Ilias Anagnostopoulos of Anagnostopoulosconsiders the use of double jeopardy in an era of global enforcement that exposes corporations and individuals alike to unprecedented risk of parallel or consecutive prosecutions and sanctions in different states.
Nemo debet bis vexari pro una et eadem causa: a man shall not be twice vexed for one and the same cause. The rule against double jeopardy (non bis in idem) is a universal maxim of ancient origin.
As early as 355 BC, Demosthenes spoke against Leptines in defence of a law that exempted Ktesippos (the son of a war hero) from paying public taxes: He stated, “The laws forbid the same person to be tried twice on the same issue be it an action, rendering of accounts, a contested claim, or anything else of the sort.”
The rule can also be found in Roman law, and has been part of English common law since the 12th century – offering the basis for the pleas of autrefois acquit and autrefois convict. More recently, US Supreme Court Justice Hugo Lafayette Black explained in Green v United States (355 US, 184 (1957)) the rationale of the double jeopardy rule enshrined in the Fifth Amendment to the US Constitution:
The underlying idea, one that is deeply ingrained in at least the Anglo-American system of jurisprudence, is that the state, with all its resources and power, should not be allowed to make repeated attempts to convict an individual for an alleged offence, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as increasing the possibility that, even though innocent, he may be found guilty.
In its widely acclaimed judgment in Zolotukhin v Russia (2009) the Grand Chamber of the European Court of Human Rights highlighted the universal character of the fundamental right against multiple prosecutions for the same act and the need for legal certainty in this area.
Although sacred throughout the centuries, the principle of non bis in idem does not seem to offer effective protection to corporations and individuals in today’s world of borderless prosecutions. The monumental surge in global enforcement in the last decade exposes corporations and individuals alike to unprecedented risk of parallel or consecutive prosecutions and sanctions in different states. Indeed, the world seems to have turned into a global arena where corporate and individual offenders are called upon to fight against multiple attacks by increasingly aggressive state authorities.
Take, for example, the non-prosecution or deferred prosecution agreements that have become the favourite tool for prosecuting authorities and accused companies to resolve investigations into corporate wrongdoing. DPAs, championed in the United States and, since 2014, also available in the UK, seem to offer a variety of attractions.
State authorities avoid the expense and uncertainty of a trial with high standards of proof against a sophisticated corporate defendant who is usually represented by experienced, well-funded defence lawyers. Moreover, DPAs enable them to speedily impose and enforce substantial and often eye-watering monetary sanctions and force companies to introduce and implement efficient compliance programmes minimising the risk of future wrongdoing and to accept additional reporting duties for the term of the agreement.
Corporations, on the other hand, are attracted by DPAs in order to avoid the collateral consequences of a criminal indictment that can be lethal, as the Arthur Andersen disintegration after indictment dramatically demonstrates. Celebrated US Attorney Preet Bharara put it bluntly: “An indicted firm is a dead firm, a decision to defend an indictment is suicide.”
Companies are more aware than ever before that they may not survive criminal indictment – much less conviction – and are therefore willing to dig deep into their pockets, in order to secure immunity against criminal prosecution and avoid its potentially devastating effect.
Settlements with prosecuting authorities in white-collar cases – though different in a number of aspects to US-style DPAs – are also becoming popular in continental Europe. The chief prosecutor in Munich, Manfred Nötzel – known as “the criminal justice billionaire” – has built a reputation as a specialist in Gewinnabschöpfung (profit disgorgement), from companies held accountable for corporate misconduct. In a 2014 press interview he stated that his office was proud to have collected more than €1 billion in recent years from companies such as Siemens, MAN, Ferrostaal and Linde.
A settlement in one jurisdiction may offer fragile protection against parallel or consecutive prosecutions in other states affected by the alleged misconduct. Worse still, it might also undermine fair proceedings and effective defence in subsequent procedures. This is true even in cases of multi-state settlements, where corporations strive to resolve their disputes with more than one sovereign; thus, sanctions imposed in one jurisdiction will be taken into account by the competent authorities of the concurring jurisdictions.
In 2008 Siemens AG and its subsidiaries settled (via a DPA) in the United States the proceedings against them for a worldwide scheme to bribe foreign officials in many countries (including Argentina, Nigeria and Greece) paying $450 million to the Department of Justice in criminal fines and $350 million to the Securities and Exchange Commission in disgorgement of profits. In parallel proceedings in Germany the company paid €596 million. However, in 2010 Siemens had to pay another $46.5 million to Nigeria, and in 2012 entered into an agreement with the Hellenic Republic to a total value of €270 million.
In 2011 Johnson & Johnson (J&J) and DePuy settled simultaneously parallel investigations against them in the United States and the UK for alleged bribes to foreign officials in Romania, Poland and Greece. J&J paid in the US a total of $70 million in criminal penalties and disgorged profits, while the SFO issued a civil recovery order of no more than £4.8 million taking into account the US sanctions and the double jeopardy rule, as well as the fact that a restraint order for €5.7 million had been issued in parallel proceedings in Greece. However, in the proceedings that are still pending in Greece, the above companies may face multimillion-euro claims by state-owned hospitals and/or Greece, in relation to the same misconduct for which they settled the investigations in the US and the UK.
The above examples show that what appears at first glance to be a “global” settlement for a company might well create a number of parallel or consecutive prosecutions for the same misconduct in other countries that were not party to the initial settlement. In such “carbon copy” proceedings it would be extremely difficult for a company that has admitted to its wrongdoing as part of the settlement agreement to rebut criminal charges and/or civil claims arising out of the same misconduct.
