With a packed programme at the International Bar Association’s (IBA) annual conference in Boston, working out which of the many (and sometimes dry) debates to attend is a challenge, but one of the stand-outs from the first day was the discussion on anti-corruption.
That this session was packed is unsurprising; one of the major forces currently shaping the legal profession at a global level has been the sustained crackdown on corruption in many forms, be it graft, tax avoidance or cartels.This factor has been enough to create a fundamental shift in the demand for high-end legal services away from transactional work – which is increasingly being handled in-house – in favour of contentious matters or risk management.
And the message from the panellists was clear: the pace of developments and the push towards more rigorous enforcement is not letting up with Canada, China and Brazil among the countries to demonstrate a more proactive stance against corruption over the last 12 months.
In the case of Brazil, Leopoldo Pagotto of Sao Paulo’s ZISP Law cited recent mass protests in triggering a reluctant political class to usher in tougher anti-bribery laws that will make it easier to pursue cases against corporates and senior officials in place of the kind of ‘flea-biting fines’ that businessmen largely ignored.
The World Bank’s Pascale Helene Dubois noted that the US is continuing its stance in aggressive enforcement of the Foreign Corrupt Practices Act, the legislation that has been widely copied by other nations. ‘The bottom line is that enforcement in the US is very strong,’ said Dubois, citing estimates that there are currently 95 public enforcement cases relating to FCPA violations, a figure that doesn’t cover actions against private companies.
In comparison, the UK remains in a ‘transitional phase’ according to Simmons & Simmons partner Nick Benwell, noting the time-lag on the cases coming through due to the Bribery Act, which is not retrospective in its remit. Benwell observed that the cases initially pursued in the UK have been small and straight-forward as expected, citing prosecutions against a failed taxi-driver who tried to bribe an instructor, and a student who attempted a £5,000 bribe to a tutor.
‘This is hardly the blockbuster prosecution we’ve been waiting for,’ noted Benwell to laughter among the audience. The UK experience has attracted considerable attention because of the embattled state of the Serious Fraud Office and current and controversial moves to usher in deferred prosecution agreements (DPAs) in the UK. DPAs, the main arm-twisting measure used in the US to secure settlements in white-collar criminal cases, are set to be implemented in the UK but details remain sketchy.
With the SFO under pressure, Benwell said more attention should be paid to the Financial Conduct Authority in terms of policing anti-corruption, with the new body currently investigating anti-corruption controls in the asset management industry.
If policy is in flux in the UK, Paul Hastings partner Bruno Cova noted the widely fragmented and often poor record on anti-corruption in Europe, with established economies like France and Spain seeing few convictions and his native Italy continuing to struggle with ‘ethical standards [that] are not terribly high’.
In contrast, Wenjie Qian of Chance Bridge Partners in Beijing noted the recent push towards tough anti-bribery enforcement in China, with foreign pharma companies being this year dragged into a major investigation. Warning that foreign companies need to have ‘China-specific’ anti-corruption defences, Qian told delegates: ‘Global companies are facing a new and significant risk [in terms of tougher bribery enforcement]. Companies need to redouble their efforts before Chinese authorities knock on their doors.’
Rounding up the discussion, Miami-based lawyer Edward Davis noted the relative lack of focus on regaining money lost through corruption. ‘Asset recovery has long been the red-headed stepchild of the anti-corruption world. Why are we not focusing on the money?’
Davis argued that a lack of transparency or a clear model for damages and a lack of co-operation between governments and private parties is holding back asset recovery, with damaging consequences. He said encouraging private actions could ease the pressure on government agencies and act as a ‘force multiplier’ in anti-corruption.
Citing figures that the EU was losing around $120bn a year through corruption, against $62.5bn last year in Africa, he argued that taxpayers deserved far better redress. ‘We need to take away the money, take away their toys.’
Rounding off the debate he concluded: ‘We can’t just accept that this is culture. We are lawyers, we need to be the tip of the spear here. We can’t just say: “They’re Brazilians, they pay bribes.”‘
Judged by the growing focus of the profession on anti-bribery, most lawyers agree.