The International Administrative Law Centre of Excellence publishes the Internal Justice Systems of International Organisations Legitimacy Index 2015

By | IAL, International Administrative Law, News | One Comment

On 1st and 2nd October 2015, the third annual International Administrative Law (“IAL”) Centre of Excellence conference took place at King’s College, London, where delegates represented 26 international organisations, including the World Bank, the EU, UNIDO, EPO, WHO, WTO, EBRD, AsDB, IAEA, OECD and OECD.

The IAL Centre of Excellence annual conference brought together international civil servants, union representatives, independent lawyers and lawyers for human resources and management, academics, and others interested in IAL from around the world, with a view to shaping and improving this area of the law.

The conference topics included recent developments in IAL, the concept of fairness, whistleblower protection at the UN, updates on legal insurance and class actions, the EU courts and violation of Article 6 ECHR.

The conference culminated with the presentation of the second version (2015) of the IAL Centre of Excellence’s Internal Justice of International Organisation Legitimacy Index. The 2015 version of the Index comprises of 28 international organisations of different sizes and from different continents, and ranks the internal justice systems of international organisations against one another with reference to customary international human rights law and general principles of international law.

Access the 2015 Index and more general information on the IAL Centre of Excellence

 

Bretton Woods Law Canada Opens for Business in Montreal

By | Multilateral Development Banks, News | No Comments

All members of Bretton Woods Law, London (“BWL”) are delighted to announce that Bretton Woods Law Canada (“BWLC”) opened its doors to clients in Montreal’s fashionable and avant-garde ‘old quarter’ on Monday, 12th October 2015. Ayman Daher and Alan Sarhan are the two partners leading the efforts of this new and dynamic law firm, which has a specialisation within Canada and elsewhere on governance, compliance and business risk, as well as the traditional Public International Law practice areas normally associated with BWL.

Ayman and Alan, who are supported internationally by the team at BWL, are highly talented and accomplished lawyers at the Quebec bar, who have unparalleled experience within Canada in dealing with anti-corruption issues within large multinational North American companies, including defending companies accused by the Multilateral Development Banks (e.g., African Development Bank (“AfDB”), the Asian Development Bank (“AsDB”) and the World Bank Group) of having in engaged in sanctionable practices on MDB financed projects.

With comprehensive assistance provided as necessary from BWL barristers, BWLC will advise and help Canadian and other companies in all aspects of anti-corruption work, including the design and implementation of ‘gold standard’ integrity compliance programmes.

To learn more about BWLC and to view the profiles of Ayman and Alan, visit our sister website at www.brettonwoodslaw.ca

Posted by: Lee Marler and Neil Macaulay – BWL’s Co-Heads of Chambers

Uncontested Sanctions Proceedings – the SDO Option

By | Multilateral Development Banks, News, Uncategorized | No Comments

The World Bank’s Suspension and Debarment Officer takes into account “a past systemic deficiency of corporate controls” and “mitigating factors” in deciding the sanction against Berger Group Holdings, Inc.

1. In uncontested sanctions proceedings Berger Group Holdings, Inc. (“BGH”), the controlling affiliate of Louis Berger Group, Inc. (“LBG”), has accepted the sanction of a one-year conditional non-debarment recommended by Pascal Dubois, the World Bank’s Suspension and Debarment Officer (“SDO”) with effect from 29th January 2015.  LBG was sanctioned to a single year of debarment with conditional release after accepting making corrupt payments to government officials in Vietnam under two World Bank financed projects.  The amounts of the payments are not specified in the SDO’s publication of her decision.

