Global Investigations Review - The law and practice of international investigations

The Practitioner’s Guide to Global Investigations, Third Edition

Romania

03 January 2019

CMS Cameron McKenna Nabarro Olswang LLP – SCP

General context and principles

1 Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects as it relates to your country.

Romania’s enforcement efforts continue to focus on allegations of corruption in the same key industries as last year (healthcare, IT, and construction and infrastructure) with the healthcare sector taking the limelight. In fact, only months before the Head Prosecutor of the National Anti-corruption Directorate (DNA), Laura Codruta Kovesi, was forced out of office, she declared that bribes in the healthcare sector are higher than in the infrastructure sector and that the price in healthcare-related public procurement is 10 times higher than the initial price of acquisition.

In one of the several high-profile investigations in the healthcare sector, the DNA alleges that healthcare professionals accepted luxury trips, gifts and money from 11 of the top 20 pharma companies operating in Romania in exchange for prescribing oncology drugs produced by these companies instead of cheaper generic drugs.

Public procurement within the healthcare and IT sectors is also making headlines. Two former presidents and several executives of the National House of Health Insurance and a leading global IT company are currently being investigated in connection with an alleged breach of public procurement law relating to the implementation of the national card reading system. The DNA alleges that the contract price was inflated, unjustified and resulted in a detriment to the public budget. This highlights the DNA’s wider focus on investigating public procurement-related corruption when pricing appears to be excessive.

In the infrastructure sector, one of the most widely publicised cases recently involved the indictment of a former Minister of Finance and other members of the Romanian parliament and Romanian government for allegedly receiving €20 million in bribes from an Austrian consortium in exchange for the award of public procurement contracts and payment of invoices for the rehabilitation of certain national railways. Interestingly, the bail amounts imposed in this case – €1 million and €1.5 million – are some of the highest on record in Romania.

Another high-profile investigation in the infrastructure sector involves a Romanian company controlled in part by Liviu Dragnea, the leader of the Social Democratic Party and President of the Chamber of Deputies. The DNA indicted the company for illegally obtaining European funds for the rehabilitation of county-maintained roads, tax evasion, abuse of office, forgery and involvement in an organised criminal group. In an interesting procedural turn, prior to being indicted, the company entered into insolvency. To prevent the company from using insolvency to avoid criminal liability, the Bucharest Tribunal, at the DNA’s request, prohibited the company from dissolving or liquidating.

Romanian prosecutors have also targeted the banking sector. One of the largest current investigations involves a leading French bank and its executive board, in collaboration with public notaries and real estate appraisers, which the Directorate for Investigating Organised Crime and Terrorism (DIICOT) accuses of approving 17 non-compliant loans worth €43 million.

2 Outline the legal framework for corporate liability in your country.

Article 135 of the Romanian Criminal Code, entitled ‘Conditions for the criminal liability of legal entities’, defines when a corporation can be held criminally liable. It very broadly states:

(1) Legal entities, except for state and public authorities, shall have criminal liability for offences committed in the performance of the legal entity’s object of activity, in its interest, or on its behalf.

(2) Public institutions, such as state-owned hospitals, will not be held criminally liable for actions taken in the exercise of their public domain role/function, but can be criminally liable for offences committed while acting outside such public functions.

(3) Criminal liability of legal entities does not exclude the criminal liability of the individual who contributed to the commission of the same offence.

Romanian law attributes criminal liability to a corporation irrespective of the acting capacity of the individuals committing the offence. The criminal liability of a corporation is extended to all crimes committed in the furtherance of the company’s scope of business, for its benefit or in its name. The scope of individuals who may trigger criminal liability of a company is therefore very broad – it may be a legal representative (e.g., a director or manager), an employee, an agent or even a third party who commits a criminal offence for the benefit or in the name of the company.

In practice, for a company to be criminally liable, prosecutors must only prove that the company either benefited from the criminal activity of the individual effectively perpetrating the offence or that the conduct was performed by the individual within the scope of his or her services for the company (whether by way of an employment contract, services contract or otherwise). It is not required to demonstrate that the criminal activity was conducted through the actions of the company’s management bodies or through individuals who represent the ‘controlling mind and will’ of the company.

3 In your country, what law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies relating to the prosecution of corporations?

In general, public prosecution offices are responsible for investigating and prosecuting crimes in Romania – there is not a specialised team focused on corporate crimes. A prosecutor is competent to investigate and prosecute a criminal offence within the jurisdiction of the court to which it is attached. Prosecution offices also have authority to coordinate judicial police to perform case investigations.

In addition to prosecution offices, Romania has specialised enforcement institutions, such as DIICOT and the DNA, which have exclusive jurisdiction over certain crimes. DIICOT and the DNA operate as specialised, independent institutions within the General Prosecutor’s Office, which is attached to Romania’s highest court, the High Court of Cassation and Justice.

4 What grounds must the authorities in your country have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

Law enforcement authorities can initiate investigations based on any of the following: a complaint by a party prejudiced by an offence; self-reporting by a participant to an offence; a report by a person with a management or other control function of a public institution or authority, or public sector entity; at the discretion of the prosecution office, on the basis of data available to it; or observing an offence being committed.

