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Kami Haeri
Quinn Emanuel Urquhart & Sullivan, Paris
kamihaeri@quinnemanuel.com

Valérie Munoz-Pons
Quinn Emanuel Urquhart & Sullivan, Paris
valeriemunozpons@quinnemanuel.com

 

French courts have been closed since 16 March 2020 on the order of the Ministry of Justice.^[1] However, courts have continued to provide necessary services for hearings and matters related to ‘essential litigation’. All other proceedings have been suspended. Similarly, police have been advised to give priority to investigations in flagrante delicto that present a clear threat to public order and necessitate rapid judicial response. Investigative services and the public prosecutor’s department specialising in matters of economic delinquency, such as the Central Office for the Fight Against Corruption and Financial and Fiscal Infractions (OCLCIFF), the National Financial Prosecutor’s Office (PNF) or the financial division of the investigative services of the Paris Judicial Court, have not issued official statements on how they continue to operate. Nonetheless, in practice, it appears that these organisations are applying the recommendations of the Ministry of Justice and are postponing the processing of traditional cases in order to focus on more urgent matters. As a result, almost all hearings, depositions, investigations and custody hearings, and meetings and appointments scheduled with judges and police services have been postponed sine die. As of 5 May, the French Minister of Justice has not spoken publicly about the end of the judicial lockdown. However, we expect the French courts and investigative services to gradually resume activity starting 11 May 2020.

The French Anti-Corruption Agency (AFA) was created by the Transparency, Anti-Corruption and Economic Modernisation Act 2016-1691 of 9 December 2016 and is known as the ‘Sapin II Law’ after the name of the minister who drafted it. The AFA is a service with national scope placed under the joint authority of the Minister of Justice and the Minister for Government Action and Public Accounts. The AFA is tasked with detecting, preventing and coordinating anti-corruption efforts. It only intervenes as a preventive measure. Although it can detect offences, it is not a judicial authority and, therefore, is not required by law to investigate, record or prosecute criminal offences. Above all, the AFA’s main task is to carry out audits of the measures and procedures put in place by public and private stakeholders in regards to the prevention and detection of breaches of the duty of probity.^[2]

There are different types of AFA audits:

Audits stipulated in Article 17 of the Act of 9 December 2016

Companies and government-funded industrial and commercial institutions with 500 employees or more and turnover of more than €100m are required to implement the measures provided for in Article 17 of the Act. The AFA is responsible for auditing compliance with this obligation.

Audits stipulated in Article 3 of the Act of 9 December 2016

Central government departments, local authorities and their associated government-funded institutions and semi-public companies, as well as public interest foundations and non-profit organisations, are also required to implement procedures to prevent corruption.

Anti-corruption compliance programmes

Organisations may be required to implement anti-corruption compliance programmes under the control of the AFA pursuant to the compliance programme sanctions stipulated in Article 131-39-2 of the Criminal Code describing supplementary sanctions that may be imposed by a criminal court if a company is found guilty of corruption or influence peddling.

Audits to enforce a judicial settlement

The AFA may carry out audits to enforce a judicial settlement in the public interest (‘Convention judiciaire d’intérêt public’, a French style DPA created by Sapin II Law) as stipulated in Article 41-1-2 of the Code of Criminal Procedure.

As part of the fight against the Covid-19 pandemic, the premises of the AFA were closed on 16 March 2020. The AFA issued a press release on 19 March, which provided important clarifications regarding its audit operations in the context of the current health crisis and lockdown.^[3]

How the AFA audit division will be organised during lockdown

As of 16 March 2020, the AFA’s audit division officers work from home. The Agency announced that its officers are in a position to continue their mission thanks to adjustments made to the organisation of their work.

The purpose of this new organisation is to reconcile both the working conditions of the AFA officers and the constraints of those entities likely to be audited and currently being audited.

The AFA and initiating new audits during lockdown

The AFA Director indicated that he would not initiate any new audits during lockdown. As a result, audits will not resume until after lockdown is lifted, probably on 11 May 2020. It should be stressed that the AFA takes as reference the lockdown period, and not the health emergency period as decided by the Parliament in the Emergency Law No 2020-230, dated 23 March 2020, addressing the Covid-19 pandemic.

The AFA said that it would make sure to accommodate the entities that are particularly affected by the current health crisis at the end of the lockdown period. Furthermore, it indicated that the terms of the new audits (deadlines for submitting documents, conditions for on-site audits, etc) would be set on a case-by-case basis, in close consultation with the audited entities and according to their constraints.

Audits in progress modified during lockdown

Major adjustments were made to investigations already underway before lockdown. The AFA detailed the new terms and conditions of pending investigations, which aimed to provide predictability and legal certainty to the entities being audited:

Onsite audits

The AFA suspended all onsite audit operations. In practice, this was implemented through the following actions:

• informing the entities that received an audit notice prior to lockdown;
• suspending, during the lockdown period, the sending of onsite audit notices that were in draft form and had been prepared with the audited entities; and
• amending audit notices in consultation with the audited entities, at the end of lockdown.

Document verifications

Subject to the agreement of the audited entities, exchanges of exhibits and information could continue remotely. If necessary, the AFA approaches the audited entities to agree on delays and rules for communication on a case-by-case basis.

Finally, the AFA provided useful clarifications for each type of audit:

Audits decided by the AFA Director

• the Agency has informed the concerned entities that final audit interviews are postponed until further notice;
• at the end of the lockdown period, interviews will be rescheduled in consultation with the audited entities;
• for audits that were in the two-month stage when the audited entities can file a written submission and request an interview, the audited entities could request a delay to respond to AFA’s observations, findings of non-compliance and recommendations contained in the interim report. The AFA announced that this delay would be at least equal ‘to the duration of the lockdown period’, or even longer for entities particularly affected by the Covid-19 pandemic.

Audits on the enforcement of compliance programmes ordered by a judicial authority

• the Agency has informed the concerned entities that early audit interviews are postponed indefinitely;
• at the end of the lockdown period, the interviews will be rescheduled in consultation with the audited entities; and
• the AFA also provided details for audited entities that find that the current health crisis is likely to affect their ability to carry out their compliance programme within the deadlines set by their DFA (‘Convention Judiciaire d’Intérêt Public’), these entities are requested to notify the public prosecutor’s office that signed the deferred prosecution agreement;
• the AFA announced that it may, if necessary, continue its investigations beyond the term set by the DFA, subject to the explicit agreement of the signatory public prosecutor and within a timeline set by him.

It is likely that the AFA will gradually resume its activity and audits starting 11 May 2020. Hopefully it will take into account the big shock created by the Covid-19 crisis and the almost two-month lockdown period for most companies based in France and adjust accordingly the way it conducts its audits.

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