Risks and Threats Corruption Legal Profession

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    Risks and threats

    of corruption and

    the legal profession

    Sy 2010

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    www.anticorruptionstrategy.org

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    Risks and threats of corruption and

    the legal profession: Survey 2010

    Contents

    Introduction 6

    A.Aboutthesurvey 6

    B.Surveymethodology 7

    C.Abouttheauthors 7

    Survey results 9

    A.Perceptionsoftheimpactofcorruptiononthelegalprofessionathomeandabroad 9

    1. PercePtionS of the imPact of corruPtion on the legal ProfeSSion at home 9

    2. PercePtionS of the imPact of corruPtion on the legal ProfeSSion

    in neighbouring juriSdictionS 11

    B.Risksassociatedwithinternationalbriberyandcorruption 12

    1. Perceived imPact of corruPtion on foreign inveStment 12

    2. buSineSS and comPetitive riSkS 12

    C.Levelofawarenessoftheinternationalanti-corruptionregulatoryframework 16

    1. awareneSS of international anti-corruPtion inStrumentS 16

    2. awareneSS of national legiSlation with extraterritorial aPPlication 18

    D.Theroleoflocalbarassociations,lawsocietiesandlawrmsinaddressing

    thechallengeofcorruption 20

    1. bar aSSociationS and law SocietieS 20

    2. law firmS 21

    Conclusions and recommendations 25

    A.Summaryofconclusions 25

    B.Recommendations 25

    Annex 1 27

    Annex 2 28

    Acknowledgements 29

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    4 anti-corruPtion Strateg for the legal ProfeSSion

    List of Charts and Boxes

    Charts

    Chart1 Doyouthinkcorruptionisanissueinthelegalprofessioninyourjurisdiction?

    (byregions) 9

    Chart2 Doyouthinkcorruptionisanissueinthelegalprofessioninyourjurisdiction?

    (bycountries) 10

    Chart3 Doyouthinkcorruptionisanissueinthelegalprofessioninyourjurisdiction?

    (byage) 10

    Chart4 Doyouthinkcorruptionisanissueinthelegalprofessioninneighbouring

    jurisdictions? 11

    Chart5 Haveyoueverbeenapproachedtoactasanagentormiddlemanina

    transactionthatcouldreasonablybesuspectedtoinvolveinternationalcorruption,eg,foreignbribery? 12

    Chart6 Inyouropinion,whatproportionoflegalprofessionalsinyourjurisdiction

    wouldbewillingtoparticipateorfacilitateinternationaltransactionsthat

    theyrecogniseascorrupt,eg,foreignbribery? 13

    Chart7 Doyouknowofanylegalprofessionalsinyourjurisdictionwhohavebeen

    involvedininternationalcorruptionoffences,eg,foreignbribery? 14

    Chart8 Doyoubelievethatyouhavelostbusinesstootherlawrmsorindividual

    lawyerswhoarepreparedtomakeillicitpaymentstogovernmentofcialsonbehalfoforforthebenetofforeigncompanies/investors? 14

    Chart9 Awarenessofinternationalconventionsoncorruptionandbriberybyregion 16

    Chart10 Awarenessofinternationalconventionsbystateparties 17

    Chart11 Howresponsestopleaseselecttheinternationalanti-corruptioninstruments

    youarefamiliarwitharedistributedwiththepracticeareaofrespondents 18

    Chart12 Doesyourbarassociationorlawsocietyprovidespecicanti-corruption

    guidelinesforlegalprofessionals? 20

    Chart13 Doesyourbarassociationorlawsocietyguidelinesaddressspecicallythe

    issueofinternationalcorruption,eg,foreignbribery? 21

    Chart14 Wheredoesdealingwithcorruptionandforeignbriberyrisksrankwithin

    theprioritiesofyourlawrm? 21

    Chart15 Howresponsestowheredoesdealingwithcorruptionandforeignbribery

    risksrankwithintheprioritiesofyourlawrmaredistributedwithrespect

    tothepositionsheldbyrespondents 22

    Chart16 Doesyourlawrmhaveaclearandspecicanti-corruptionpolicy? 22

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    riSkS and threatS of corruPtion and the legal ProfeSSion: Surve 2010 5

