Yearly Archives

2012

multilateral development banks

Why did you set up Bretton Woods Law?

By | Administrative Law, Development Banks, Employment Disputes, International Administrative Law, Multilateral Development Banks, News | No Comments

Hard to find specialist knowledge, borne out of experience

It’s not often that a company can claim to be unique and then actually live up to that claim – but Bretton Woods Law can.

When Lee Marler and Neil Macaulay decided to set up Bretton Woods Law, they knew that from first hand experience that their specialist arena – International Organisations Law, was woefully under-represented not just nationally but internationally. So as well as making good commercial sense to set up this country’s first legal practice focusing solely on International Organisations Law, it would also offer those International Civil Servants with employment disputes or companies being accused of sanctionable practices relating to projects funded by Multilateral Development Banks, a vital lifeline.

Whilst working together before setting up Bretton Woods Law, Neil and Lee were working in a practice where International Organisations Law made up a part of what they offered. They were surprised by the increasing number of potential clients who came knocking on their door over this three year period, looking for robust legal advice in this specialist sector. International Civil Servants locked in employment disputes with their employers or heads of international companies involved with projects funded by Multilateral Development Banks faced with serious accusations of corruption or fraud, came in equal numbers. Hence it seemed a natural route forward, when they decided to set up on their own.

International Organisations and its associated law were not new fields for this pair, Lee with a Masters in International Law, worked inside International Organisations for over 10 years, whereas Neil worked as a lawyer in the Civil Service for seven years, so it seemed a natural fit. This experience gave them an understanding in how these organisations operate and more importantly an insight into the complex personalities of these often intimidating organisations. This valuable viewpoint is rare, if not unique, and it is this inside knowledge of the organisations and their characters that gives Bretton Woods Law and their clients an enviable advantage.

Bretton Woods Law’s mantra is: “To represent clients without fear or favour” and of course to provide every client with first class legal advice. It is this ‘human’ aspect that both Neil and Lee feel is as important as the professional role they offer their clients. They have a passion for defending their clients, whatever there professional status – a secretary from an International Organisation will receive the same level of professional and emotional guidance as a CEO of an international company facing sanctions from a Multilateral Development Bank. Lee and Neil put this passion down to having lived and worked abroad for so many years and dealing with people who feel lost and don’t know which way to turn, they were both officers in the army and spent many years helping soldiers with the idiosyncrasies of the country, practices and culture they were stationed in, as well as its associated law practices.

Equalling their client focus is their all embracing knowledge of every aspect of the multifaceted arena of International Organisations Law. Members of Bretton Woods Law have two primary strands to their practices, firstly representing companies facing possible sanctions, including debarment or more serious repercussions by Multilateral Development Banks, as a result of an investigation into or an allegation of engaging in sanctionable practices (e.g. fraud and corruption). Secondly, an in-depth knowledge of International Administrative Law, which is the employment law that operates between International Civil Servants and their employer, means they are well placed to tackle and resolve any HR issues facing International Civil Servants. At first glace these two quite distinct areas seem unconnected, not so say Lee and Neil – in fact quite the opposite. They believe they complement each other, as they are always defending people who are suffering, professionally and personally, as a result of the decisions made by and within an International Organisation – and the uniting factor – Members of Bretton Woods Law are always there to defend them.

Defending their clients in front of these boards, committees and tribunals is of course why people come to Bretton Woods Law, as often clients have approached local legal providers and have been turned away. As it is not a commonly known area of law, they may have no one working in the practice that, for example, truly understands International Administrative Law and all the privileges and immunities the law affords the International Organistaions. So whom do they turn to?

Well members of Bretton Woods Law of course.

So back to the original question, “Why did you set up Bretton Woods Law”?

Answer: “Because we truly believe that there is no other grouping of lawyers who can truly defend people who find themselves in the situations that our clients do, and that could be described a basic breach of their human rights and that in everyone’s minds at Bretton Woods Law is unacceptable.”

If you are an International Civil Servant or facing accusations of corruption or fraud, related to a project funded by an Multilateral Development Bank and don’t know where to find the legal help you need, please click here to find you nearest office.

Des emplois des Fonctionnaires Internationaux en périle à l’UNESCO

By | Droit administratif, fonctionnaires, Les litiges du travail, News | No Comments

On 9th March 2012, the 58 member Executive Board of UNESCO adopted at the behest of the organisation’s Director General (Irina Bokova) a new ‘Road Map.’  The Road Map, which is in effect a euphemism for change, was necessitated by a cut of approximately US$188 million to the organisation’s operating budget as a consequence of the United States’ refusal to pay its levy.  Although the Road Map is designed to allow UNESCO to continue its programmes over the period 2012-2013, despite its severe funding crisis, it is nevertheless based on a series of austerity measures that, according to the Executive Board, will require Ms Bokova to:

  • abolish or redefine posts where appropriate with a view to shifting resources to priority areas;
  • develop a more flexible policy of contracts;
  • review current Staff Rules and Regulations.