2. Initially Dubois had recommended a sanction of two years conditional non-debarment against BGH, but took into account “additional mitigating factors” provided by the Company in their written Explanation, as allowed for under the Bank’s Sanctions Procedures, which effectively halved the period of sanction.  The published notice issued by Dubois office, the Office of Suspension and Debarment (“OSD”) includes the following:
“In determining this recommended sanction, the SDO took into account that, while the evidence did not support a finding that Berger Holdings was directly involved in the corrupt practices at issue, the evidence did support a finding that Berger Holdings bore a degree of responsibility for its failure to adequately supervise its subsidiary, particularly given the direction to Berger Holdings “members” to assist in Berger Holdings subsidiaries’ compliance efforts, as well as the apparent involvement of Berger Holdings executives in directing LBG efforts in Vietnam. In addition the SDO noted that while Berger Holdings’ failure of oversight might otherwise be seen as an isolated incident, the evidence relating to the history of fraudulent activity by Berger Holdings subsidiaries identified in 1990 and 2000 World Bank sanctions cases, a 2006 Asian Development Bank sanctions case and a 2010 Deferred Prosecution Agreement with the United States Department of Justice indicates a past systemic deficiency of corporate controls, warranting the recommendation of a conditional non-debarment.”

3. LBG had initially been subject to a recommendation of three years debarment by Dubois prior to submission of the written Explanation.  The notice explains the reduction of the recommended debarment period by two thirds in its case as follows: “In determining this recommended sanction, the SDO took into account, as aggravating factors, the involvement of LBG management in the misconduct and the fact that LBG engaged in a repeated pattern of misconduct. The SDO took into account, as mitigating factors, the fact that LBG terminated the employment of individuals responsible for the misconduct and that LBG has implemented an effective compliance program, without prejudice … The SDO also took into account INT’s representations as to extent of LBG’s cooperation during the course of the investigation, noting in particular that LBG (a) undertook a robust internal investigation of misconduct at the company, (b) voluntarily refrained from bidding on Bank-financed projects and (c) provided INT with extensive documentary evidence.

4. It is noteworthy that the earlier recommendation for LBG acknowledged the implementation of a compliance program, but did not include evidence as to the extent of its implementation. In this instance, it appears that the SDO was provided in the Explanation with sufficient evidence to determine that an ‘effective’ compliance program was now in place at the company.  These proceedings show the benefits to companies facing and admitting sanctions proceedings of making full use of opportunity provided by the written Explanation to the SDO together with supporting evidence to prove that the mitigating factors are present and thus convince the SDO to reduce the level of sanction.

5. The mitigating factors identified by the SDO mirror some of those provided for in the World Bank Sanction Guidelines. The guidelines indicate that significant reductions of up to 50% of the sanction period can be allowed when a company has taken voluntary corrective action, and up to 33% may be reduced for cooperation with the investigation. In exceptional cases an even greater reduction may be warranted. By contrast the Guidelines also set out the most common aggravating factors, such as Interference with the Investigation, which could increase the sanction by 1-3 years and a Past History of Adjudicated Misconduct, which brings a guideline 10 year increase.

6. The differing sanctions imposed against Berger Group Holdings Inc. and Louis Berger Group Inc. serve as a useful reminder that the individual culpability of each accused entity should be considered rather than a single sanction imposed against a whole group of companies. In this case the parent company received a significantly lesser sanction than its subsidiary on the basis that it bore a degree of responsibility for failing to adequately supervise Louis Berger Group Inc. and was not directly involved in the corrupt practices at issue.

7. Louis Berger included in its press release of 4 February 2015 the following reflection on the issue of allocating the sanction:
“While we believe it would have been more appropriate if the World Bank had sanctioned Louis Berger International or one of its subsidiaries that now owns the Asia operations where these activities occurred, today’s development is an important milestone in our five year reform program”.

8. These proceedings also highlight the option of utilizing the uncontested sanctions process in cases where a company prefers not to challenge the accusations or sanctions recommended by the SDO.  Other options that are usually considered include entering into a Negotiated Resolution Agreement with the Bank’s Integrity Vice Presidency (“INT”) – and on this issue see the recent article posted by the BWL MDB Team on this website – or having the case determined by the Sanctions Board, particularly if the misconduct allegation is disputed or the recommended SDO sanction is considered to be too severe.

Companies facing or fearing sanctions proceedings by one of the Multilateral Development Banks have a range of options available in dealing with those proceedings each of which has advantages and disadvantages and may wish to contact the BWL MDB Team of Neil Macaulay, Lee Marler, and Jazz Omari  through enquiries@brettonwoodslaw.com or on +44 (0) 20 7764 0745 for confidential advice and guidance in respect of the particular circumstances of their case.