    Chart17 Howresponsestodoesyourlawrmhaveaclearandspecicanti-corruption

    policyaredistributedwithrespecttothepositionsheldbyrespondentsin

    lawrms 23

    Chart18 Approximatelywhatproportionofyourforeignclientsrequireyourrm

    tocertifyanti-corruptioncompliance,eg,FCPAcompliance? 23

    Chart19 Hasyourrmbeensubjecttoanti-corruptionoranti-moneylaunderingduediligenceconductedbyforeignclients? 24

    Boxes

    Box1 Majorndings 6

    Box2 Distributionofrespondentsbygeographicalregion,ageandpositionintheirrms 7

    Box3 Internationalanti-corruptioninstruments 15

    Box4 Extraterritorialapplicationoftheoffenceofbribingaforeignpublicofcial 18

    Box5 Awarenessandage 19

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    6 anti-corruPtion Strateg for the legal ProfeSSion

    legal profession.1 As a consequence, lawyers may beat risk of violating this framework by, for example,their involvement as intermediaries in corrupt

    transactions that would leave them exposed topossible criminal liability.To gain a better understanding of the

    possible risks the legal profession faces in thisever-developing international anti-corruptionregulatory environment, an exploratory survey wasconducted among IBA members. The global survey

    was designed as part of the Anti-Corruption Strategyfor the Legal Profession. Its objectives are: to explorethe level of awareness of the risks of corruption;to investigate the legal professions awareness ofthe tools available to mitigate these risks; and toexamine the role bar associations, law societies andlaw rms have in ensuring the legal profession isequipped to engage effectively in the internationalght against corruption.

    The results of this survey were launched at the2010 IBA Annual Conference in Vancouver, Canada.

    A. About the survey

    In April 2010, the International Bar Association(IBA), in cooperation with the Organisation forEconomic Co-operation and Development (OECD)and the United Nations Ofce on Drugs and Crime(UNODC), launched the Anti-Corruption Strategy forthe Legal Profession, a project focusing on the rolelawyers play in ghting corruption in internationalbusiness transactions and the impact on thelegal practice of international anti-corruptioninstruments and associated implementing nationallegislation with extraterritorial application.

    A powerful and developed internationalregulatory framework to combat corruption in allits forms is now in place. It includes international

    legal instruments and national anti-corruptionlegislation that applies to corruption casesboth at home and abroad. Unfortunately, manylawyers remain unaware of the implications ofthis international anti-corruption regulatoryframework on both their legal practice and on the

    Introduction

    box 1 major findingS

    Nearlyhalfofallrespondentsstatedcorruptionwasanissueinthelegalprofessionintheirownjurisdiction.Theproportionwas

    evenhigherover70percentinthefollowingregions:CIS,Africa,LatinAmericaand,BalticStatesandEasternEurope.

    Morethanafthofrespondentssaidtheyhaveormayhavebeenapproachedtoactasanagentormiddlemaninatransaction

    thatcouldreasonablybesuspectedtoinvolveinternationalcorruption.Nearlyathirdofrespondentssaidalegalprofessional

    theyknowhasbeeninvolvedininternationalcorruptionoffences.

    Nearly30percentofrespondentssaidtheyhadlostbusinesstocorruptlawrmsorindividualswhohaveengagedin

    internationalbriberyandcorruption.

    Nearly40percentofrespondentshadneverheardofthemajorinternationalinstrumentsthatmakeuptheinternationalanti-

    corruptionregulatoryframework,suchastheOECDAnti-BriberyConventionandtheUNConventionagainstCorruption.

