Friday, July 1, 2016

IRS’s investigation of Google: the PNF ball, but few resources – Challenges.fr

François Hollande had lunch with a table of choice at the lounge Vivatech Thursday 30 June: representatives of the digital multinationals. Eric Schmidt, chairman of the board of directors of Google, was present and even invited its stand to present him the autonomous car home. But on the tax issue, the two men acted as if nothing had happened … The firm is yet within the scope of a preliminary investigation for “aggravated tax fraud” and “organized gang bleaching aggravated tax fraud,” open in June 2015 and 24 May last hardened following a search of the national financial Parquet (PNF) in the Paris offices of Google France. According to estimates of World , the amount of the expected tax adjustment would be between 1.1 and 1.3 billion euros.

According to the information of challenges, the national financial Parquet (PNF) is “convinced of the strength of the case” against Google. A source close to the investigation ensures that “the PNF balls” to demonstrate the existence of a permanent establishment in France. For it is on this issue that the subsidiary of the US group is screened. Google France keeps repeating “collaborate in the best conditions with tax organizations” and “respect French law.” In fact, the company has cooperated during the search, given access to information on the monitors, and provided several terra bytes of data to investigators.



A real business in France

What investigators are looking into this mass of data? They are trying to prove that Google has a genuine commercial activity in France, all sales of services (Google AdWords, DoubleClick, AdSense, etc …) is not made in Ireland, where the corporate tax to 12 5% is one of the lowest in Europe. In theory, yet it is the Irish subsidiary that sells advertising to French customers. Specifically, when a company completes an online form to start an Adwords campaign (purchase of keywords), everything is automated. Similarly when Google acts as the advertising agency for in the pages of a media site. The company may very well be in direct contact with any person. In fact, regular, large enterprises and SMEs face significant size of the French representatives of the US giant to understand how to improve their web presence and improve their advertising revenue. As part of the investigation of Google France, the tax police heard partners and competitors of the Group, including employees of Havas and other advertising agencies to verify that they deal with every day. They would have said “never seen Irish” only French employees. Contacted by Challenges , and another Havas agency has not responded.

To prove his argument, the French tax authorities must succeed especially to delineate the activities of services and employees group. But about 700 workers in France – Google is not trying to diminish its real effective – difficult to know who does what, apart from the 150 engineers. Google is organized into small teams and even the DG France, Nick Leeder, only oversees 200 employees: commercial and partnership service. Met by Challenges before the search June 24, he used himself the term “commercial”, but after a few weeks, a spokesman request replacement with the “consultant”. Before “refuse to give the ratio by functions or a breakdown by project, it is too complex.” Viadeo and LinkedIn profiles of employees of Google France meet the deliberately vague descriptions ‘business consultant’. In February 2014, an article BFMbusiness.fr defended the idea that this nomenclature and the new name services ( “broad customer team” and “small & amp; medium business”), in place since the first search of the treasury at Google France in 2011, tend to eliminate the commercial activity at least on the front. A former employee of the hexagonal subsidiary nevertheless entrusts Challenges that “trade is more likely that the company would have us believe …”

The service providers PNF

Problem, the PNF and the central Office for the fight against corruption and financial and tax offenses (OCLCIFF) they have the means to oppose the digital giant? During the search, it sent 73 investigators … or all of its staff and the PNF has sent 5 of its 15 judges. A deployment impressive numbers corresponding to a first. The PNF has used the services of TRACIP company has made available a dozen computer experts for this busy day. These providers who perform judicial expertise and computing, offering solutions for digital forensics, data processing, and are regularly used by police services.

To the search of 24 May at Google, their intervention and copying data to external hard drives was billed a whopping 100,000 euros, according to our information, operation of data not included (sic). Since then, investigators OCLCIFF have to study the data collected. But they are many: 4 terabytes, the equivalent of 5,700 feature films or 4 times the collection of digitized books of the BNF. Worse, Google France transmitted between 2 and 3 terabytes of additional data from. The OCLCIFF has an old data processing software, installed on a single computer stations, and requires entering data 100 megabytes 100 megabytes. It’s not win. According to the same source, the claimant would have felt that the appropriate software, such as a version of EnCase Forensic, and a training session would cost up to 250,000 euros. Contacted, TRACIP refuses to confirm the amount of the quote: “it depends on what police or gendarmerie contacts us, the requested licenses, necessary services …” The PNF obviously does not want to communicate on the ongoing investigation. But internally, we recognize reflect on how the management of internal data analysis would be less costly than using private external expertise. The scale of the Google case is certainly one of the causes of this reflection.

Not enough to shake the most imposing GAFA but good first tracks. And France has been emulated. Yesterday a search was conducted at the headquarters of Google Spain in Madrid as part of an investigation of the local tax authorities seeking to determine whether the group says although all of its activities in the territory. To be continued.

Léa Lejeune Macke with Gaëlle.

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