Accepting the challenge handed to her by the Executive Board, Ms Bokova said:

“The Roadmap now provides the Organisation with a clear sense of direction, and it sets firm targets to meet as we move forward … I am determined to meet the targets we have set in all areas – including cost efficiency, restructuring and human resources management.  My commitment to reforming the Organisation is steadfast.  The reform we have started is irreversible”

Not surprisingly, a significant number UNESCO’s employees were angered by the Executive Boards resolution and the Director-General’s apparent desire to implement it, for it is inevitable that the implementation of the roadmap will lead to significant job losses and an overall diminution of the terms and conditions of service presently enjoyed by the organisation’s staff.  In effect, the resolution of the Executive Board risks taking UNESCO out of the United Nations common system.  According to the two unions that represent the interests of the organisation’s international civil servants (ISAU and STU), 600 of them “massed” in protest outside the room in which the Executive Board was sitting.  Sidiki Coulibaly, President of the ISAU, and Ronan Grippay, President of the STU, were eventually invited to address members of the Executive Board, but, by this late stage of the proceedings, their advocacy on behalf of the staff fell onto deaf ears.  ISAU and STU have now set up a ‘Crisis Committee’ with a view to overturning the resolution.

UNESCO and the international civil servants that it employees appear to be on a collision course that may well test and have ramifications for international administrative law.  UNESCO is a member of the International Labour Organisation Administrative Tribunal and it will eventually fall to that body to adjudicate any unresolved complaints that might flow from UNESCO’s adverse treatment of its staff.  If a settlement to the dispute cannot be found, then a myriad of issues may be litigated within and possibly outside of UNESCO’s internal justice mechanism, such as accrued rights, fundamental and essential terms of contract, equality of treatment, dignity of the international civil service etc.

UNESCO (the United Nations Educational, Scientific and Cultural Organisation) is an international organisation and a specialised agency of the United Nations.  Its employees are international civil servants.  UNESCO was established on 16th November 1945 and has its headquarters in Paris, France.  UNESCO’s mandate is to contribute to peace and security by promoting international collaboration through education, science and culture in order to further universal respect for justice, the rule of law, and human rights and fundamental freedoms.  The Organisation is the successor to the League of Nations’ International Commission on Intellectual Cooperation.  Its web-site is www.unesco.org.

If you are an International Civil Servant facing employment and HR issues, Bretton Woods Law has considerable experience in dealing with matters relating to International Administrative Law. To contact your nearest office, please click here.

Jobs of International Civil Servants at Risk in UNESCO

By | Administrative Law, Civil Servants, Employment Disputes, International Administrative Law, News | No Comments

On 9th March 2012, the 58 member Executive Board of UNESCO adopted at the behest of the organisation’s Director General (Irina Bokova) a new ‘Road Map.’  The Road Map, which is in effect a euphemism for change, was necessitated by a cut of approximately US$188 million to the organisation’s operating budget as a consequence of the United States’ refusal to pay its levy.  Although the Road Map is designed to allow UNESCO to continue its programmes over the period 2012-2013, despite its severe funding crisis, it is nevertheless based on a series of austerity measures that, according to the Executive Board, will require Ms Bokova to:

  • abolish or redefine posts where appropriate with a view to shifting resources to priority areas;
  • develop a more flexible policy of contracts;
  • review current Staff Rules and Regulations.

Accepting the challenge handed to her by the Executive Board, Ms Bokova said:

“The Roadmap now provides the Organisation with a clear sense of direction, and it sets firm targets to meet as we move forward … I am determined to meet the targets we have set in all areas – including cost efficiency, restructuring and human resources management.  My commitment to reforming the Organisation is steadfast.  The reform we have started is irreversible”

Not surprisingly, a significant number UNESCO’s employees were angered by the Executive Boards resolution and the Director-General’s apparent desire to implement it, for it is inevitable that the implementation of the roadmap will lead to significant job losses and an overall diminution of the terms and conditions of service presently enjoyed by the organisation’s staff.  In effect, the resolution of the Executive Board risks taking UNESCO out of the United Nations common system.  According to the two unions that represent the interests of the organisation’s international civil servants (ISAU and STU), 600 of them “massed” in protest outside the room in which the Executive Board was sitting.  Sidiki Coulibaly, President of the ISAU, and Ronan Grippay, President of the STU, were eventually invited to address members of the Executive Board, but, by this late stage of the proceedings, their advocacy on behalf of the staff fell onto deaf ears.  ISAU and STU have now set up a ‘Crisis Committee’ with a view to overturning the resolution.

