Corruption. Conflicts of interest. Criminal risks in business relationships

Preventing risky practices. Investigating alerts. Defending the company.

A corruption case rarely begins with an envelope passed under the table.

It may arise from a gift accepted without any real rule, an intermediary who was not properly vetted, a long-standing relationship with a public decision-maker, a contract awarded in a hurry or a conflict of interest that no one thought to formalise.

Taken in isolation, each of these elements may seem explainable. Brought together by a criminal investigation, they can tell a very different story.

When a company faces a suspicion of a breach of probity, the proceedings therefore never concern just one act or one person. They also call into question its decision-making channels, its purchasing processes, its relations with public actors, its internal controls and its governance.

Vouland Avocats assists companies, their directors and their managers in preventing these risks, establishing the facts when an alert arises and building their defence when criminal proceedings begin.

The criminal risk behind the business decision

Corruption, influence peddling, favouritism, unlawful taking of interest, extortion by a public official or misappropriation of public funds have different definitions.

These offences nevertheless have one thing in common: they lead investigators to look for what really determined a decision.

Why was this service provider chosen?

What service was expected in return for a payment?

What role did the intermediary actually play?

Who knew about the links between the various parties?

How was the price, commission or fee set?

What checks were carried out, and by whom?

The defence then requires reconstructing the reality of the organisation: delegations, approval levels, financial flows, internal exchanges and the chronology of decisions.

Reading a contract is not enough. It is necessary to understand how the company works.

Liability that can run through the whole organisation

The same investigation may concern at the same time:

• the company as a legal entity;
• its director or one of its representatives;
• a sales or operational manager;
• a public official or elected representative;
• an intermediary, consultant or local partner;
• a supplier or beneficiary of the contract.

The company’s strategy is not necessarily the same as that of the individuals implicated. Their interests may converge, but they may also diverge during the proceedings.

Our work therefore begins with a precise identification of the possible liabilities, each party’s interests and any conflicts between defences.

Prevention: making decisions explainable

Prevention does not consist in piling up procedures that no one consults.

A useful system must enable the company to understand where its risks lie and to demonstrate, when the time comes, how its decisions were taken.

We act in particular to:

• map the risks of corruption and influence peddling;
• review procedures relating to gifts, hospitality and conflicts of interest;
• secure the use of intermediaries, business introducers and consultants;
• assess third parties and document the due diligence carried out;
• analyse purchasing and approval channels;
• structure internal delegations and responsibilities;
• set up or review a whistleblowing system;
• train directors, managers, buyers and sales teams;
• prepare teams for inspections and investigations.

The obligations laid down by Article 17 of the Sapin II Law apply to certain companies reaching the legal thresholds. But criminal risk does not begin with the five-hundredth employee. SMEs, smaller mid-sized companies, associations and organisations working with public actors may also be exposed.

Investigating: knowing before deciding

An internal report, an accounting anomaly, an unusual request from a partner or the discovery of a conflict of interest must be dealt with quickly, without drawing conclusions before checking.

An internal investigation makes it possible to establish the facts objectively and inform the company’s decisions.

We act to:

• define the scope and methodology of the investigation;
• preserve and analyse the relevant documents;
• conduct the interviews;
• reconstruct decisions and flows;
• distinguish internal malfunctions from facts that may be classified as criminal offences;
• draft a report enabling management to decide on the action to be taken;
• prepare, where necessary, dealings with the authorities.

An internal investigation is neither a private police investigation nor a formality intended to confirm a conclusion already reached. Its credibility rests on the independence with which it is conducted, the traceability of its work and respect for the rights of the people interviewed.

Internal investigations. Criminal law audits. Corporate training

Defending: regaining control of the proceedings

The first investigative measure immediately changes the company’s situation.

A search can give access to several years of email and documents. An interview can personally implicate a director or manager. A seizure can affect cash flow and business. Finally, media coverage of a case can precede any judicial assessment of the facts.

We act from the very first hours:

• searches and seizures;
• voluntary interviews and police custody;
• preliminary investigations;
• judicial investigations;
• inspections by the French Anti-Corruption Agency (AFA);
• proceedings before the criminal courts;
• appeals and appeals to the Court of Cassation;
• negotiation and performance of a judicial public interest agreement (CJIP) where legally possible.

The defence covers the legal classification, but also the evidence: whether there really was a quid pro quo, the intermediary’s role, knowledge of the facts, intent, decision-making power, the regularity of investigative acts and attribution to the company.

White-collar criminal law

Corruption and public procurement

Public procurement is a particular area of exposure.

Closeness between the parties, information passed on in advance, a change in the award criteria, an insufficiently documented negotiation or the intervention of a third party may be reinterpreted, after the event, as evidence of favouritism, corruption or influence peddling.

We assist:

• companies bidding for or holding public contracts;
• directors and managers in charge of institutional relations;
• local authorities and public bodies;
• elected representatives and officials implicated;
• organisations that are victims of practices that distorted access to a contract or funding.