Settle or fight the MDBs – that is the question

By | Multilateral Development Banks, News | No Comments
  1. Companies and individuals that are accused by the Multilateral Development Banks (“MDBs”), such as the African Development Bank (“AfDB”), the Asian Development Bank (“AsDB”) and the World Bank Group, of having paid bribes in order to be awarded MDB financed contracts around the world or who have engaged in other sanctionable practices (e.g., fraud, collusion, coercion or obstruction) on MDB financed projects often face a difficult, yet significant decision at a relatively early stage of proceedings: do they (1) deny the allegations and fight the case within the respective sanctions regime of the accusing MDB; (2) accept the allegations but seek to be judged by the relevant sanctions board, committee or commissioner; or (3) do they seek to enter into some form of settlement with the relevant bank or banks.  In the experience of the BWL MDB Team (henceforth “BWL”), especially of late, the answer very much depends upon the MDB involved and of course the underlying facts of the actual case.
  2. With one or two exceptions, the anti-corruption offices of the MDBs are extremely keen (some might argue too keen) to convince companies accused by them of misconduct to enter into settlement agreements, for such agreements (1) resolve the case in the absence of it being tested before a properly constituted sanctions board, committee or commissioner, and with few if any rights of redress or appeal; (2) provide a fertile ground for the gathering of additional evidence and intelligence to be used by the relevant MDB against other companies; (3) raise in some cases revenue for the MDB; and (4) save the anti-corruption offices from doing their jobs, as they place the burden and cost of detection and investigation upon the company.
  3. There are of course pros and cons for entering into a settlement agreement that on its face resolves the difficulties confronted by a company embroiled in a dispute with an MDB anti-corruption office.  The advantages in theory are that (1) the company accused of engaging in a sanctionable practice will receive a reduced period of debarment if it accepts its guilt or possibly ‘does not admit nor deny’ its culpability; and (2) it will not be sanctioned further by the MDB for any past inculpatory matters that emerge as a consequence of doing the work required by the MDB under the terms of the agreement (e.g., additional investigation of MDB financed contracts).  The disadvantages are that (1) the obligations imposed upon the company are onerous (e.g., (a) the imposition of an MDB approved integrity compliance program; (b) the conduct of a Red Flag Review of MDB financed contracts awarded to the company under which the company or its representative seeks to identify indicators of sanctionable practices; (c) undertaking investigations of those contracts that emit, for example, indicators of sanctionable practices; and (d) on-going collaboration obligations, including informing on other companies); (2) implementing the obligations is expensive and time consuming; (3) the sanction in the case of the World Bank’s Integrity Vice Presidency (“INT”) risks being longer than that initially recommended by Pascale Dubois, the World Bank’s Chief Suspension and Debarment Officer in any Notices of Sanctions Proceedings (“NoSPs”) issued by her office or imposed after a plea or contest by the World Bank’s Sanctions Board; (4) INT in particular may veto a company’s choice of law firm or lawyers to undertake the settlement obligations that it is required to undertake and pay for (at least in Europe, legal assistance of one’s own choosing has been regarded for some time as a basic human right see e.g., article 6(3)(c) of the European Convention on Human Rights (1950) (“ECHR”)); (5) the work of any third party Compliance Monitors appointed under direction from the MDB to verify Integrity Compliance Program (“ICP”) implementation is not necessarily confidential and may be shared with national prosecutors and regulators; (6) no immunity is offered by INT (the situation is entirely different at other MDBs) from referral to national law enforcement and prosecutorial agencies (“Criminal Referrals”); and (7) Criminal Referrals of third parties often exposes the company to the risk of identification and prosecution.  INT is unusual, if not unique, as it insists that it is obliged to leave open the possibility of making Criminal Referrals in a settlement agreement and will not therefore countenance negotiating such a provision out of the agreement, despite the merits of doing so (Is it prudent, sensible or even commercially expedient to enter into an NRA with INT under which one may be obliged to disclose incriminating evidence that could be referred on for prosecution before the criminal courts?).