In such situations a generous interpretation of the transnational ne bis in idem principle, by both prosecuting authorities and courts in different countries, could provide a remedy against multiple harsh sanctions for the same conduct.
In a much-noted judgment of 8 July 2013, a criminal court in Paris ruled on a plea deal made between Switzerland-based oil trading company Vitol SA and the US prosecuting authorities to settle charges of paying $13 million in illegal kickbacks to Iraqi officials in connection with the United Nations Oil for Food programme. The court ruled that this deal bars criminal proceedings in France against the company for the same conduct. The company had pleaded guilty to the charges before a state court in New York and agreed to pay a total of $17.5 million (including $13 million to an international fund for the development of Iraq and $3.5 million in lieu of fines, forfeiture and prosecution cost).
On 18 June 2015 a criminal court in Paris acquitted 14 companies on charges of active bribery in the same context. The court ruled that DPAs entered into by four of the companies with the US authorities in respect to the same conduct – ie, kickbacks to Iraqi officials in connection with the Oil for Food programme – barred a criminal conviction in France on the basis of the principle non bis in idem. This is an important judgment, which broadens the scope of the rule against double jeopardy, given that from a procedural-technical point of view a DPA is not a “judgment” concluding a trial hearing, but rather a contract between the authorities and the corporation resolving the investigations.
On the same line, a trial hearing against the French oil and gas company Total SA in Paris on charges of bribery, in relation to contracts with the National Iranian Company for the development of oil and gas fields was postponed until mid-2016 when a DPA concluded in May 2013 with the DoJ in close cooperation with the French authorities is due to expire. Total SA agreed to pay $245.5 million to resolve the DoJ action and another $153 million required by the SEC’s administrative cease-and-desist order on the same facts. It is expected that the parallel charges in France against the company will be dismissed in 2016 on the same basis (non bis in idem).
Time will tell whether the above judgments will set a trend towards a more sensible treatment of corporations that try to achieve global settlements in white-collar cross-border cases.
Company officers or intermediaries involved in questionable corporate practices are increasingly faced with multiple prosecutions around the world enjoying a rather poor level of protection by the rule against double jeopardy.
Earlier this year 12 former Siemens executives were indicted for bribery and money laundering before a criminal court in Athens. They had already resolved their cases on charges of breach of trust and related offences against the company in connection with slush funds used to bribe foreign officials in many countries, including Greece. Those defendants who had admitted to the charges in Germany will have a thin basis of defence at the trial hearing in Greece, given that incriminating evidence, including guilty pleas, has been forwarded by the German authorities to the Greek prosecutors and forms part of the file.
The court in Athens must decide whether, according to the non bis in idem rule – which is being broadly interpreted by the ECJ and the ECHR – the German decisions or court judgments on the above charges bar prosecution and conviction for specific acts of bribing officials in Greece, part of which were not expressly mentioned in the proceedings in Germany or they were tried there from another legal perspective, ie, unfair administration of the company’s funds.
In this respect a recent judgment (4 May 2015) by the Federal Court of Cassation in Argentina is noteworthy. The Court rejected a petition for dismissal on non bis in idem grounds by former chief executive at Siemens SA Argentina, Hans Herbert Steffen. The defendant Steffen and 16 other Siemens managers were indicted by a federal judge of Argentina in 2011 for paying bribes exceeding $106 million in connection to a $1.3 billion contract, won by Siemens in 1998 under the then-president Carlos Menem, to produce ID cards and build a border control system (Project ID).
Steffen argued before the Federal Court of Argentina that he had already been tried on the same facts in Germany. The prosecutor in Munich desisted from prosecution for unfair management of Siemens funds in relation to alleged bribes in Argentina for Project ID, ordering the defendant to pay approximately $25,000 to two humanitarian organisations. The court rejected Steffen’s request ruling that the charges in Germany for unfair management were not identical to those for bribery in Argentina. The latter included a much higher amount and were directed against the integrity of the public sector in that country, and not the fair administration of Siemens property.
It should be mentioned that the above corrupt payments in Argentina were part of the Siemens settlement in the US in 2008, which did not offer immunity to any individuals potentially involved in the wrongdoings. In 2011, Steffen and seven other Siemens executives were also indicted in the US for bribery.
Last year seven former officers of J&J/DePuy were summoned by an investigating judge in Athens to answer charges of fraud, money laundering and bribery in connection with the purchase of orthopaedic products by public hospitals, through intermediaries, at inflated prices including bribes to doctors. Investigations were conducted in the US and the UK for bribery practices in Poland, Romania and Greece. Six officers were not criminally prosecuted in either the US or the UK; one pleaded guilty and was convicted by a UK court, having served his sentence. This officer was spared double charges on bribery in Greece, but still faces prosecution for fraud against the hospitals and money laundering. The misconduct investigated by the Greek authorities is based on the same core facts with the Johnson & Johnson/DePuy investigations in the US and the UK.
The foregoing cases demonstrate that companies and individuals enter a minefield when settling investigations in one or more jurisdictions. What might seem to be the closing of a dark chapter may actually be the beginning of a prosecution saga for years to come.
In this risk-inflated environment, timely advice by competent lawyers in all jurisdictions where proceedings have already been initiated, or are likely to open, is pivotal to obtaining a favourable resolution on a global scale. White-collar defence lawyers take the role of legal architects who are called to design safe shelters for their corporate and individual clients; and to protect them from multiple prosecutions and unfair punishment.