Although there is no specific threshold of suspicion required to trigger an investigation into the facts of a matter, in practice, prosecutors will launch an investigation if they can identify direct or indirect evidence that gives rise to a suspicion that a crime has been committed. For example, in the anti-corruption realm, prosecutors have used Court of Accounts (a specialised, autonomous public institution exercising control over the management and use of public money) reports to initiate an investigation of the wrongdoing identified in such reports.

5 Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another country?

The principle of double jeopardy applies in Romania and a corporation cannot be tried for the same or similar crime based on the same conduct and facts, regardless of whether the initial trial occurred in Romania. However, the Romanian Criminal Procedure Code provides that cases can be revised when new evidence proving that the previous outcome of the case was not substantiated later comes to light.

6 Does criminal law have general extraterritorial effect in your country? To the extent that extraterritorial effect is limited to specific offences, describe those which have extraterritorial effect, the statutory basis and any conditions that must be met for extraterritoriality to apply.

As a general rule, Romanian criminal law applies to offences committed on Romanian territory. An offence is construed to have been ‘committed on Romanian territory’ if the offence has been executed in Romania, there has been an act of instigation or aiding or abetting in relation to an offence in Romania, or the results of an offence have occurred (even if in part) on Romanian territory.

Additionally, under the Romanian Criminal Code, Romanian criminal law also applies where the criminal offence has been committed abroad:

  • by a Romanian national or Romanian legal entity, if the penalty provided by Romanian law for the offence is life imprisonment or imprisonment for more than 10 years;
  • by a Romanian national or Romanian legal entity, in all other cases, but only if the offence is qualified as a criminal offence by the criminal laws of the country where the offence was committed, or if the offence was committed in a place that is not subject to the jurisdiction of any state;
  • by a foreign person or a stateless individual, if the offence is an offence against the Romanian state, or against a Romanian national or legal entity (in this case, the indictment can be made only with prior authorisation of the General Prosecutor of Romania, and only if the offence is not subject to judiciary proceedings in the state in which it was committed); or
  • by a foreign citizen or a stateless individual who is willingly present on Romanian territory if he or she has committed an offence that the Romanian state has undertaken to prevent through an international treaty; or the extradition of the offender has been requested and refused (this case does not apply where there is any cause for impunity in the state in which the crime was committed, or the sentence has been executed or is deemed executed).

7 Describe the principal challenges in your country that arise in cross-border investigations, and explain whether and how such challenges are dependent on other countries involved.

In Romania, the principal challenges that arise in cross-border investigations relate to difficulties in coordinating the investigation efforts across cultures and in communicating effectively in different languages; differences in laws regarding attorney–client privilege, employee rights and data protection laws across various countries, and differences in attitudes and approaches of law enforcement authorities.

Certain challenges may also arise owing to the over-criminalisation of certain, non-violent acts – for example, the offence of influence peddling incriminates the simple promise to persuade a Romanian public official to act in a certain way, irrespective of whether an ‘undue advantage’ was pursued or whether the supposed influence was in fact exercised abusively.

8 What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?

The influence that foreign decisions have on Romanian investigations is determined largely by applicable bilateral treaties and legislation on the provision and receiving of judicial assistance between Romania and the country in question.

Romanian authorities exercise their freedom to investigate matters falling under their jurisdiction and have discretion in how they view foreign decisions, but they also endeavour to co-operate with foreign authorities.

9 Do your country’s law enforcement authorities have regard to corporate culture in assessing a company’s liability for misconduct?

There is no legal requirement for law enforcement authorities to consider a company’s corporate culture when assessing its criminal liability. However, corporate culture may be used as a defence strategy to argue that the corporation has diligently taken all necessary measures to prevent employees or third parties from engaging in any misconduct and therefore the corporation should not be held liable.

Further, a positive corporate culture may be construed as a mitigating factor before a court of law – the Romanian Criminal Code recognises two judicial mitigating factors: efforts made by the author of a crime to mitigate or remove the consequences of the crime, and certain circumstances related to the offence that reduce the gravity of the crime or the degree of risk or danger posed by the offender.

Although the law does not recognise the mitigating factor of an anti-corruption compliance culture, a properly implemented compliance programme may mitigate the risk of corporate liability.

10 What are the top priorities for your country’s law enforcement authorities?

In recent years, Romanian law enforcement authorities have prioritised the targeting of high-level corruption cases, EU funds fraud, tax fraud and money laundering. A notable record of success was achieved in conducting investigations into allegations of corruption at the highest levels of the government, the judiciary and across the IT, energy, infrastructure, real estate and healthcare sectors.

11 How are internal investigations viewed by local enforcement bodies in your country?

Overall, enforcement bodies view internal investigations positively; however, due care must be taken in performing an internal investigation to ensure that the investigation does not interfere with a prosecution investigation.

Internal investigations may also be considered a sign of a healthy corporate culture; on the contrary, if a company passively stands by while its agents commit criminal offences, a prosecutor or court may deem that such lack of action facilitates, condones or even encourages criminal misconduct.

Sometimes, internal investigations may validate a company’s position that it was unaware of, did not condone, or did not permit the conduct in question. Further, some EU doctrine provides for the mitigation of corporate liability and sanctions if an internal investigation exposes the commission of a criminal offence and allows a corporation to improve and optimise its corporate compliance programme to prevent similar offences from occurring.

