Convention Judiciaire d’Intérêt Public (CJIP) – A Forensic Approach to Fine Calculation
How are fines calculated under the French Convention Judiciaire d’Intérêt Public (CJIP), particularly in multi-jurisdictional corruption and bribery investigations?
The procedures and penalties behind the French Convention Judiciaire d’Intérêt Public (CJIP) are generating significant interest among companies and the public. In this article, FRA’s Yousr Khalil, partner and head of the Paris office, and senior associate Justin Michel answer two common questions regarding the calculation of penalties:
- How is the amount of a fine determined?
- Why it is not possible or advisable to predetermine the amount of a fine in multijurisdictional matters?
At the heart of Sapin II – the French anticorruption law introduced in December 2016 – is a procedure called the Convention Judiciaire d’Intérêt Public (CJIP). Similar to a Deferred Prosecution Agreement in the US or UK, it was created to allow the prosecution of corporate crime. An agreement between a company and its prosecutors is made, whereby a CIJP carries an admission of facts, but not guilt. Fines are calculated and, if appropriate, reduced. This procedure allows companies and their advisers to benefit from an agreement with the French prosecutors, le Parquet National Financier (PNF).
1. How to calculate the fine
Three factors are essential:
- Legal Liability: Identifying the tainted contracts or projects, as only these form the basis of the calculation
- A unified and principled approach: In an international regulatory litigation case covering many jurisdictions, it is necessary to establish a common and principled methodology agreed by the various authorities
- The right team to perform the calculation: Collaboration between the forensic accountants and the company's internal accounting teams is essential to properly reflect the company's operations in the gain calculation model and related cost elements
2. Why is it not possible nor advisable to pre-determine a fine
- Risk of subsequent law suits from other competent jurisdictions, shareholders and competitors
- Risk of undermining cooperation between authorities in reaching one consistent method of calculation
- Risk of a company ceasing its efforts to conclude a CJIP if the predetermined fine is considered unfavorable (i.e. too high)
- Based on FRA's experience with various authorities around the world, fines have never been predetermined as the company's legal liability must first be established as the basis for a fine calculation