  4. The anti-corruption office of the AfDB is the Integrity and Anti-corruption Department (“IACD”), which is led by Anna Bossman, a Ghanaian law graduate and former Deputy Commissioner of the Ghanaian Commission on Human Rights and Administrative Justice.  Clair Wee, a Singaporean commercial lawyer and long standing counsel to the AsDB runs the AsDB’s Office of Anti-corruption and Integrity (“OAI”) and the ‘sanctioning arm’ of the World Bank’s Integrity Vice Presidency (“INT”) is run by Steven Zimmerman (a former US Federal Prosecutor) and managed by Leonard McCarthy (a former South African prosecutor and Head of the now disbanded Scorpions).  Other smaller and viable anti-corruption offices do exist within other MDBs (see e.g., the Office of the Chief Compliance Officer (“OCCO”) at the EBRD, the Office of Institutional Integrity (“OII”) at the IADB and the Group Integrity Office (“GIO”) of the Islamic Development Bank), but this note will in the main deal only with the ‘Big Three’ and will not concern itself with the offices of organizations that operate less mature sanctions regimes, such as the Fraud and Investigation Division (“IG/IN”) of the European Investment Bank (“EIB”).
  5. INT is by far the largest anti-corruption office within the MDB community in terms of budget and numbers, and not surprisingly it has traditionally been seen as the ‘big kid on the MDB block’, but of late it is being surpassed and outpaced in BWL’s view by the smaller, less bureaucratic and more commercially focused offices operated by the AfDB and the AsDB.  It would appear to BWL that IACD and in particular OAI want to see companies reformed and thereafter succeeding commercially, and be able to work on AfDB and AsDB projects and thereby assist in fulfilling the mandates of those organizations.  IACD and OAI seem to appreciate that the root cause of corruption in their respective countries of operation is corrupt public officials who seek to extort bribes from foreign companies and it would seem by their actions that they do not want to drive those companies into bankruptcy.  It occurs to BWL that IACD and OAI grasp the very simple point that there is little to be gained from debarring reforming or reformed companies and their subsidiaries for often long periods, when those same companies are best placed to deliver AfDB and AsDB projects in often challenging environments.  The risk of adopting an overzealous or aggressive debarment strategy is that all the large and capable companies are prevented from bidding on MDB financed projects, leaving those projects to the mercy of the less well qualified.
  6. INT’s version of a settlement agreement is known as a Negotiated Resolution Agreement (“NRA”), which in itself amounts to an oxymoron, as the title creates the false impression that a meaningful dialogue occurs between the parties, when it does not.  In BWL’s experience, INT has a set template for a NRA and it will not waiver much, if at all from its standard terms and conditions.  Unlike with IACD and OAI, there is precious little in the way of negotiation and all that seems to be open for debate with INT is the terms of the actual sanction.  This lack of lack of negotiation has much to do with the fact that the ‘deck is stacked’ from the outset against companies accused by INT of misconduct; there exists an inequality in the bargaining positions of the parties, for accused companies seeking a non-contentious resolution may already be subjected to and suffering from Early Temporary Suspension (“ETS”), which is the process at the World Bank by which companies are prohibited from bidding on World Bank financed projects before INT has even concluded its investigation (the legitimacy of ETS and temporary suspension more generally at the World Bank is arguable and potentially open to contest on the basis that it offends the presumption of innocence – a fundamental human right in civilised rule of law systems (see e.g., article 6(2) of the ECHRs) – and causes financial loss and reputational damage to companies that have not been found culpable of or admitted any wronging).  In contrast, IACD calls such agreements what they actually are: Settlement Agreements and, as one would expect, the terms and conditions are open for reasonable discussion and debate.  OAI does not have a formalised settlement procedure, preferring instead to deal with each case on its individual merits and there is much to be said for this flexible approach.