When deciding to initiate an internal investigation into possible criminal misconduct, corporations should consider a number of factors. One crucial factor refers to preserving legal privilege over the proceedings or results of the investigation. For this purpose, involving an outside legal consultant is essential. Romanian law provides that, for the purposes of ensuring and protecting privilege, the professional documents and works of an attorney are inviolable. Searches of an attorney, his or her office or domicile, or seizing his or her documents or assets may only be carried out on the basis of a specific mandate. Furthermore, investigating authorities cannot access or seize documents reflecting communication between an attorney and the client, or notes made by the attorney in the defence of a client.

Before an internal investigation

12 How do allegations of misconduct most often come to light in companies in your country?

Internal investigations are triggered by information from various sources such as, whistleblowers, employees, internal audits, lawsuits, business partners, media reports, as well as from the prosecutor or other government authorities. For example, audits commenced by the Romanian tax authority could bring to light wrongdoing that could generate the need to investigate. Corporations must treat any allegations of misconduct very seriously.

Romanian law obliges persons who carry out control duties within the corporation to come forward and report suspected wrongdoing to the enforcement authorities. Corporations will want to conduct investigations to make an informed decision prior to self-reporting the matter to the enforcement authorities.

13 Does your country have a data protection regime?

Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation (GDPR)) entered into force in all EU Member States on 25 May 2018. The GDPR has a broader scope than the former Romanian legislation and seeks to protect the personal data of all natural persons in the European Union, regardless of the geographical location of the data controller.

The GDPR is directly enforceable in Romania, without any national legislation required. However, a law implementing the GDPR was adopted in late July 2018. This law maintains the main provisions of the GDPR but also sets forth special rules concerning the processing of genetic data, biometric data, data concerning individuals’ health, national identification numbers and data concerning work relations.

14 How is the data protection regime enforced?

To a large extent, the GDPR relies on the new mandatory reporting obligations that require data controllers to self-report personal data breaches that may risk the rights and freedom of natural persons. In the event of an infringement of GDPR provisions, the Romanian Data Protection Authority can issue a reprimand or impose a fine. Under the GDPR, fines depend on the severity of the infringement; fines for more minor infringements can be up to €10 million or 2 per cent of annual global turnover, while fines for more significant infringements can be up to €20 million or 4 per cent of annual global turnover.

15 Are there any data protection issues that cause particular concern in internal investigations in your country?

There are circumstances that arise where a company cannot process or transfer the personal data of an individual because they require, but do not have, the consent of the individual. In most cases, however, lack of consent would not prevent disclosure of information to the law enforcement authority, given that the grounds for disclosure would be the need to comply with a legal obligation.

16 Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress the company has if those limits are exceeded.

Both search warrants and dawn raids are common features of law enforcement in Romania; each is legally subject to various formal and material requirements.

The requirements on search warrants are:

  • they must be issued by a special judge at the request of a prosecutor only after a criminal investigation has been commenced;
  • in the event a trial is under way, a search warrant may be issued under a court order, ex officio or at the request of a prosecutor;
  • subject to the approval of prosecution, if during a search it is found that evidence or data were transferred or that searched persons were hidden in neighbouring places, the validity of the search warrant will be extended to cover such places;
  • suspects and their counsel have the right to be present during searches; however, they do not need to be informed until immediately prior to a search; and
  • when a search warrant entitles a search of a company’s premises, the legal representative or a company employee on the premises must be provided with the search warrant.

The requirements on the execution of dawn raids are:

  • they must occur between 6.00am and 8.00pm;
  • only objects, documents, correspondence and evidence related to the investigated offence can be seized;
  • correspondence between suspects or defendants and their legal counsel is subject to legal privilege and cannot be seized or searched by authorities;
  • judicial bodies may restrict the freedom of movement of persons on the premises and restrict access to the premises where searches are conducted;
  • the company being raided must be informed that it may be assisted by a lawyer. If the presence of a lawyer is requested, the dawn raid shall be delayed until the lawyer arrives on site, but not by more than two hours from the time the company has been informed of its right to be assisted; and
  • the use of force shall be adequate and proportional, for example to gain access to locked rooms (where access is refused by the person being raided or where there are reasons to believe that evidence will be tampered with if a prior request for access is made).

Company redress

If a search warrant or dawn raid does not meet the above legal requirements, any evidence obtained under that warrant may be deemed by a court to have been unlawfully obtained. This evidence may therefore be inadmissible in criminal proceedings and companies should seek to have it excluded. Also, court decisions based on unlawfully obtained evidence can be overturned. Assistance during the dawn raid by external legal counsel proves extremely useful in ensuring that the prosecutors do not seize documents or assets unrelated to the investigation or that breach privilege.

17 How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?

In 2016, the Lawyers’ Law clarified the rules surrounding legal privilege and specified that, as far as external counsel is concerned:

  • documents that include client–lawyer communications or lawyer’s notes regarding matters related to the defence of a client cannot be viewed, taken, seized or confiscated by prosecutors; and
  • attorney–client communication can only be obtained if it has been created in furtherance of an illegal or improper purpose, or relates to the promotion of an illegal act such as money laundering, terrorism, drug trafficking or various other corruption crimes.

Invoking privilege is therefore crucial in dawn raids, and it is important that companies are trained in recognising documents that are subject to legal privilege, and in effectively opposing attempts by the investigating authorities to access these materials. For this reason, having external counsel on the ground during a dawn raid is recommended.

