By Virginie ROBERT, Les Echos
The interference of American law imposes heavy fines on foreign companies. And it is increasingly resented. But it is also up to France and Europe to fight corruption more effectively. We need to equip ourselves with the means to fight on equal terms with the United States.
Fines imposed by the United States on foreign companies have become commonplace. The latest victim is Deutsche Bank, which has been threatened with a $14 billion fine in a dispute dating back to the subprime crisis. This penalty could ultimately be reduced to between 4 and 5 billion dollars. The sums involved now seem enormous, and the bank has been badly shaken.
How can we deal with such a show of force by the American courts? On the one hand, there are those who consider the United States' interference in the business lives of European companies to be intolerable. This is the case of Pierre Lellouche (LR) and Karine Berger (PS), who last week published a report on the extraterritoriality of US legislation. On the other hand, there are those who see the United States as the only country capable of effectively combating corruption. Depending on the analysis, the answer is obviously not the same.
"We are dealing with an enormous American standards steamroller, a legal imperium that aims to impose American standards to ensure the success of economic or political strategies. This is 'soft power'".explains Pierre Lellouche. The MP denounced the thicket of US legislation on business transparency, corruption, sanctions imposed by the United States on third countries, terrorism and consumer protection. This explains the extent of American intervention, from the $15 billion fine imposed on Volkswagen for tampering with pollution control software to the $12 billion imposed on Fifa for massive corruption, not to mention the $8.9 billion BNP had to pay for violating the embargo on Sudan.
For the two MPs, the law has become "a tool of economic warfare", for which, moreover, recourse is frequently had to American intelligence services. Fines can jeopardise the financial health of the companies concerned, or even lead to their break-up or disappearance. For example, Alstom was fined $772 million for corruption in Indonesia in 2014, "The Americans were aware that this would put the company in a terrible situation. The decision was taken taking into account the financial consequences".says Karine Berger.
Companies find themselves alone in this kind of ordeal. A case has been opened against them in Washington. They are being given the opportunity to repent by providing proof of their wrongdoing. After that, they will be heavily taxed. They will have to authorise the presence of American monitors, at their own expense, who will check that they have made the necessary changes. "This can represent several million euros a year. And we're exposing the company to American scrutiny".Pierre Lellouche fulminated. In some circles, conspiracy theories are rife. The Americans did not target Volkswagen at random. The proceedings against Alstom led to its break-up and served the interests of General Electric, which took over part of its activities...
"We are not legally equal".One lobbyist complains that Chinese and Indian companies are not targeted by the US authorities. One aspect that is very shocking to companies is the lack of recourse. A company denounced by a whistleblower will not be able to participate in public tenders for the duration of the investigation. Whatever happens, it will incur significant legal costs. And if it is found innocent, it will not be entitled to any compensation.
But other voices are being raised. The United States, under President Jimmy Carter, was one of the few countries to crack down effectively on corruption. "The United States has played a very useful and major role in criminalising corruption in international trade".says Daniel Lebègue. He is the French President of Transparency International. According to this NGO, of the hundred or so convictions for violations of the 1977 Foreign Corrupt Practices Act, half were against American companies. The other half involved foreign companies.
Since then, the international legislative arsenal has been strengthened with an OECD convention (1997) and then a United Nations convention (2005). The UK passed ad hoc legislation in 2010 and France in 2007. The Sapin II law has strengthened this legislation. "The real change comes from the requirement for companies worth more than €100 million to set up an internal corruption prevention system. This is a welcome change, as it places as much emphasis on punishment as on prevention".says Niels Lindholm of the Control Risks consultancy. In particular, the law incorporates the brand new judicial public interest agreement, which allows for a French-style penal transaction. We need to equip ourselves with the same weapons as the United States or the United Kingdom," insists Daniel Lebègue, "not only for our own companies, but also for foreign companies with a subsidiary in France.
For Karine Berger and Pierre Lellouche, we need to go further. French companies have no choice but to comply with American law if they want to remain in the United States. "We believe that the answer is to enter into a power struggle".explained the Socialist MEP. In particular by strengthening economic intelligence: the administration could use the intelligence services. They would also provide companies with economic intelligence. In addition, the issue of extraterritoriality could be included in the scope of the transatlantic partnership negotiations. Finally, a European response will have to be put in place.
Virginie Robert
Head of International
POINTS TO REMEMBER
Deutsche Bank, most recently, but also Volkswagen, Fifa, BNP Paribas and many others, all have one thing in common. They have all been convicted by the American courts.
For MPs Pierre Lellouche (LR) and Karine Berger (PS), the law has become "a tool of economic warfare".
But others stress the lead taken by the United States in the fight against corruption. And they recommend drawing inspiration from American methods.
Find out more about : http://www.lesechos.fr/idees-debats/editos-analyses/0211354715383-quand-le-droit-devient-une-arme-de-guerre-economique-2033669.php?AYGMjTsuJdWISugz.99#