Our work consists in confronting the criminal suspicion with the reality of the procedure, the powers exercised and the decisions taken.

A defence built with the necessary expertise

Probity cases often combine criminal law, public law, tax, accounting, public procurement and international issues.

As required, we work with the company’s other advisers, accounting specialists, technical experts and crisis communication professionals.

This coordination makes it possible to build a single strategy, while distinguishing between what relates to:

• the criminal defence;
• business continuity;
• relations with the authorities;
• employment or disciplinary obligations;
• internal and external communication.

The aim is not only to respond to the investigation. It is to prevent the company from losing control of its decisions while it defends itself.

Examples of our work

The firm has acted in particular in the following situations:

• defence of a waste treatment company prosecuted for active corruption and fraud in connection with the award of a public contract;
• assistance to an international company facing allegations of corruption abroad;
• defence of an elected representative accused of influence peddling and favouritism;
• representation of the French subsidiary of an international group in an investigation into the conditions under which a contract was awarded;
• defence of a former member of a local authority’s private office prosecuted for handling the proceeds of unlawful taking of interest;
• defence of a director prosecuted in particular for misuse of corporate assets and money laundering.

In these cases, discretion is not only a professional rule. It is part of the strategy.

Protecting the company without promising the impossible

Proceedings for a breach of probity may have consequences that go beyond the sentence imposed: damage to reputation, weakened business relationships, inspection of the anti-corruption system, confiscations, restrictions on activity or difficulties in accessing public contracts.

No serious defence can promise to make these risks disappear.

It can, however, make it possible to identify them early enough, preserve useful evidence, distinguish responsibilities and place each decision back in its real context.

That is our approach to corporate criminal law.

Frequently asked questions

What is corruption under criminal law?

Corruption requires that an advantage be offered, granted, solicited or accepted so that a person performs, delays or refrains from performing an act within the scope of their duties or facilitated by them.

It may be active or passive and may concern relations with a public official as well as certain relations between private parties. The legal classification depends on the position of the person concerned, the nature of the advantage and the consideration sought.

What is the difference between corruption and influence peddling?

In corruption, the advantage is aimed at the performance of an act within the scope of the recipient’s duties.

In influence peddling, it rewards the real or supposed use of influence over a third party in order to obtain a decision, a distinction, a contract or another advantage.

The line depends on the facts. It must be examined on the basis of the exchanges, the exact role of each party and the consideration expected.

Can the company be prosecuted at the same time as its director?

Yes. A legal entity may be held criminally liable for offences committed on its behalf by its organs or representatives. This does not exclude the liability of individuals who may have taken part in the facts.

It is therefore essential to examine quickly whether the company and its director can maintain a joint defence.

Are all companies subject to the Sapin II Law?

The mandatory obligations of Article 17 apply to companies or groups meeting the thresholds set by the law: at least 500 employees and turnover or consolidated turnover of more than €100 million, under the conditions laid down by law.

Companies below these thresholds are not, however, free of risk. The French Anti-Corruption Agency has in fact published a guide specifically for SMEs and smaller mid-sized companies.

What should a company do when it receives a corruption alert?

It must first protect the report, prevent documents from disappearing or being altered and limit the circulation of information to those who need to know.

It should then assess the credibility and seriousness of the alert, check for any conflict of interest and decide whether an internal investigation should be opened. The decision to report the facts to an authority should only be taken after a precise legal analysis, unless there is a legal obligation or particular urgency.

Does an internal investigation protect the company against prosecution?

No. It is neither an immunity nor a guarantee that there will be no prosecution.

It may, however, enable the company to establish the facts, stop a practice, adopt corrective measures and define its strategy. The quality of the investigation and the degree of cooperation may also be taken into account in discussions on a judicial public interest agreement.

What is a judicial public interest agreement?

The judicial public interest agreement (convention judiciaire d’intérêt public, or CJIP) is a procedure that may be offered to a legal entity for certain offences, in particular corruption or influence peddling and the laundering of their proceeds.

It may include a public interest fine, compensation for victims and, where appropriate, the implementation of a compliance programme under the supervision of the French Anti-Corruption Agency.

It concerns only the legal entity and does not automatically resolve the criminal position of the directors or employees involved.

What are the first reflexes in the event of a search?

Contact the lawyer immediately, identify the legal basis and scope of the operation, designate internal contacts and preserve the confidentiality of exchanges covered by the rights of the defence.

Staff must neither obstruct the operations nor improvise explanations on the substance of the case. Every request, seizure and difficulty must be precisely recorded so that the regularity of the procedure can be reviewed later.

Vouland Avocats — Marseille and Paris

Vouland Avocats acts for companies, directors, managers, local authorities and elected representatives facing a risk of corruption, favouritism or breach of probity, both in prevention and during criminal proceedings.

Would you like to assess a situation, conduct an internal investigation or prepare a defence?