  7. BWL barristers are regularly called upon to (1) defend companies and individuals who have been accused by INT, IACD and OAI of having engaged in sanctionable practices on World Bank, AfDB and AsDB financed contracts respectively; and (2) approach those offices with a view to agreeing disclosure protocols that will facilitate voluntary disclosures.  It is fair to say that in our experience, IACD and OAI approach settlement negotiations in an entirely different manner to INT.  The former and in particular OAI adopt a strategic and commercial attitude, which properly reflects their position within an international financial institution that lends to States in need of assistance.  Whereas INT in contrast aligns itself far more with US law enforcement and behaves in a quasi prosecutorial role, which is undoubtedly due to the fact that INT is run and led by former prosecutors and staffed by inter alia former police officers.  It appears to BWL that IACD and OAI are focused on the respective mandates of their institutions, whereas INT seems to concentrate more on the need for punishment of those that it perceives have transgressed the World Bank’s rules.  INT operates undeniably within an administrative and contractual structure with a mandate to ensure that World Bank funds reach their intended destination and it is arguable that its quasi-law enforcement stance is ultra vires and open to contest.
  8. One thing is for sure, a company must in BWL’s view tread with caution before going down the path of an NRA with INT, for it would certainly appear of late that the disadvantages outweigh the advantages of such an arrangement.  Companies and individuals are better advised in general to consider either accepting the sanction recommended by Pascale Dubois in any NoSP issued by her office or taking their chances and fighting the merits of the case before the World Bank’s Sanctions Board, as it is more than likely that the company will receive a lesser penalty and avoid the burdens associated with an NRA, including the risk of Criminal Referrals.  In contrast, it is BWL’s experience that a company or individual can walk with far more confidence towards a settlement with IACD or OAI, for those offices and their respective staff – due mainly to their professional backgrounds – do not see themselves and nor do they behave as an arm of law enforcement.  Unlike their colleagues in INT, IACD and OAI officers do not, at least to BWL’s knowledge, participate in, for example, searches of premises undertaken under warrant by national law enforcement bodies.
  9. Another certainty is that a company that is deciding whether to go or has decided to go down the route of a settlement agreement must be represented and advised by lawyers who actually know what they are doing.  This seems self-evident, but BWL often encounter the aftermath of companies who have been poorly advised and who have taken decisions that prove to be regrettable.  Companies should do their due diligence before instructing advisers and taking advice from them to ensure that they (1) are qualified and are acting as lawyers, and can assert legal professional privilege; (2) have real and verifiable experience of defending entities accused by the MDBs of sanctionable practices and not merely experience of designing and implementing integrity frameworks; and (3) are not MDB appeasers, in the sense that they are not advocating whole scale capitulation and disclosure of incriminating material.  Companies and individuals should only engage competent and MDB experienced lawyers who will if necessary fight for their clients and give sound advice, which may be to reject a settlement and proceed to contest the accusations, both on jurisdiction and on the merits.
  10. So to answer the question, the BWL MDB Team would advise companies and if needs be individuals – at least at present – to actively consider pursuing settlements with IACD and OAI, content in the knowledge that those offices will act reasonably towards them, but that care should be adopted when contemplating settling with INT.  Do not misunderstand us, as we do not want to create the impression that settlements with INT cannot be achieved, for they can, provided of course that the conditions are right (and BWL can assist in shaping those conditions), but caution with INT is and should presently remain the operative word.