18 Are there any privileges in your country that would prevent an individual or company from providing testimony? Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow in your country from such compelled testimony?

Witnesses may avoid an obligation to testify in some situations, such as when they have a family relationship with the defendant or suspect, or when medical, legal or religious circumstances give rise to confidentiality. Otherwise, during Romanian criminal proceedings, a suspect or a witness can be compelled to testify with a bench warrant (where the court orders the witness to be brought before the court).

When a witness has been compelled to testify, the court may assess the probative value of the witness’s evidence and give appropriate weight to that evidence in any relevant decision. Further, witnesses can be criminally charged with perjury if they make false statements in their testimony.

In the event that a witness or defendant’s answer could give rise to self-incrimination, he or she has a right to silence.

19 What legal protections are in place for whistleblowers in your country?

While whistleblowing in the private sector is not broadly regulated, whistleblowing in the public sector is. The law protects individuals who come forward and report a breach of law committed within a public authority or institution, central or local public administration bodies, or state-owned companies. The mere act of reporting misconduct cannot trigger disciplinary misconduct against the employee, except where such reporting is purely vexatious or in bad faith.

Under the relevant public sector legislation, a whistleblower may report misconduct related to a defined list of crimes, including corruption and assimilated offences, offences against the financial interests of the European Union, discriminatory treatment or practices, public procurement and non-reimbursable financing.

Whistleblowers in the public sector benefit from a presumption of good faith. Upon request from a whistleblower subject to a disciplinary investigation, the authority or entity must invite the press or broadcast media and a representative of the union to the disciplinary hearing. Any sanction imposed against a good-faith whistleblower in the public sector may be overturned easily in a court of law.

In more extreme situations, the Criminal Procedure Code offers surveillance, escorted travel, and identity protection to whistleblowers (and their family members) if there is a reasonable suspicion that their life, physical integrity, freedom, assets or professional activity could be jeopardised as a result of their whistleblowing.

If the whistleblower is also the party prejudiced through the criminal deed, he or she may – during the criminal investigation – ask for an attorney to access the file, to be periodically informed about the status of the investigation, to participate in any of the investigative measures (except for surveillance and dawn raids), and to formulate requests and provide written submissions. The victim’s attorney would also be entitled to sufficient time and access to prepare an appropriate pleading. Access to the file may be temporarily restricted only if it may impede or hinder the criminal investigation.

20 What rights do employees possess under local employment law that determine how they are treated within a company if their conduct is within the scope of an investigation? What employment rights would attach if they are deemed to have engaged in misconduct? Does it differ for officers and directors of the company?

Typically, when allegations of misconduct against an employee (including officers and directors, if retained under an employment agreement) are made, employers may start an investigation into the alleged misconduct.

During a disciplinary investigation, employees are entitled to:

  • receive written notice of the allegations brought against them (which must provide sufficient information about the scope of the allegations to enable the employees to prepare a proper defence) before the disciplinary hearing;
  • be provided with ‘reasonable time’ between the receipt of the notice and any hearing, in order to prepare a defence; and
  • be informed of (and to exercise) the right to defend themselves and to seek assistance, either from a lawyer, or from the trade union of which the employee is a member.

During the disciplinary investigation, employees may raise all arguments and provide all evidence which they wish to bring in defence. The disciplinary hearing cannot extend to matters of which the employee was not previously notified. If a disciplinary hearing is held without such prior information on the scope of the allegations being investigated, and a disciplinary sanction is applied, the sanction can be overturned in court.

If the investigation establishes that the employee has violated a law or internal regulation, the company may impose any sanctions permitted by law or internal regulations on the employee, including dismissal, issuing a warning or demotion.

21 Are there disciplinary or other steps that a company must take in your country when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation? Can an employee be dismissed for refusing to participate in an internal investigation?

Employers have discretion to investigate and sanction a particular case of misconduct (including where such misconduct may constitute a criminal offence).

In Romania, a company cannot take any action (except for a written warning) against an employee suspected of misconduct until it has conducted an internal investigation. In certain situations, employees may have their employment suspended if they are suspected of criminal conduct. For instance, if there are pending criminal charges against an employee that are incompatible with the position held, the company may suspend the employment relationship, including remuneration, until a final decision is rendered in the criminal file.

During an internal investigation, employees suspected of misconduct must be given an opportunity to present their defence. However, they may refuse to participate. If the employee chooses not to participate, the Labour Code allows employers to make a determination on the investigation even without the employee’s participation. The employee cannot be penalised for merely refusing to appear before the disciplinary commission during the disciplinary hearing.

To the extent an employee refuses to participate in an investigation related to another employee, if the first employee has knowledge or holds evidence crucial to finding the truth in the investigation, the first employee may potentially be subject to disciplinary measures. It is unlikely, though, that an employee’s refusal to participate in the disciplinary investigation of another employee would represent sufficient grounds for dismissal. Romanian law provides a progressive scale of sanctions, from a written warning to dismissal, and a disciplinary sanction must be taken in light of several criteria, including the seriousness of the breach and the consequences of the misconduct.

Commencing an internal investigation

22 Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?