    Thelevelofawarenessoftheexistenceofanti-corruptionextraterritoriallegislationishigherthanthatoftheinternationallegal

    instruments:60percentofsurveyrespondentswereawareoftheFCPAanditsscope,while30percentwereawareoftheUK

    BriberyActanditsscope.

    Atotalof42percentofrespondentsagreedthatnationalanti-corruptionlawsandregulationswereeffectiveinpreventing

    bothinboundandoutboundinternationalcorruptioncomparedtoveyearsago.

    Youngerrespondents(aged20to30years)were,onaverage,lessawareofinternationalanti-corruptionlawsandnational

    legislationthanolderrespondents.

    Only43percentofrespondentsrecognisedthattheirbarassociationsprovidesomekindofanti-corruptionguidanceforlegal

    practitioners.Ofthese,onlyathirdsaidthatsuchguidancespecicallyaddressestheissueofinternationalcorruption.

    Lessthan40percentofrespondentssaidanti-corruptionwasapriorityattheirlawrmandjustunderathirdsaidthattheir

    rmsdonothaveaclearandspecicanti-corruptionpolicy.

    Morethantwo-thirdsofrespondentssaidtheirlawrmshadnotbeensubjecttoanti-corruptionoranti-moneylaunderingdue

    diligenceconductedbyforeignclients.

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    riSkS and threatS of corruPtion and the legal ProfeSSion: Surve 2010 7

    box 2 diStribution of reSPondentS b geograPhical region, age and PoSition in their firmS

    Partner 67%

    Associate 18%

    Other 15%

    Percentage of respondents by positions in the law firm

    Age 20-30 11%Age 31-40 29%

    Age 41-50 25%

    Age 51-60 21%

    Age 61 and over 14%

    Percentage of respondents by age

    Number of respondents

    1-5

    6-10

    11-20

    21-30

    31 and above

    No respondents

    Number of responses Jurisdictions

    1-5 Albania,Algeria,Austria,Azerbaijan,Barbados,Belgium,Bolivia,BosniaandHerzegovina,

    Bulgaria,Cambodia,CaymanIslands,CostaRica,Croatia,Cyprus,CzechRepublic,Egypt,El

    Salvador,Ethiopia,Finland,Georgia,Ghana,Guatemala,Honduras,Hungary,Iran,Ireland,

    Israel,Kenya,SouthKorea,Kosovo,KyrgyzRepublic,Latvia,Lebanon,Liechtenstein,Lithuania,

    Macedonia,Malaysia,Moldova,Nepal,Nicaragua,Oman,Pakistan,Panama,Paraguay,Poland,

    Qatar,Romania,Singapore,Slovakia,Slovenia,SriLanka,Syria,Taiwan,Tanzania,Thailand,

    Turkey,Uganda,Uruguay,Yemen,Zambia,Zimbabwe.

    6-10 China,Colombia,Denmark,France,Italy,India,Japan,Mexico,Portugal,Russia,SouthAfrica,

    UnitedArabEmirates,Venezuela.

    11-20 Argentina,Australia,Brazil,Canada,Germany,Netherlands,Norway,Peru,Spain,Sweden,

    Switzerland.

    21-30 Chile,NewZealand,Nigeria.

    31andabove HongKong,Ukraine,UnitedKingdom,UnitedStates.

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    8 anti-corruPtion Strateg for the legal ProfeSSion

    C. About the authors

    The survey and this report were prepared by the IBA,with input from the OECD and the UNODC. Thendings, interpretations and conclusions expresseddo not necessarily represent the views of the IBA,the OECD, the UNODC, or their member countries,including the States Party to the Convention on

    Combating Bribery of Foreign Public Ofcials inInternational Business Transactions and the UNConvention against Corruption (UNCAC). The IBA,OECD and UNODC do not guarantee the accuracyof the data included in this publication and acceptno responsibility for any consequences of their use.The term country or jurisdiction does not implyany judgment by the OECD or the UN as to the legalor other status of any territorial entity.