The dedicated BWL MDB Team is presently comprised of the following BWL barristers: Lee Marler, Neil Macaulay and Jazz Omari and the team can be contacted at enquiries@brettonwoodslaw.com or by telephone at +44 1245 351073.

 

Bretton Woods Law assists World Bank Staff Association to protect grandfathered rights

By | IAL, International Administrative Law, News | No Comments

On 3rd November 2014, Lee Marler from Bretton Woods Law gave a presentation at a World Bank town hall meeting organised by the Staff Association.  The meeting took place in the Preston Auditorium at the World Bank’s headquarters in Washington DC and was streamed live via video link to thousands of employees in the Bank’s country offices around the world.  Bretton Woods Law’s presentation was on whether or not the World Bank, following discussions by management around cost efficiencies and savings, could cut the benefits (including education grants, home leave and the separation grant upon termination) of staff who joined the organisation before 1998.  The benefits of these staff members are different from those offered to staff who joined thereafter.  A month after the town hall meeting in November of last year, Senior Management of the World Bank confirmed its decision to leave these pre-1998 benefits intact and not to review them for the foreseeable future.  Bretton Woods Law considers this decision to be a well-deserved victory for the Staff Association following its hard work over the last two years to protect the acquired rights of its members.

An anti-corruption training course for staff working in peace operations in a post conflict environment

By | News, Rule of Law | No Comments

As part of its Rule of Law services Bretton Woods Law offers an anti-corruption training course for staff working in peace operations in a post conflict environment.

Corruption can seriously hamper efforts to establish governance and restore rule of law in post-conflict countries. While some level of corruption is a common feature in many societies, it can have a devastating effect on a peace mission’s reform efforts in particular in the area of rule of law and can put the entire mission at risk.

Frequently host countries emerging from conflict have high or endemic corruption. Corruption is often both a cause and a consequence of conflict, and effectively addressing it is key for post-conflict state building and the re-establishment of the rule of law in which missions are involved.

Peace operations in post-conflict countries have rarely addressed corruption as a priority focusing instead on more pressing issues such as establishing peace and security. We believe one of the more serious risks in post-conflict which should be addressed is corruption, due to its negative effects on power distribution and longer-term stabilization and ultimately on a mission’s impact and its credibility in the host country.

The deployment of a mission involves major flows of resources and funds, very often without adequate accountability mechanisms, and those key resources are particularly susceptible to corruption and staff need to understand corruption risks within mission operations and arising from it.

A better knowledge and understanding by mission staff of corruption risks and anti-corruption in respect of the host country they support and the mission they work for is central to the success of peace operations.

The training course is offered at two levels, one is introductory providing participants a useful and essential overview of corruption risks and anti-corruption tools in a post-conflict context.  The intermediate level training course is designed for those working on host government support and in particular rule of law assistance with a special focus on the UN Convention against Corruption (UNCAC).

The trainers are experienced practitioners in anti-corruption, rule of law and post-conflict environments. They include the Head of BWL Rule of Law Team and BWL’s Lead Counsel Lee Marler who used to be the Director of Operations of the World Bank Group’s Anti-Corruption office and Chief of International Law of UNRWA, BWL’s Lead Counsel Neil Macaulay, a former Senior Prosecutor within the U.K. Revenue and Customs Prosecution office and Antje Kunst, Senior Counsel and former senior legal adviser with UN peace operations.

Marler Mentioned in Dispatches

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A former UK Chief of the Defence Staff has singled out BWL’s Lee Marler for praise. Lord Richards of Hertsmonceux (formerly General Sir David Richards) in his recently published, serialised and best selling autobiography titled Taking Command (Headline Publishing Group (2014) ISBN 97814722 20844) writes at page 110 as follows:

“Another key player [in East Timor in 1999] was Lieutenant Colonel Lee Marler of the Army Legal Corps, who was my operational lawyer. Modern Generals need to have in their back pockets not the sapper and gunner of tradition, but a media man and a lawyer. If you haven’t got those cards in your deck, you’re lost. The Australians soon realised that they needed to put the new country of East Timor on a legal footing but they didn’t have anyone within their military with that background. I had someone in Lee Marler. In the month or so that we were in East Timor, he worked all hours to draft a new constitution. He deserves huge credit for what he did. He based it on the international laws of war and it served as a transitional structure while a new long-term constitution was drafted, which the UN did the following year. The Australians did not much like the fact that my lawyer had done it but took it on the chin, generously giving Lee many plaudits when he left. Since leaving the Army, Marler has become a successful barrister with his own chambers.”

Chambers congratulates Lee on this public recognition for his Rule of Law work.

Lee heads up the BWL Rule of Law and IHL Teams and can be contacted at leemarler@brettonwoodslaw.com.