The best practice for commencing an internal investigation requires the preparation of a plan setting out elements such as the scope, approach, responsibilities and the steps relating to communication and disclosure, preservation of evidence, securing witness testimony while information is still fresh in the minds of the various participants in or witnesses to the alleged misconduct. The preparation and execution of this plan are essential to successfully conduct an investigation in a manner that allows the company to argue an efficient and consistent corporate culture of compliance within the investigation, while limiting exposure and mitigating the potential risks of a formal investigation.

23 If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?

In some situations, companies and individuals must report crimes or potential crimes to police. For instance, any person (1) holding a managerial position (or an oversight authority) within public administration or within a public authority, a public institution or other public legal entity, and (2) who, in the exercise of their responsibilities, has acquired knowledge of the commission of a criminal offence that warrants a criminal investigation, must immediately file a referral to the relevant criminal investigation body and take steps to preserve the crime scene and material evidence.

This obligation also applies to any person mandated by public authorities to perform (or oversee) a public-interest service who has, in exercising their responsibilities, acquired knowledge of the commission of a criminal offence. And in general, all individuals must immediately report knowledge of any offence against human life.

Additionally, persons with control functions prescribed by law must notify enforcement authorities if they become aware of information related to potential corruption or corruption-assimilated offences. Failure to comply with the above obligations is in itself a criminal offence and could result in prosecution.

Companies are not legally required to take internal steps, other than in circumstances that give rise to mandatory reporting. It is, however, both prudent and ethical to undertake steps to ensure that the offending behaviour ceases, any evidence relating to the offending behaviour is retained and protected, and future misconduct of that kind is prevented. This helps build a culture of compliance, and may assist the company – in a future formal investigation – to argue that it has implemented and enforced appropriate mechanisms to curb illegal conduct within the company.

24 At what point must a company in your country publicly disclose the existence of an internal investigation or contact from law enforcement?

Romanian law does not oblige companies to disclose the existence of an internal investigation or any contact from law enforcement. However, depending on the situation, companies should consider disclosing the situation to demonstrate the intent to fully co-operate with the relevant authorities. Depending on the type of investigation conducted, proactive behaviour may be recommended in order to prevent reputational backlash arising from a press release by the relevant investigating authority (the DNA, for example, regularly publishes reports on investigations that have started, especially if they involve high-profile cases or persons).

25 When would management typically brief the board of a company in your country about an internal investigation or contact from law enforcement officials?

Management should inform the board immediately to ensure an independent team is put in place to manage the situation, and plan and run the investigation. It is also advisable that local management only provide administrative support to the independent team to ensure the independence and impartiality of the investigation. Further, the earlier the company’s headquarters are informed, the sooner a plan can be implemented to manage public communication regarding an investigation.

26 What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?

Upon receipt of a subpoena, the company should immediately alert its internal compliance and central management representatives and seek legal advice on Romanian law from external counsel. Measures to preserve all relevant documentation and data must be taken immediately. External counsel will assist the company to minimise risks and determine the most appropriate strategy for the company to take in responding to the subpoena.

27 How can the lawfulness or scope of a notice or subpoena from a law enforcement authority be challenged in your country?

A company can challenge a subpoena or orders for production of documents before the relevant chief prosecutor or court. Prosecutors are generally given wide discretion to conduct investigations and, in practice, subpoenas are upheld. However, a warrant to search a premises and seize assets cannot be challenged effectively before it is implemented.

Attorney–client privilege

28 May attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?

Documents, information and data of any type, irrespective of their format are protected by attorney–client privilege when they:

  • are deemed by the client to be confidential and provided to the lawyer for the purposes of the legal advice sought;
  • were created or issued by the lawyer in relation to the legal advice sought by the client; and
  • are communications or correspondence between the client and lawyer (or the lawyer and another lawyer also bound by confidentiality) relating to the legal advice being sought by the client, or consist of notes or comments taken or prepared by the lawyer on the basis of information related to a particular case.

Companies should take the following steps to protect the privilege and confidentiality of an internal investigation:

  • Retain a lawyer to coordinate and execute the investigation and ensure that retention is explicit in a written agreement and registered in the lawyer’s registry of contacts.
  • Ensure that the privileged character of documents is protected.
  • Avoid recording legal advice or creating additional documents relating to legal advice, for example summaries, internal emails, discussions or minutes of meetings.
  • Unless communicating to lawyers, make all communication as factual as possible (do not take views on whether something was legal or illegal, appropriate or inappropriate, or raise potential weaknesses, risks or vulnerabilities).
  • Consider whether the investigated issues will justify the recovery of previously deleted or older versions of documents, instant messenger communications, emails or text messages.
  • Consider the list of people with access to the works and documents of the investigation procedure.

29 Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?

Legal privilege protects confidential communication between a lawyer and client, if the communications relate to the seeking and receiving of legal advice. For legal entities, the definition of a ‘client’ is limited to persons that legally represent the entity (based on the legal entity’s charter), or are empowered by the entity to seek and obtain advice on behalf of the legal entity.

If communication is shared with third parties or parties who are not considered ‘clients’, that communication may no longer be considered confidential and loses its privilege.

30 Does the attorney–client privilege apply equally to in-house and external counsel in your country?

Under Romanian law, communications with in-house legal counsel who are not admitted to the Bar are not protected by legal privilege.

