore, what the interviewee says what they say and any other information gathered during the investigation may be used by his/her client, so may be the report he/she may provide to his/her client.

2.4 He/she will inform the interviewee that he/she may be assisted or advised by an attorney when it appears, prior to or during the interview, that the interviewee may be held accountable for any wrongdoing at the outcome of the investigation;

2.5 When a statement is transcribed verbatim, he/she will offer to the interviewee an opportunity to review the statement and to sign it. He/she will refrain from providing him/her with a copy if the preservation of the confidentiality of the investigation requires otherwise – with regards to French or foreign rules on confidentiality -;

2.6 He/she may assist his/her client in a mutual agreement procedure or in a dispute, related or subsequent to the internal investigation, but will refrain from representing his/her client in such a procedure directed against an individual that he/she has interviewed during the internal investigation.

3. Specific recommendations for the activity of internal investigation carried out by an attorney in the context of an expertise activity (article 6.2 al. 5 RIN)

3.1 An attorney tasked with carrying out an internal investigation, in the context of an expertise activity, will not accept this mission if he/she already is the counsel, usual or not, of the person(s) retaining him/her;

3.2 He/she will mention that in the context of an expertise mission, the internal investigation is not subject to the attorney-client privilege; he/she will ensure that documents, correspondence and other exchanges related to this investigation are split from the matters he is tasked with carrying out as an attorney, in order to preserve the attorney-client privilege by which he/she is bound in this capacity.

3.3 When a deposition is transcribed verbatim, he/she will offer the interviewee an opportunity to review the statement and to sign it; he/she will provide a copy upon the interviewee’s request, except in specific circumstances.

3.4 He/she will refrain from representing one of the parties in any procedure relating to or arising from the internal investigation, even in an amicable procedure.