BUSINESS AND HUMAN RIGHTS
Former UN secretary general Kofi Annan at the IBA Opening Showcase Session on …. Informed Corporate lawyers that they had a higher duty than simply meeting clients’ expectations when it comes to business and human rights.
Annan who was speaking on the role of lawyers in implementing the principles, alongside John Ruggie, architect of the UN Guiding Principles on Business and Human Rights, emphasised the vital role in-house and corporate lawyers have in turning the principles into practice.
“You are in a unique position of influence. You give your clients the advice they want to hear, but you need to go beyond that,” he told the packed conference session. He noted as an example that paying a reasonable salary to young lawyers, should not depend on minimum wage legislation.
‘Tell your clients you don’t need to wait for a government to pass a new law to do what’s right.’
Ruggie rejected criticism of the principles on the ground that they are ‘soft law’, pointing out that the ‘black-letter’ law of formal international treaties had been in decline for two decades. “The last multilateral treaty to be lodged with the UN was in 2010, and that was a minor revision,” he said.
“If you’re only going to advise on black letter law, you are going to have less and less to advise on.”
He further described as ‘an interesting challenge’ his latest project, to draw up a human rights strategy for the international football body FIFA.
Adopted in 2011, the principles amount to a non-binding but UN-endorsed corporate social responsibility charter. Ruggie described them as being based on three pillars: a state duty to protect rights, a corporate responsibility to respect rights and access to remedies for victims of abuses.
This IBA Opening Showcase marked the Opening of the Showcase sessions, which took place during the week-long Conference in Vienna that brought together 6,000 members of the legal professionals from corporations, governments and regulatory bodies.
ANTI CORRUPTION & BRIBERY LAWS
On the matter of bribery and corruption globally, it was agreed that the threat of a single employee making a corrupt decision, which puts the company in violation of laws in its home country or another where it operates, is a daily concern for compliance officers.
Participants at the session on Corporate Corruption and Bribery organised by the Anti-Corruption Committee, participants noted that the best way to defend against such a threat is training schemes and internal whistleblower systems.
Noteworthy was the fact that more countries are introducing legislations to address corruption and bribery, regardless of the fact that new ways of evading these laws are constantly being invented.
Speaking at the session, the Co-chair of the session, Peter Rees QC stated that despite the best efforts of some countries, rooting out corporate corruption would be somewhat of a herculean task. “Corporate corruption is something that will continue to happen and people will find more creative ways of obtaining business,” he said.
At the session, participants deliberated on whether global anti-bribery programs have really worked and how the differences between anti-corruption legislation affect businesses.
Rees warned that different regulations can create difficulties unless a company adopts the sensible approach of complying with the most stringent policies.
He said, “Accepted business practices in some countries can be blatant violations of anti-corruption law else- where. In parts of West Africa it is not unheard of for an intermediary to be hired and paid a commission to broker a deal. Blind eyes are turned when part of that commission is used for bribes to close the deal.”
Under both the UK Bribery Act and the US Foreign Corrupt Practices Act (FCPA) if these actions are committed by the agent of a company with business in the UK or US, the company is liable for those violations. In response, businesses are adopting clear chains of command and reporting structures that will help boards and CEOs be confident in the way deals are negotiated and paid for.
Delegates argued that in areas where bribery and corruption are a long-standing part of the culture, ensuring these practices are followed can be difficult. This is particularly true when the companies’ leadership is far away. They noted that it can sometimes seem as though deals are impossible to secure without succumbing to corrupt acts.
But Rees noted that this was a matter of cultural acceptance, which can change as local businesses look to have a global presence where these sorts of practices aren’t tolerated and when international business open up that operate without accepting bribes or illicit favours.
M&A AND DUE DILIGENCE
At a session tagged, ‘M&A gone bad’ organised by the IBA’s M&A and Corporate Law Committee, it was stated that avoiding bad M&A and mitigating risk is a fine art.
According to the panel of discussants made up of panelists from China, Japan, Brazil, Australia, Switzerland, Canada, the US and UK, the red flags in any deal can vary hugely depending on where the deal is taking place and the type of transaction.
According to them, corruption, antisocial forces, fraud and obscured ownership were some of the more common trials faced by legal practitioners.
Thus together, they examined some protective legal mechanisms, the financial hit of pulling out and the nature of post-transaction litigation.
Carl Cheng, a Shanghai-based senior counsel of Zhong Lun Law Firm, presented the imagined scenario of a US company subject to Foreign Corrupt Practices Act (FCPA) rules attempting to acquire a Chinese target.
“In the process of reviewing the closing documents you find that the way the local target makes its sales involves payments to a buying entity with a government connection,” said Cheng, “so at the very last minute you find an FCPA problem”.
Cheng stated that this example is common place in a lot of countries.
“It seems to me to be a problem in all emerging markets and in the EU as well. Frankly, I’m surprised when the clients are surprised,” he said.
Government control of entities in China may be hidden by the fact that ownership does not always denote control. Cheng cited the case of a chief executive appointed by the Communist Party, and the difficulties in post-acquisition litigation if judge bribery was a risk. “Due diligence is not enough, you need forensic due diligence,” said Cheng as he criticised the naivety of the traditional Anglo-Saxon deal-making approach in certain cases.
According to Keita Tokura, from Anderson Mori & Tomotsune in Tokyo, Japan has its own pitfalls. The lack of incentives to sellers against withholding information and the difficulty of redress for buyers if they could have known the issues at the time of signing are two such problems. Japan also has a zero tolerance policy if the subject or any person around the subject has any connections to the country’s mafia organisations.
While stressing the importance of due diligence Francisco Müssnich, senior partner at Brazilian firm Barbosa Müssnich & Aragão warned that “due diligence is no guarantee that there is no fraud”. Along with the rest of the panel, Müssnich advocated thorough and detailed drafting of documents and careful analysis of corporate governance laws.
GENDER ISSUES AND LAWS ON RAPE
The session presented the position of the law regarding rape in various jurisdictions across the world. Factual incidents of rape and testimonies from were also highlighted. Particular reference was made to developments in the UK, the US, Nigeria and Sri Lanka.
Ruwani Dantanarayana, from John Wilson Partners in Sri Lanka, informed participants that 2,008 rape and incest cases were registered in 2014 by the police. “Only one was convicted and 1,792 are pending”, said Dantanarayana, who examined laws that exempt the Muslim community from statutory rape in marriage.
Meg Strickler, from US law firm Conaway & Strickler, argued that legal systems should “take the shame away from the victim and protect the victim”. She criticised the slow mechanisms in the US for collecting DNA evidence. Gillian Rivers from Penningtons Manches in London argued that there was much still to do in England and Wales, point- ing to police failures in appropriately handling victims and social attitudes heavily stigmatising victims in the press. Olufunmi Oluyede, from TRLPLAW in Nigeria, found it troubling that the Nigerian law today still requires the corroboration of evidence in rape cases. Oluyede said, “The corroboration issue is completely out of place.” She pointed out that these crimes were not usually committed in public and a lack of witness evidence often threw cases out immediately.