The long history of economic and financial crime in France has been largely met with superficial after-the-event measures that in practice change little in the fight against corruption.
In the 1980s, a series of cases involving illegal party funding of all the major parties, from Left and Right, led to the creation in 1993 of the Central Service for the Prevention of Corruption, (the Service central de prévention de la corruption, or SCPC), an agency made up of investigating magistrates, specialized police services, tax inspectors and customs, but which had no real investigative powers.
Two decades later, the case of Jérôme Cahuzac, the disgraced socialist budget minister who Mediapart revealed had held a tax-evading foreign bank account for more than 20 years, led to the creation – once again after the event - of the Higher Authority for Transparency in Public Affairs (the Haute autorité pour la transparence de la vie publique), the HATVP, and a dedicated financial crime unit of the public prosecutor’s office, the PNF. While these are gradually gaining in power, they continue to meet with a degree of political resistance.
The HAT, headed by senior French magistrate Jean-Louis Nadal, is slowly making public figures accept the notion of a procedure that many remain opposed to, namely to declare their wealth and outside interests.
The role of the PNF, meanwhile, has come to the fore with the ‘The Panama Papers’ revelations which detail the offshore interests of the rich and powerful protected by shell companies mounted on their behalf by Panamanian law firm Mossack Fonseca. On April 4th, the day following the first of the revelations, the head of the PNF, Éliane Houlette, opened a preliminary investigation into ‘aggravated money laundering of fiscal fraud’ which were ‘susceptible of concerning French fiscal residents’. She assigned the investigation to the police’s Central Office for Fighting Financial and Fiscal Crimes (OCLCIFF),which was also created after the Cahuzac affair
But this rapid initiative is at risk of becoming bogged down by a lack of resources. With more than 300 other investigations into complex cases of corruption tax evasion and money laundering, the PNF is now close to being overwhelmed by its tasks. When it was created, the PNF was to be given 20 investigating magistrates, eight clerks and 12 administrative civil servants. In the event, it has just 13 magistrates, five clerks, and no administrative civil servants, as detailed in a letter sent to President François Hollande by socialist Member of Parliament Yann Galut on April 7th, in which he raised his concerns about the means given to the PNF. Galut underlined that each of the 13 magistrates was in charge of an average 25 cases “of very high complexity”.
It is difficult to imagine how, in these conditions, the PNF can handle a new investigation into international fraud, in which it is estimated that some 1,000 French citizens and firms are implicated. The paradox is that the creation of the PNF, and the decision to favour preliminary investigations - which decide whether a full-blown judicial investigation should be opened - was intended to improve and speed up probes into white-collar crime which, until the recent past, were too often lengthy and dissipated procedures, even ending in cover-ups.
Similarly, a special court dedicated to cases of corruption and tax evasion was established in 2015.
The need for a radical improvement in the management of white-collar crime investigations is illustrated by the fact that until recently the cases would often last five years to reach a conclusion, and sometimes even ten. The numbers of investigating magistrates, who are independent judicial figures separate from the public prosecutors’ offices, are insufficient and they mostly work alone. Defence lawyers can play for time by requesting new lines of enquiry, demanding the annulations of the investigation over procedural errors, and launching legal appeals against the magistrate’s actions. In the investigation into Nicolas Sarkozy’s attempted corruption of a French magistrate, such procedural appeals froze the case for two years. That is significantly less possible in preliminary investigations by the public prosecutor’s office.
Enlargement : Illustration 2
But a number of judicial sources have told Mediapart that the PNF and independent investigating magistrates are above all adversely affected by the same problem, namely the overload of specialised police services who are assigned to carry out the investigations in the field.
At the Central Office for Fighting Financial and Fiscal Crimes (OCLCIFF), which handles the majority of cases led by the PNF, there are currently 81 police detectives instead of the 93 originally intended. “It’s a catastrophe,” said a senior judicial figure, speaking on condition his name is withheld. “This office is made up of ultra-competent people, but they can’t manage anymore.”
The situation is hardly any easier for the police financial crime squad (the brigade financière), BF, which also handles PNF investigations, notably stock market crimes. The number of detectives at the BF is now 65, compared to 80 just a few years ago, and here too the cases are piling up. “Financial matters have always been an adjustment variable of public policies,” commented a senior police official. “Currently, the priority is anti-terrorism. As a result, outside of high-profile cases, it’s small financial delinquency which is not properly taken into account, whereas bank transfer order fraud, for example, costs millions of euros and internet scams are multiplying.”
He cites another, lesser known, factor contributing to the overall problem. “In the police, it is services who are on the ground, like the serious crime squad, the child protection squad or the anti-gang squad which attract most candidates. The financial crime unit, on the other hand, is often regarded as arid and boring.”
Complicating things further, the legislative and institutional environment surrounding economic and financial crime investigations is constantly changing. In the separate tax evasion cases against Jérôme Cahuzac and art dealer Guy Wildenstein (see more here), which were expected to illustrate the efficiency of the PNF, both defendants succeeded in postponing their trials with appeals over the constitutional legality of bringing criminal charges for tax evasion which they argue is a matter for the tax authorities. As a result, the Constitutional Council is to redefine the future framework of tax fraud investigations.
Enlargement : Illustration 3
Last but not least, economy minister Michel Sapin has drawn up proposed legislation in which yet another entity will be created, called the National Agency for the Fight Against Corruption. The agency would replace the Central Service for the Prevention of Corruption, set up after the Cahuzac affair, and would come under the joint management of the finance and justice ministries. Its role would include the setting up of anti-corruption programmes for large companies (those with a payroll of more than 500 and a yearly turnover of more than 100 million euros).
The project has been met with concern by both the judiciary and the police who are wary of a scheme led by the finance ministry, instead of the interior and justice ministries, and which is likely to siphon off material and human resources. “It is yet again a manner of decriminalising white-collar delinquency instead of clearly announcing a criminal anti-corruption policy and to give the means for efficient and dissuasive repression,” commented a senior magistrate, speaking on condition his name was withheld.
Sapin’s proposed legislation would allow companies to avoid a court case by negotiating the punishment for incidents of corruption. This was rejected by the State Council in March, but can technically be submitted in his bill before parliament. While it would no doubt satisfy the business world, it is a disturbing prospect for police and magistrates.
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- The French version of this article can be found here.
English version by Graham Tearse