Employment & Labour Law
Ordinance no. 2022-408 of 23 March 2022 radically changed the system of liability for public managers by abolishing the Court of Budgetary and Financial Discipline and the jurisdictional powers of the Regional Audit Chambers in favour of a new unified system of liability common to authorising officers and public accountants.
This system was accompanied by the creation of a new court of first instance, the Court of Audit Litigation Chamber, and a court of appeal, the Financial Court of Appeal.
In this case, the Financial Court of Appeal was seized of a ruling by the Court of Audit's Litigation Division concerning management irregularities affecting a local semi-public company, which subsequently became a local public company.
Faced with management difficulties, this local public company entrusted an interim management service to a company, which assigned this task to an employee.
This employee was given power of attorney over the accounts of the local public company, without having any delegation of authority or signature for this purpose.
Access to the company's accounts enabled the employee to make personal expenditure for the benefit of herself and her spouse.
She was therefore prosecuted under the former article L. 313-6 of the Financial Jurisdiction Code, which punishes the act of procuring for another an unjustified benefit in cash or in kind, and article L. 313-4 of the Financial Jurisdiction Code, which punishes failure to comply with the rules relating to the execution of revenue and expenditure.
However, the Court ruled out the application of these offences in this case insofar as the former wording of these offences did not directly criminalise the granting of an advantage to oneself.
While self-benefit now falls within the scope of the new financial offence defined in article L. 131-9 of the Code des juridictions financières or article L. 131-12, which generally punishes breaches of financial rules, the latter provisions cannot be applied retroactively to acts committed before the reform of the liability regime for public managers came into force.
The Court therefore applied rigorously the principle of non-retroactivity of new criminal laws, considering that the new obligations imposed on public managers could not apply to acts committed before the reform came into force, i.e. on 1 January 2023.
The two successive CEOs of the local public company were also prosecuted. The Public Prosecutor's Office accused them of failing to monitor the actions of the aforementioned employee, of failing to perform the interim management contract and of making purchases in breach of public procurement rules.
The interpretation of the Financial Court of Appeal was awaited on this point insofar as these breaches must now be assessed on the basis of article L. 131-9 of the Financial Jurisdictions Code, which sanctions breaches that have caused "significant financial damage".
On this point, the Financial Court of Appeal placed the onus on the Public Prosecutor to demonstrate that the failure to comply with the rules of public procurement had resulted in an increase in expenditure to be borne by the body concerned, as no such proof had been provided in this case.
The Court went on to find that the sole use of interim management and its extension over three years did not constitute mismanagement, nor was it established that there was a disproportion between the fees paid and the services rendered.
Finally, the Court was able to consider that the financial loss suffered by the local public company, linked to the payment of irregular expenses, was not significant.
In assessing this factor, the financial appeal court considered that the corresponding amount of €15,000 should be assessed in relation to the average annual turnover of the local public company, the court also taking into account the fact that this transitional management had apparently made it possible to reduce the company's annual operating costs by almost 25%.
This ruling, which may be appealed to the Conseil d'Etat, has thus enabled the new Financial Court of Appeal to outline what will probably be the framework of its case law in future rulings, placing a significant degree of proof on the public prosecutor to justify all the constituent elements of the offences likely to target public managers.
This ruling also serves to remind the directors of local public companies that this new system of public liability does not apply only to State administrations and local authorities, but is subject to a broader scope of application, extended to all representatives, directors or agents of public or private law bodies likely to come under the control of the financial courts, and in particular local public companies.
CA fin. 12 Jan. 2024, no. 2024-01
