Analysis
14 July 2019

Carmignac to pay a 30 million euro fine to settle tax fraud prosecution

Bastille Day Newsletter 2019 - Enforcement / Court Decisions

 

On June 28, 2019, French investment firm Carmignac Gestion, agreed to pay a 30 million euro fine as part of the French equivalent of a Deferred Prosecution Agreement (“DPA”) settled with the National Financial Prosecutor (“PNF”) to resolve a two-year criminal investigation for tax fraud.

This Convention Judiciaire d’Intérêt Public (“CJIP”), signed by Carmignac Gestion and approved by the judge during the confirmation hearing on July 8, is the first prosecution agreement for tax fraud in France since the extension of the CJIP scope to tax fraud1 – the scope initially limited to corruption, influence peddling, laundering of tax fraud proceeds and offenses “connected” to the latter.

In the Carmignac case, it appears that the company’s Luxembourg subsidiary payed its executives with dividends rather than salaries to reduce French tax expenditure. To avoid criminal conviction, Carmignac settled for a 30 million euro fine to put an end to the tax fraud investigation launched in February 2017. The PNF indicated that this fine was determined in consideration of the benefits resulting from the misconduct2.

Once again, this case highlights the most considerable advantage of the CJIP – Carmignac resolved the dispute without conviction or admission of guilt.

Carmignac states that “[t]he prosecutors were investigating into technicalities over transactions carried out before 2014” and that the company had thereby “seized the opportunity to close a case belonging to the past3.

The question of potential proceedings stays open concerning the individuals who may have been involved however, as they are not concerned by the CJIP provisions.

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