A 2010 European Court decision (CJEU Case C-550/07 P, Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v. European Commission) found that, at least in terms of competition law, communication with in-house counsel is not considered to be privileged. It was found that, although in-house counsel are enrolled in the Bar or Law Society, and are subject to professional ethical obligations, they are not as independent from their employer as external counsel. Privilege in competition matters now only applies to communications with external counsel who have been retained by the client through a written and registered agreement.

Based on this decision, it is sensible for companies to assume that any in-house counsel communication may not be protected by legal privilege.

31 To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?

Waiving legal privilege does not fall under any of the mitigating circumstances provided by law. It may potentially fall under the scope of the wider mitigating factors relating to circumstances that reduce the gravity of the offence or the degree of risk posed by the offender, but applying this criterion is at the discretion of the court.

Nonetheless, in determining the penalty applicable in a particular case (which can be anywhere between the minimum and maximum thresholds provided by law), the court will take into account the gravity of the offence and the degree of risk posed by the offender, including the offender’s conduct after the offence and during the criminal investigation. Co-operating with the investigation, and being forthcoming with information (for example, by waiving legal privilege), could therefore count towards a more lenient sentence.

32 Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?

The concept of a limited waiver of privilege is not regulated. However, that should not preclude one’s ability to waive privilege only with respect to certain aspects or documents.

33 If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?

Maintaining confidentiality is regarded as an absolute obligation for lawyers in Romania. Therefore, even if privilege has been waived in another country, the lawyer must maintain the privilege in Romania, except where a client waives privilege specifically in relation to the lawyer or the information becomes public.

34 Do common interest privileges exist as concepts in your country? What are the requirements and scope?

The concept of common interest privilege does not exist in Romania.

35 Can privilege be claimed over the assistance given by third parties to lawyers?

Legal privilege can be claimed on any documents or information created, exchanged or disclosed during the professional services rendered by a lawyer, provided the client has retained the lawyer through a written agreement registered in the lawyer’s registry of contracts.

This privilege will extend to lawyers’ associates, employees, subcontractors, other lawyers that co-operate with the lawyer and any individual who is helping the lawyers in carrying out their jobs. However, lawyers must warn these persons of their obligation to respect the privilege. If other parties such as accountants or experts have been consulted, but not retained by a lawyer, privilege will not apply.

Witness interviews

36 Does your country permit the interviewing of witnesses as part of an internal investigation?

Companies may gather information by interviewing witnesses during internal investigations, but there is no legal obligation on a potential witness to testify in internal investigations. However, in practice, employees are bound to co-operate and testify in accordance with the internal code of conduct of the company, and this may be considered a facet of the broader obligation of loyalty to the employer that employees have under the law.

37 Can the attorney–client privilege be claimed over internal witness interviews or attorney reports in your country?

If a lawyer conducts interviews to provide legal advice on a matter, the records or report of the interviews may be privileged. However, as discussed above, this privilege may be waived in some circumstances. Best practice would see lawyers recording interview notes as their ‘impression’ of an interview, rather than as a verbatim transcription thereof.

38 When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?

Romanian labour law does not specify how an interview (of employees or third parties) should be conducted. However, employers should strive for fairness and transparency when conducting interviews, treat interviewees appropriately and avoid leading questions or prejudicing witnesses’ answers. Further, employees generally must assist in all aspects of an internal investigation, including interviews, if this obligation is included in the company’s code of conduct or under the more general obligation of loyalty to employers. Confidentiality and respect for private life should also be ensured, so that information obtained in relation to other individuals is not distributed except on a ‘need-to-know’ basis and is subject to appropriate confidentiality safeguards that are in place.

If the person interviewed is the person accused of misconduct, and the company wishes to take corrective measures, the company must give the employee notice of the allegations, sufficient information and reasonable time to prepare a proper defence, and notify the employee of the right to a defence and legal assistance.

39 How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?

There are no prescribed methods for conducting a witness interview. Companies either retain external counsel or conduct the interviews with their internal compliance teams. If external counsel is retained to conduct the interview, it is customary for the lawyer to inform employees that he or she does not represent them. Nevertheless, an employee has a right to legal representation during the interview. Also, it is customary in a witness interview to show documents to the employee if it is necessary to refresh the memory of the witness.

Reporting to the authorities

40 Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?

As discussed above, a variety of circumstances trigger mandatory reporting obligations. In practice, however, as law enforcement authorities are primarily concerned with investigating crimes, the enforcement of breaches of these obligations is usually considered ancillary.

One of the more problematic mandatory reporting obligations comes from corruption legislation, which requires certain categories of individuals to report indications or knowledge of potential corruption, even where these may be the sole result of a purely vexatious or unsubstantiated claim. While the intent of the legislature was to maximise cases of suspected corruption being alerted to the prosecutors, and ensure that the reporting obligation was triggered without the need to investigate the merits of the suspicion, such mandatory reporting obligation opens the door to potential investigations by law enforcement authorities in purely speculative or bad-faith cases.

Reporting offences against human life, or offences that have resulted in loss of human life, is also mandatory for any individual under Romanian law.

41 In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?

This issue is currently the subject of public debate in Romania. The advice given to companies would vary depending on the individual matter and require the careful assessment of a company’s duties, and the risks and benefits of self-reporting. One considerable benefit is that the relevant authorities in Romania may agree to non-criminal penalties or other benefits for self-reporting companies.

