All in it together?

Ruth Green

The Panama Papers leak and other corruption scandals across the world have forced countries to up the ante. Global Insight examines the challenges and opportunities facing lawyers and lawmakers.

It wasn’t so long ago in July 2015 that business leaders in the UK were calling for the UK Bribery Act 2010, which only came into force in 2011, to be watered down, complaining it was creating too much red tape and making it difficult for British businesses to export their goods.

A year on the picture couldn’t be more different as the leak of 11.5 million documents in April 2016 lifted the lid on billions of dollars’ worth of assets squirrelled away in offshore accounts. Worse still, the UK was caught in the eye of the Panama Papers maelstrom: 113,000 of the 214,000 exposed corporate entities were registered in the British Virgin Islands, over which the UK has jurisdiction, and a further 1,924 UK-based professionals were identified as working with Mossack Fonseca to manage the named companies.

Then Prime Minister David Cameron had already announced plans for an anti-corruption summit in London in May, but suddenly the need for a global stance on bribery and corruption was all the more pressing. Many have hailed the summit, which was attended by around 300 people including heads of state from Nigeria, Colombia and Afghanistan, as a major breakthrough for the global fight against corruption.

Akere Muna, founder of the Cameroon chapter of Transparency International and the African Development Bank’s first-ever Sanctions Commissioner, told Global Insightthat it was a step forward both for ending illicit financial flows and creating greater transparency for beneficial ownership.

‘The conference in London I think will be a marker in terms of how the revolution in dealing with illicit financial flows goes from here,’ he said at the IBA Anti-Corruption Conference held at the OECD headquarters in Paris in June. ‘Especially the issue of beneficial ownership, which is rather hard for England that has a tradition of trusts – this is not known in civil law countries, it’s an English notion. But I think the London conference was a marker towards better days.’

The summit’s distinct lack of representation from the business world, however, has been strongly criticised, and certainly didn’t escape the notice of Drago Kos, Chair of the OECD Working Group on Bribery. ‘This is the part of the summit that I still don’t understand,’ he said during a recent IBA webcast. ‘We were not only missing the private sector; we were also missing some very important countries of the world there. They were simply not invited. We cannot fight corruption any more without engaging the private sector. We had the ministerial meeting in March here in Paris. We said that the private sector was our indispensable partner in the fight against foreign bribery. So there’s no future without engaging them.’

Eradicating corruption’s culture

Of course, private-sector engagement is crucial to tackling what the Panama Papers has exposed to be very much a global problem. Other parties, including lawmakers, state-owned entities, international federations, civil society, prosecutors and even lawyers, can also play their part in eradicating the culture of corruption that persists in countries worldwide.

The good news is we’re seeing positive signs that some countries are beginning to turn a corner. Take the examples of Romania and Brazil. When Romania joined the European Union in 2007 there were major concerns over the country’s dismal track record on corruption. Nine years on and Laura Kovesi, Chief Prosecutor of Romania’s National Anti-corruption Directorate (DNA), says the country is slowly changing its spots. ‘In the last three years the DNA has become an effective anti-corruption agency,’ she told Global Insight during an interview in Paris.

‘It started high-level investigations regarding high-level public officials and ministers, including the former Prime Minister Victor Ponta, and it has also reached convictions in high-level cases. All of this raised the level of trust of citizens, which is now at 62 per cent, the highest level amongst traditional institutions. The European Commission mentioned the DNA as one of the five best examples of anti-corruption agencies in Europe, so things are starting to change.’

Kovesi maintains that Romania still has a long way to go, but warns that government support will be vital to eradicating corruption altogether: ‘Parliament has attempted several times to amend legislation to try and reduce our investigative capacities or even eliminate some categories of officials from the remit of corruption offences. These attempts are a danger because if they succeed our efficiency will be affected.’

Brazil is another country where corruption has implicated both governmental and public officials, as exemplified by the Operation Car Wash investigation, which has exposed a widespread kickback scheme at state-owned oil company Petrobras. Deltan Dallagnol, the chief prosecutor overseeing the investigation, who also spoke at the IBA Anti-Corruption Conference, says Brazil’s corruption problem is two-fold. ‘In my view we have two critical problems,’ he told Global Insight. ‘One is the criminal justice system, which does not work in regards to white-collar crimes and the second problem is the political system, which favours corruption as well because nowadays electoral campaigns depend on huge amounts of money in order for people to get elected.’

To date the efforts of Dallagnol and his team have recovered an estimated US$1.5bn in paid bribes. Like Romania, a slew of charges and convictions against members of Brazil’s Congress have raised public awareness of the state of corruption in the country. ‘For the first time in two recent polls corruption was pointed out as the major problem in Brazil, more than health, more than unemployment, because society has realised that this problem, corruption, has also affected other problems,’ he says.

Offshore and beyond

Operation Car Wash has already revealed that several high-profile political figures secretly diverted funds from Petrobras and carefully concealed them in offshore accounts and trusts to avoid suspicion. It comes as little surprise then that Dallagnol is strongly in favour of Brazil signing up to the new public register initiative that reveals the identities of the beneficial owners of shell companies. ‘That would help not only in Brazil, but everywhere where people use offshore structures in order to conceal the proprietary beneficiary of the funds – that is everywhere where crimes occur,’ he says.

While multilateral governmental initiatives certainly help support the work of independent prosecutors like Dallagnol and Kovesi, there is also a role for lawyers in fighting corruption, notes Rob Wyld, Co-Chair of the IBA Anti-Corruption Committee. ‘Lawyers are invariably involved in setting up transactions and acting for clients,’ he says. ‘It is invariably clients – both companies and individuals – who, if they are involved in corruption, often lawyers have a role in advising them about their conduct and setting up transactions. [Lawyers are] hopefully not doing it illegally or unethically but when it does expose them to risk they need to be aware of it.’

Ruth Green is Multimedia Journalist at the IBA and can be contacted at ruth.green@int-bar.org