UNESCO and the international civil servants that it employees appear to be on a collision course that may well test and have ramifications for international administrative law.  UNESCO is a member of the International Labour Organisation Administrative Tribunal and it will eventually fall to that body to adjudicate any unresolved complaints that might flow from UNESCO’s adverse treatment of its staff.  If a settlement to the dispute cannot be found, then a myriad of issues may be litigated within and possibly outside of UNESCO’s internal justice mechanism, such as accrued rights, fundamental and essential terms of contract, equality of treatment, dignity of the international civil service etc.

UNESCO (the United Nations Educational, Scientific and Cultural Organisation) is an international organisation and a specialised agency of the United Nations.  Its employees are international civil servants.  UNESCO was established on 16th November 1945 and has its headquarters in Paris, France.  UNESCO’s mandate is to contribute to peace and security by promoting international collaboration through education, science and culture in order to further universal respect for justice, the rule of law, and human rights and fundamental freedoms.  The Organisation is the successor to the League of Nations’ International Commission on Intellectual Cooperation.  Its web-site is www.unesco.org.

If you are an International Civil Servant facing employment and HR issues, Bretton Woods Law has considerable experience in dealing with matters relating to International Administrative Law. To contact your nearest office, please click here.

Fraud can be ‘reckless’ and doesn’t have to be successful

By | Development Banks, Fraud, Multilateral, Multilateral Development Banks, News, Sanctions | No Comments

The current definition of fraud being applied by the World Bank Group’s Sanctions Board is capable of a very wide interpretation and could lead to yet more companies and individuals facing debarment.

The present day version of ‘fraudulent practice’ being applied under the 2011 Procurement or Consultant Guidelines and Anticorruption Guidelines has clarified, simplified and possibly extended earlier definitions of this type of sanctionable practice and now includes “any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation”.

For the first time recklessness is expressed as an alternative way in which a company may commit a fraudulent practice, in other words the fraud need not be deliberate but includes the taking of a risk of misleading another party. Neither does a fraud (most commonly a misrepresentation of particular facts) need to succeed; the most recent definition now specifically includes ‘attempts to mislead’. It is also worth noting that the offence has been extended explicitly to include conduct or a misrepresentation that could lead to an obligation, such as having to perform works to a particular standard, being avoided.

Previous cases suggest that the submission of false performance and experience certificates or bolstered CVs as part of a contract bid is the most common way companies put themselves at risk of sanction for fraud; although of course the definition is sufficiently wide to cover a wide range of conduct throughout the execution of a contract. In the 2011 fiscal year the World Bank Group debarred thirty five companies and individuals from doing business on any of its projects that it finances around the world.

Companies and individuals need to be aware of the wide definition of ‘fraudulent practice’ to adhere to their compliance obligations. Bretton Woods Law view is that more companies face the prospect of debarment for a ‘fraudulent practice’ than for a corrupt one.

If you are concerned that you may have committed a fraudulent practice Bretton Woods Law can investigate the matter on your behalf, advise you in confidence whether you have a defence, such as bona fide mistake or “rogue employee,” and suggest how best to proceed.

Contact Bretton Woods Law: enquiries@brettonwoodslaw.com

Asian Development Bank gets tough with companies who engage in sanctionable activities

By | Corruption, Development Banks, Fraud, International, Multilateral, Multilateral Development Banks, News | No Comments

The Office of Anticorruption and Integrity (OAI) of the Asian Development Bank (ADB) recently published its 2011 Annual Report (‘the Report’).  Two core messages flow from it.  The first is that efforts to tackle fraud and corruption have never been greater.  The second is the importance of ‘communication’ both between the MDBs and through OAI’s aim to ‘empower’ those involved in ADB activities “with a deeper understanding of ADB’s approach to the anticorruption fight”.  An appreciation of both messages is of paramount importance both for board members and employees of companies operating within the sphere of international development and procurement.  Indeed, many may think they have a clear view of the meaning of fraud and corruption; they are often equally clear that ‘fraud’ and ‘corruption’ are words which do not apply to them or their companies.  Yet the Report to the President may make for chilling reading: it spells out with crystal clarity conduct which may be viewed by the ADB as fraudulent or corrupt; conduct which, if found, will almost inevitably lead to the imposition of sanctions.  What might surprise many, is just how easy it is for a company to cross the threshold into sanctionable conduct.