For certain criminal offences (such as giving a bribe and acquiring influence), a person (physical or legal) who reports its participation in a criminal offence will receive leniency under criminal law, if the self-reporting is done before law enforcement authorities become aware (by any other means) of the offence.

42 What are the practical steps you need to take to self-report to law enforcement in your country?

Companies should thoroughly investigate the issue and the surrounding circumstances to be reported to ensure that they are fully aware of all the issues that may arise during a law enforcement investigation. Next, the company should assess the benefits and potential setbacks of self-reporting, including whether the self-reporting entails impunity, or acts only as a mitigating factor or counts towards a lesser penalty; the timing and content of self-reporting and its effects on the organisation’s ability to conduct its business; a potential reputational backlash; or the risk of opening up the organisation to additional scrutiny. This assessment needs to be conducted carefully, with an external legal consultant specialised in crisis and reputation management. If the company decides that self-reporting is the most appropriate action, it should prepare a communication plan and ensure it is ready to co-operate with authorities and provide any requested support.

Responding to the authorities

43 In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?

As indicated above, a company should rely on the advice of external counsel regarding compliance with a document production request or a subpoena. The external counsel should engage in dialogue with the law enforcement authority regarding the scope of the subpoena and communicate the intent of the company to fully co-operate. Dialogue with the law enforcement authority is possible and advisable; authorities may view it as a demonstration of the willingness to co-operate and an act of good faith. If the company fails to comply with such a request within the established deadline, the prosecutor may obtain a warrant to search the premises.

44 Are ongoing authority investigations subject to challenge before the courts?

A company can file requests for quashing a prosecutor’s measures and orders. Such requests are reviewed and decided by the relevant chief prosecutor. In practice, challenges are filed before the relevant chief prosecutor; however, prosecutors are reluctant to uphold such challenges, unless there is a clear indication that the company’s legitimate interests are harmed. If the company alleging harm is not satisfied with the superior prosecutor’s decision, and human or property rights (whether tangible and intangible) are affected, the company may challenge it in court.

45 In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?

Companies should seek legal advice on legal requirements under both countries’ jurisdictions and their legal counsel should provide advice that details the appropriate strategy for the company to respond to the subpoenas and advise whether it is most appropriate to respond to notices or subpoenas separately or together.

46 If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for and produce material in other countries to satisfy the request? What are the difficulties in that regard?

If the material is in the company’s possession, the company should comply with the request for production. It may be argued that, even if the documents are not in the company’s possession, it would still have to comply with a request to produce those documents which, under Romanian law, should have been in its possession. If the material requested should be in the company’s possession under Romanian law but is in another country, the company should search in that country. If the material is not (nor should be) in the company’s possession, the company is not bound to make additional enquiries (although, if it is feasible to make enquiries and they do not entail expenditure of material time or resources, making additional enquiries may be a sign of active co-operation with the investigation).

47 Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?

Romanian law enforcement authorities frequently and successfully co-operate with foreign law enforcement.

The Criminal Procedure Code and Law No. 302/2004 on international judicial co-operation in criminal matters regulates Romania’s co-operation procedures on extradition, European arrest warrants, the transfer of criminal proceedings and sentenced persons, and the recognition and execution of judgments. These laws and the 2000 European Union Convention on mutual assistance regulate Romania’s obligations in providing and receiving mutual legal assistance, including the search, seizure and confiscation of assets.

Additionally, Romania has signed more than 25 bilateral treaties with other countries, including France, Italy and the United States, which enable it to provide and receive assistance in criminal matters.

48 Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?

The law enforcement authority is itself under a duty of confidentiality with respect to material it has accessed as a result of a request for production or a search warrant. Criminal procedure rules specifically require a strict level of confidentiality with respect to all information discovered during such procedures. Moreover, illegally disclosing data about an individual’s private life by a person who has had access to such data in the exercise of his duties, constitutes a criminal offence sanctioned by imprisonment or a criminal fine.

49 How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?

In these circumstances, companies should seek an exception and inform the relevant law enforcement authority that they cannot reasonably comply with the request without violating the laws of another country. Further, as the company receiving the request would not typically own the documents in another country, the company should direct the law enforcement authorities to the foreign entity holding the documents.

50 Does your country have blocking statutes? What related issues are implicated by complying with a notice or subpoena?

Generally, a company’s data is not protected under Romanian data protection statutes and, as a result, their obligation to comply with a notice or subpoena is not blocked by data protection statutes unless it involves the personal data of employees or clients (even in those cases, restrictions on consent to disclose would most likely be overridden by other legitimate grounds). The new GDPR, implemented in May 2018, has the same effect.

51 What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?

Compliance with a request for production of material is mandatory under the law – to do other­wise would be to act in breach of the law. Unless there are legitimate grounds to argue that a request violates specific rights or legitimate interests of the company (in which case the company is able to file a complaint against the order), the request should be complied with.

Furthermore, if the request is not complied with, a warrant may be issued to search the company premises to obtain such material.

Global settlements

52 Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?

Companies must cautiously weigh the benefits and risks of proceeding under such a settlement. Some of the factors that should be considered are:

  • the strength of the prosecution case, defence case and likely outcome of the case;
  • the sanction that would likely be imposed in the event of a conviction;
  • the object of the settlement and an assessment of whether the settlement is comprehensively defined;
  • the effect the settlement may have on any aspect of the company’s future activities and operations;
  • ensuring the settlement is consistent with the company’s internal regulations; or
  • consideration of any benefits derived, such as the potential for a guilty plea to act as a mitigating factor in sentencing.