Legal Expenses Insurance – Game Changer for International Civil Servants

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

Earlier this year, lawyers from BWL were approached by a Manager at a large International Organisation based in London who had been, in his view, a victim of retaliation. As as a result, he was not promoted and his employer organisation failed to award him the pay rise he deserved.

He notified his household insurers who confirmed that his policy included legal expenses insurance for grievances arising out of employment disputes with his employer. Initially, his insurance company wanted to appoint an English employment lawyer to represent him throughout the international organisation’s internal justice system. Lawyers from BWL explained that the applicable law (i.e., international administrative law or ‘IAL’) was specific to international organisations and the insurance company eventually agreed to instruct experts in IAL to represent the employee in question. Once the formalities had been completed, the employee’s lawyers were able to represent him before the organisation and invoice the insurance company directly. A settlement was eventually reached, and at no stage did the employee have to pay for his legal representation.

This success story is a small step in balancing out the inequality of arms that exists all to often between international organisations and their employees. International Civil Servants are advised to examine the terms and conditions of their household insurance to check if it covers legal expenses for their employment disputes. They should also be aware that being insured does not mean that they have to accept any lawyer provided by the insurers, who will often not have the expertise required to represent them effectively.

The value of due diligence and publicising compliance efforts

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

When meeting a potential new business partner, quite often commercial urgency or excitement at having established a relationship with a high profile company can overtake more sober and practical thoughts of undertaking due diligence, which can often seem like a time-consuming and inconvenient necessity. You and your company will almost certainly not want to be surprised by news that your new joint venture partner’s subsidiary was previously debarred, or that there are clouds hanging over ‘that’ project, which you later learn was an open secret among all its employees…

Should a skeleton prove to have been lurking in the closet, of course it is not enough for the other party to say ‘but you never asked’. However, with an increasingly low threshold to establish administrative and even criminal responsibility following sanctionable practices such as fraud and corruption, the responsibility is essentially on you to show that you conducted all reasonable inquiries before forging a new business relationship. It is important to ask the right questions when conducting due diligence on contract partners, be they individuals or corporate entities, or you could risk reputational damage by association at the very least.

There are many methods of conducting due diligence inquiries into new business partners, but a good place to start is through open source intelligence. It need not be very costly and can often provide insight into a company beyond the official face that it projects to the public. Depending on how a relationship has come about, you may even ask mutual business acquaintances for a second opinion or if there is ‘anything you should know’.

It is becoming increasingly difficult to hide on the internet. Even if web pages are deleted or altered, traces can remain and be picked up by search engines, although this is becoming more complex with the advent of the ‘right to be forgotten’ now emerging in Europe. The proliferation of data via the internet can be a mixed blessing in business: while it can be more difficult for a company to make a clean start after a scandal when items are cached for years after the event, potential business partners are often glad of being provided with the full story behind the glossy corporate image so that the right questions may be asked as to how a company has improved its internal procedures to avoid repetition of such an event in the future. This can go towards establishing how a company reacts following negative experiences and applies lessons learned to adopt a more positive approach moving forward.

An increasingly globalised market means that there is a greater likelihood of trading with partners based overseas. For this reason, the website has effectively become the shop window of international commerce. It is therefore of paramount importance that there is as much information as possible about your company’s anti-corruption policy, integrity compliance program and whistle-blowing mechanisms, as a lack of such information can constitute a red flag in the mind of a prospective business partner, shareholder or other investor. A surprising number of large multinational companies do not feature the name of their compliance officer, or even make reference to having one, which raises the question in the mind of both consumers and potential trading partners as to whether or not one exists. Even where a compliance officer is featured, very often a website will not show a direct means of communicating with them, making it harder for third parties to raise matters of concern that they may have witnessed, such as a rogue employee offering or soliciting a payment. Websites that do not feature sufficient information about a company’s compliance strategy risk selling the company short and undermining confidence in its integrity efforts, thus losing valuable trade potential.

Jazz Omari is a direct-access qualified barrister at Bretton Woods Law. If your company could benefit from an integrity compliance health check, bespoke debarment avoidance training for employees or wishes to conduct an internal anti-corruption investigation, get in touch