September 13, 2019

Multi-National Corporate Investigations:  Tips, Trends and Traps

The panel is intended to help attendees understand the impact of U.S. corporate investigations and prosecution practices on multi-national companies, offer tips for navigating the sometimes-conflicting U.S. and non-U.S. legal regimes, and highlight the challenges that a U.S. corporate DPA or NDA imposes on lawyers in non-U.S. jurisdictions.  The panel will also explore how the expansion on U.S. style corporate prosecution impacts multi-national corporations and practitioners both in the U.S. and foreign jurisdictions.

The United States has historically dominated global corporate civil and criminal enforcement, through, among other means, the ability to extraterritorially enforce its laws and the use of Deferred Prosecution Agreements and Non-Prosecution Agreements (DPAs and NPAs).  Recently other countries with advanced economies and strong central governments, including the United Kingdom, France and Singapore, have begun to include DPAs and NPAs as part of their corporate criminal prosecutions and settlements.  As detailed in the materials that are part of the written materials for this panel (Jennifer Arlen, The Promise and Perils of Introducing Deferred Prosecution Agreements Outside the U.S., in Research Handbook on Negotiated Settlements(Abiola Makinwa & Tina Soreide ed., forthcoming 2020), the scope and effect of DPAs and NPAs in jurisdictions outside the United States differ significantly from the American model.

One area where DPAs and NPAs differ overseas shows up in how the fruits of a corporate internal investigation can be used to help a company become eligible for a DPA or NPA.  In the United States the government requires companies seeking a DPA or NPA to fully cooperate with the government to reap the benefit of a DPA or NPA.  This cooperation includes conducting an internal investigation and sharing the results.  Typically, the investigation will include interviews with employees, review of employee emails and other documentary evidence.  If the government begins its own investigation it has to conform to well-known constitutional and procedural requirements. Not all of these conditions exist outside of the United States.  For example, in the United Kingdom, the main corporate regulators, the Financial Conduct Authority and the Serious Fraud Office, can compel testimony from corporate employees.  Under certain circumstances the compelled testimony can be admitted in court.  On the other hand, employment law outside of the United States can restrict a company’s ability to routinely interview employees about their own or coworkers’ misconduct, particularly if there is an ongoing civil or criminal investigation.  Also, in some jurisdictions, these statements may be deemed inadmissible in court.  Moreover, in many countries that are part of the European Union and elsewhere, the routine review of employees’ email is not permitted.  Finally, it can be more difficult to discipline or terminate employees in many countries outside of the United States.  Therefore, some routine methods companies use in the United States in internal investigations to demonstrate cooperation are not available in other jurisdictions.

While the United Kingdom has expanded its definition of corporate criminal liability, it is still more narrowly construed than in the United States, particularly with regard to the scope of employee misconduct for which the corporation can be found liable.  France’s concept of corporate criminal conduct is likewise more restrictive.  So too is the requirement for a corporation to fully cooperate with the government to reap the benefit of a DPA.  Indeed, in France self-reporting and cooperation aren’t necessary for a company to merit the French equivalent to a DPA.  All that may be necessary is for the company to agree to settle promptly, ensure compensation for any victims, and implement reforms to prevent reoccurrence. 

Why does this matter to the practitioner?  Because DPAs and NPAs entered into by multi-national companies with U.S. authorities can cause unforeseen issues for those companies outside of the U.S.  For example, lawyers in non-U.S. jurisdictions sometimes are faced with challenging evidentiary issues in litigations arising from DPAs entered into by companies in the U.S., which are then introduced as evidence in the foreign proceedings.  For example, companies entering into DPAs in the United States must plead guilty to a crime and admit to an agreed set of facts the truth of which they cannot deny in any other proceeding.  Similarly, non-United States government investigations that use techniques such as compelled testimony can pose impediments to cooperating with United States authorities.  The question is, are there steps companies can take to protect themselves against, or at least mitigate the negative effects of admissions made in a U.S. DPA agreement?

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