53 What types of penalties may companies or their directors, officers or employees face for misconduct in your country?

Legal entities

The primary sanction imposed on legal entities by the Criminal Code is a fine of between 3,000 and 3 million leu. However, additional options are available, such as:

  • dissolving the legal entity;
  • suspending the legal entity’s activity for between three months and three years;
  • prohibiting the legal entity’s participation in public procurement procedures for between one and three years;
  • placing the legal entity under judicial supervision; and
  • publication of the sanctioning decision (at the company’s expense).

Individuals

For individuals, the main penalties are imprisonment and fines. Individuals may also be banned from exercising certain rights, receive a military demotion, or have their conviction judgment published at their own expense.

Individual employees, directors and the companies they serve can be prosecuted together. Further, the criminal liability of the company does not exclude the criminal liability of the individuals perpetrating the offence. During joint investigations and prosecutions, counsel normally co-operate, and the content of meetings held pursuant to such joint efforts should be subject to legal privilege.

Both companies and directors may be sanctioned as a result of their employees’ mis­conduct if they have failed to implement sufficient supervisory measures. In these circumstances, companies are commonly subjected to fines, disgorgement or refund of illegal funds, and exclusion from subsidies and public contracts.

54 What do the authorities in your country take into account when fixing penalties?

The gravity of the offence, and the threat posed by the convicted individual or company determine the severity and type of penalty. The following criteria are used to assess the gravity and threat:

  • the circumstances and manner of the commission of the offence, and the means that were used;
  • the threat to the protected social interest;
  • the nature and seriousness of the outcome produced by the offence or other consequences of the offence;
  • the reason for committing the offence and intended goal;
  • the nature and frequency of offences in the indicted person’s criminal history;
  • the indicted person’s conduct after committing the offence and during the trial; and
  • the indicted person’s level of education, age, health, family and social situation.

Where the law provides for alternative penalties, the court may also use these criteria to assess which penalties are most appropriate.

When determining the value of a corporate fine, in addition to the above criteria, courts will consider a company’s financial status and any benefit derived by the company as a result of the crime.

55 Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?

Romanian legislation does not provide for non-prosecution agreements or deferred prosecution agreements for corporations or individuals.

56 Is there a regime for suspension and debarment from government contracts in your country? Where there is a risk of suspension or debarment or other restrictions on continuing business in your country, what are the options available to a corporate wanting to settle in another country?

If found guilty of certain criminal offences, such as corruption, organised crime, money laundering or fraud, corporations are automatically excluded from participation in public tenders. This applies whether it is the company, or a member of its management body, that has been convicted. Under Romanian law, this additional criminal penalty means that those companies are prohibited from participating, either directly or indirectly, in procedures for the awarding of government contracts.

57 Are ‘global’ settlements common in your country? What are the practical considerations?

Global settlements do not occur in Romania; however, at sentencing, the national authorities may take into account sanctions imposed on companies by their foreign counterparts.

58 Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?

Parallel civil actions are allowed; however, in practice they are often suspended until the conclusion of the criminal proceedings, because findings of fact in criminal courts may influence civil courts.

Parties of civil matters, such as plaintiffs, do not have access to authorities’ or criminal investigation files because investigations must maintain confidentiality and are not made public.

Publicity and reputational issues

59 Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.

The procedure and information obtained during criminal investigations is not public. Moreover, during the course of a criminal investigation, the prosecutor may restrict access to the case file for up to 15 days if access could prevent a proper criminal investigation.

Once a case is before a court, (unless protected by legislation – for example protected witnesses), the criminal investigation and subsequent information becomes public (although the court may, in particular and limited circumstances, judge the file in chambers, without access of the public to the proceedings). This does not mean that the entire file is generally accessible to the public, but requests (e.g., by journalists) may be made on the basis of Romanian freedom of access to information regulations.

60 What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?

The appointment of a public relations advice team is crucial to develop and follow a well-planned strategy. Relevant stakeholders, experts and legal consultants should work together to prepare public statements and to avoid damaging the company’s reputation.

61 How is publicity managed when there are ongoing, related proceedings?

There is no requirement to publicly manage a matter; however, it is recommended that companies manage the impact an investigation may have on their reputation and future activities. Strategic considerations are required to successfully manage public communication in cases of ongoing proceedings.

During the court proceeding phase, media access to information relating to the activity of the court and prosecutors’ offices is determined by judicial authorities to ensure a balance is met between disclosures in the public interest and ensuring that trials are not prejudiced. It is useful for companies to have an organised plan in dealing with media queries and communications relating to the proceedings.

Duty to the market

62 Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?

Disclosure by the company to the market is not mandatory and the decision must be made depending on the facts of the individual case, and by weighing up the factors discussed in question 23.

However, all decisions in criminal matters (including court-approved settlements) become public and are published on a court database. This publication is limited to basic information, such as names, the offence committed and the sanction imposed. As mentioned above, a company may be required – once convicted of an offence – to ensure publication in national media of the full court decision, at the company’s own expense.


Footnotes

Gabriel Sidere is the managing partner at CMS Cameron McKenna Nabarro Olswang LLP – SCP in Bucharest.

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