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A closer look: France - U.S. and French coordinated settlements with Société Générale

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Société Générale (the Bank) announced that it has entered into settlements with the U.S. Department of Justice (DOJ), the U.S. Commodity Futures Trading Commission (CFTC) and the French National Financial Prosecutor (Parquet National Financier, PNF), on 4 June 2018, in order to put an end to IBOR and Libya related investigations conducted by said authorities.

These coordinated settlements are the first example of transatlantic cooperation between France and the U.S. since the enactment of the so-called “Sapin II” Law on 9 December 2016, introducing the first French style DPA (known as the CJIP).

They could mark the beginning of a new era for white collar crime investigations against international companies that are headquartered, present or simply conducting activities in France, if cross-border cooperation (particularly between U.S. and French authorities) is to become common practice.

The settlement between the Bank and the PNF is the fourth CJIP to be concluded in France. While the first CJIP concerned a foreign company and the laundering of the proceeds of tax evasion, the subsequent CJIPs have been executed with French companies suspected of corruption.

In order to put an end to the preliminary investigation opened by the PNF on 18 November 2016 on the grounds of corruption of foreign public officials in relation to the Bank’s business relationships with the Libyan Investment Authority between 2007 and 2010, the Bank has agreed to: (i) be subject to the French Anti-Corruption Agency’s monitorship for two years; and (ii) pay a public fine of EUR250,150,755 to the French Treasury. As the same events were being investigated by the DOJ under the U.S. Foreign Practices Act, the PNF and the DOJ coordinated the settlements and agreed that the same amount (ie EUR250,150,755) would be paid by the Bank to the American Treasury.

The agreement reached between the Bank and the DOJ also resolves investigations regarding alleged manipulation of Libor. The CFTC investigated the same events, as well as alleged manipulation and false reporting in connection with Euribor. The Bank has agreed to pay a fine of USD275 m to the DOJ and a civil monetary penalty of USD475 m to the CFTC.

Such coordinated settlements enable both the authorities and companies to cope with legal uncertainty resulting from lengthy criminal investigations and trial proceedings. Société Générale agreed to pay approximately USD1.3bn in total, in line with the provision booked in its accounts, thereby putting an end to an investigation opened in France only a year and a half beforehand. On 9 May 2018, the DOJ, via its Deputy Attorney General, recommended coordination with other local or foreign authorities in the context of settlement negotiations, to avoid multiple investigations and sanctions for the same misconduct.

It should be borne in mind that the settlement with a company does not prevent individuals from being

prosecuted, as illustrated by the indictment of former Société Générale Treasury Heads in August 2017

in relation to Libor manipulation. It also remains to be seen whether this new approach to co-ordinated settlement will lead to arguments of double recovery – each authority arguing that it should be entitled to receive the full amount of any fine imposed.

Further information

This article is part of the European White Collar Crime Report, a quarterly publication.