The Bribery Act 2010 has, understandably, focused the attention of many bodies corporate on the need to be cognisant of the risks associated with such corrupt conduct.  However, it is important not to lose sight of the fact that sanctionable practices are not always as flagrant as the soliciting or payment of bribes.  Indeed, in 2011, in the case of allegations dealt with by OAI, “fraudulent practice formed the majority of investigations at 60%”.  Of that majority, misrepresentation “constitutes 52% of allegations pertaining to fraudulent practice, with submission of false documents (including bank guarantees, bid securities, or curricula vitae) at 27%.  False or inflating financial claims represent 18% of the investigations”.  It is of note that CV fraud is cited, since this is all too often a significant, but unappreciated risk area for many companies.

Companies necessarily operate in a competitive commercial environment and it seems that a practise has emerged in the field of procurement of submitting what effectively amount to ‘representative proposals’, where the personnel included are viewed not so much as integral and inseparable to a proposal, but as merely representative of the staff who might eventually be provided, should the bid be successful.  Such behaviour manifests itself as a risk in a number of ways.  One of the most common is the inclusion by a company of contractors’ CVs in proposals when that company knows or suspects that the consultant in question is not available to complete the project it is bidding for.  Furthermore, it is not uncommon for contractors to be unaware that their CVs have been included in a proposal.  It is no defence for a company to cite normal commercial practice as an explanation for such conduct; indeed, a single instance of such a misrepresentation is sufficient for a Multilateral Development Bank (MDB) to impose sanctions – including debarment.  The threat for companies of sanctions and in particular, debarment, is now greatly enhance by the cooperative approach to tackling fraud and corruption, which is now at the heart of the efforts of all of the MDBs.

The Report states that it “is important to note that the communication and exchange of information among the integrity offices of other MDBs greatly assisted in OAI’s investigations in 2012”.  It goes on publically to confirm that “ADB routinely shares information with the World Bank’s Integrity Vice Presidency and has received assistance from said office that has facilitated OAI’s investigations”.  Furthermore, the Report openly states that “more than 45 officials from government agencies and 13 development institutions have access to ADBs sanctions list”.  It is, perhaps, worthy of note that the period of debarment most frequently imposed by the ADB, both for firms and individuals, fell into the 4-7 years category.  This is made all the more significant as the relevant qualifying period for considering automatic ‘cross debarment’ is met where the “initial period of debarment exceeds one year”.

It is quite clear, then, that the regime in which international development companies operate has never been stricter and companies should factor this into their risk management strategies.  Not only is the liability often strictly interpreted, but it is now undeniable that knowledge of infringements arising out of that liability is not only being shared, but is being acted on throughout the MDB community.  The report recognises that such cross debarment has the effect of “significantly extending the reach and impact of sanctions” and as a result, it is not surprising that discussions “to further harmonize debarment practices among participating MDBs continue”.  It is with these points in mind that the value of early internal investigation and advice cannot be underestimated when companies are facing allegations, or even accusations, of fraud or corruption.  A misjudgement in respect of a CV could have potentially catastrophic consequences for the entire business.

If you are worried that your company’s internal procedures and programmes might leave you exposed to possible  accusations of fraud and corruption, Bretton Woods Law’s International Organisations Consultancy Service is the perfect solution to ensure compliance with Multilateral Development Banks’ stringent policies. To discuss your company’s needs in person, please click here to contact your nearest office.

The settlement that dare not speak its name?

By | Corruption, Fraud, Multilateral Development Banks, News | No Comments

Recently, the OECD (Organisation for Economic Co-operation and Development) published its Phase Three Report for the UK in which it made various recommendations to the Serious Fraud Office in their continuing fight against bribery and corruption.  One of the OECD’s many recommendations was that the details of civil settlements should be made public instead of being protected by confidentiality provisions contained within settlement agreements.

Based in Paris, the OECD was founded in 1961 to formulate and promote policies that promote economic and social wellbeing worldwide.  Most recently, a key mission has been to enforce the OECD Anti-Bribery Convention, which was transposed into UK domestic legislation in the guise of the Bribery Act 2010.  The OECD is currently undertaking studies to verify each member state’s compliance in implementing the Convention.

Civil Settlements

Civil Recovery Orders have been used increasingly by the SFO to settle cases.  They are a useful tool for companies that discover that corrupt acts have been committed by employees or directors.  Wrongdoing can be reported to the SFO without it leading to criminal sanction.  A consent Civil Recovery Order is negotiated, the terms of which are binding on both parties and usually involves the company having to pay a fine as recompense for the illicit profit gleaned from the wrongdoing.  The settlement is then certified by a High Court Judge, without a hearing.  The terms of the settlement are kept confidential, as is typical of many civil cases in the UK.