    Notes

    1 In this report, the international anti-corruption regulatoryframework is used to refer to the following body ofinternational law relating to anti-corruption: the OECDConvention on Combating Bribery of Foreign Public Ofcialsin International Business Transactions (OECD Anti-BriberyConvention), the United Nations Convention againstCorruption (UNCAC), the Inter-American Conventionagainst Corruption (IACAC), the African Union Conventionon Preventing and Combating Corruption, the Council ofEurope Criminal Law Convention on Corruption and theCouncil of Europe Civil Law Convention on Corruption, and

    Article 29 of the Treaty on European Union.2 A common international corruption scenario which has

    an impact on the legal community involves a companyapproaching a law rm or lawyer to act as agent or middlemanin a corrupt transaction that crosses borders in some mannerand which directly or indirectly involves government ofcials.

    This corruption may take the form of bribery, facilitationpayments, fraud, money laundering, among other potentiallycriminal conduct.

    3 Of the 642 private practitioners who started the survey, only574 of these completed it in full. In the analysis that follows,

    we use the maximum number of responses available for eachquestion.

    B. Survey methodology

    The survey was designed with the assistance ofanti-corruption experts including ofcers andmembers of the IBA Anti-Corruption Committeeand OECD and UNODC ofcials. It assessed legalprofessionals views on a number of importantissues, including:

    Perceptions of the risks of corruption in theirown jurisdiction

    Awareness of the international and domesticinstruments pertaining to transnational briberyand their implications for the legal profession

    Awareness of the extraterritorial application ofsome domestic anti-corruption legislation eg,US Foreign Corrupt Practices Act (FCPA) andUK Bribery Act (which is yet to come into force)

    Effectiveness of national laws and regulations toprevent corruption

    Level of understanding that legal professionals

    have about their role in the prevention ofinternational corruption2

    Vulnerability of the legal profession tointernational bribery and corruption in their

    jurisdiction and in neighbouring jurisdictions Measures taken by local bar associations to tackle

    corruptionThe survey represents a rst attempt to shed lighton the above issues, while care has to be taken

    when analysing the results, given that the sampleof respondents is not statistically representative ofthe countries covered by the survey. In total, 642professionals from 95 jurisdictions participated,3

    a list of the countries in each geographical regionused in this report is given in Annex I. Surveyrespondents were invited to answer questions onlinebetween 15 June and 5 July 2010. The respondentsrepresented members of the legal profession

    working in private practice in the following areas:practice groups; corporate law; criminal law; disputeresolution; energy, environment, natural resourcesand infrastructure law; nancial services; intellectualproperty, communication and technology;international sales, franchising and product law;maritime and aviation; public law; real estate; and

    taxation. The complete questionnaire can be viewedonline athttp://tinyurl.com/ACStrategy.

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    riSkS and threatS of corruPtion and the legal ProfeSSion: Surve 2010 9

    The role which local bar associations, lawsocieties and law rms play in addressing thechallenge of corruption in the legal profession

    (Section D)

    A. Perceptions of the impact of corruption

    on the legal profession at home and

    abroad

    1.Perceptionsoftheimpactofcorruptionon

    thelegalprofessionathome

    Survey respondents were asked whethercorruption is an issue in the legal profession in

    their own jurisdiction. Chart 1 represents theafrmative responses received, which are groupedby world regions.

    In the globalised economy of the early 21stcentury, an uncountable number of internationalbusiness transactions take place every day. Each

    poses an array of new opportunities for lawyers,but also challenges. Lawyers involvement in thesetransactions exposes them to the risks and threats ofinternational corruption. Unfortunately, however,lawyers often remain unaware of these risks andthreats. In recognition of this lack of awareness,this survey was organised to address the followingfour subjects: The legal professions perception of the impact

    of corruption on their profession at home andabroad (Section A of the report)

    Perceptions of the risks associated withinternational corruption for the legal profession(Section B)

    Levels of awareness of t...

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