There are several advantages to a Civil Recovery Order:-

  • Damage limitation regarding a company’s commercial reputation and the resulting loss of business
  • Resolution without criminal sanction
  • Insurance – some corporate insurance policies allow cover for legal fees in relation to civil litigation, which is not the case for criminal litigation, resulting in a saving for the company
  • A company will have some input as to the outcome of the settlement
  • A company will be certain of the sanction to be imposed, unlike in criminal settlements, as judicial intervention is minimal
  • Confidentiality avoids the setting of ‘precedents’ in formulating settlement packages, meaning each case will be considered solely upon its merits and the resources of each company or the value of the corrupt contract

A situation is less likely to result in criminal sanctions following a prompt self-referral, thus offering a company a valuable incentive to self-report.  This incentive would all but disappear if confidentiality were to be excluded.  There is equally an incentive for SFO to continue with such Civil Recovery Orders as they are a lucrative source of income for the State coffers and fines are sometimes reinvested into the developing world.

Criticism has been levelled at such settlements by practitioners and the judiciary alike.  Some are of the view that where a case does not meet the threshold for criminality, it makes little sense that a company should have to enter into a settlement where the SFO would have difficulty in proving a case against them at trial.  Similarly some critics insinuate that a company may effectively buy their way out of criminal sanction, thus compounding the original wrongdoing.  However, this is not strictly true: there is a certain degree of merit in a company voluntarily advancing evidence of corruption to a prosecutorial authority in an effort to change company ethics.  It would prove illogical and unjust for a company to be punished for coming forward in this way.

The consent Civil Recovery Order is a viable remedy for companies which undergo a change of regime at executive level, whereby the ‘guiding mind and will of the company’ adopts an attitude of introspective self-examination.  Although the OECD is against the confidentiality of the settlements on the basis that one cannot assess whether the penalty has been effective, proportionate and dissuasive, it is nevertheless a cost effective resolution for both parties without suffering the uncertainty and reputational risk of criminal litigation.

What the OECD fail to take into account is that the facts at the heart of any settlement may involve third parties involved in criminality and who may already be the subject of investigation or pending prosecution by the SFO, Department of Justice or multilateral development banks.  By keeping the facts confidential, there is no danger of potential targets being tipped off and, more importantly, no basis for repercussions against a company for being a whistleblower.  The facts may also inadvertently reveal the company’s commercial strategies or internal business practices which would otherwise be kept secret from its competitors.  It so follows that unless the full facts can be disclosed, there is little point in disclosing the terms of the settlement because in any event, the proportionality of the fine cannot properly be assessed.

Criminal Settlements

Civil settlements are not to be confused with criminal settlements incorporating an undertaking to make an ‘ex gratia’ payment.  Such settlements are conditional upon agreeing a basis of plea to a criminal offence.  The settlement is then presented to a Judge for approval.  The argument against confidentiality may be stronger in the case of criminal settlements, bearing in mind that criminal proceedings are conducted for the most part in open Court.

A term of the BAE Systems settlement agreement was that any ex gratia payment to the Government of Tanzania would be less the amount payable in fines imposed by the English Courts.  On one level a condition such as this ties the hands of the Judiciary insofar as a Judge may be reluctant to divert ill-gotten funds from the humanitarian projects for which they were originally destined.  Some may argue that this renders the Judiciary somewhat impotent by fettering their ability to impose the unlimited financial penalties prescribed by Parliament.  Last month, the remaining £29.5m from the BAE Systems settlement was used to fund the purchase of textbooks and other equipment to furnish schools in Tanzania.  This sum can hardly be described as not being dissuasive, especially when the case may open up an avenue for independent and concomitant commercial sanctions such as debarment or even cross-debarment by multilateral development banks, which can lead to disastrous financial consequences.  Such sanctions are not subject to the principle of double jeopardy.

That said, there is also one potential disadvantage to companies in keeping settlements confidential: a company loses a valuable resource in promoting its zero tolerance attitude to corruption.  The publicity of such suits, while initially potentially damaging, is an excellent opportunity for companies to reinforce their clients’ confidence that they will not perpetuate corrupt practices by ordering internal investigations and introducing stringent corporate compliance programmes.

Bretton Woods Law is experienced in negotiating settlements with the SFO on behalf of corporate entities.  Should your company have a matter which may be eligible for self-referral, please get in touch with one of our Counsel for a consultation.  Please click here to find your nearest office.