Anti-Corruption Measures in the Activities of the Attorney’s Office

Sergey Smirnov

In Ukraine, combating corruption is one of the declared priorities for the country's development. However, according to the 2017 Transparency International Corruption Perceptions Index (CPI) survey, Ukraine — which scored 30 on a cale from 100 (non-corrupt) to 0 (highly corrupt) — ranked 130th among 180 countries. In other words, it scored only one point more and ranks only one position higher than in 2016. In its resolutions, the Parliamentary Assembly of the Council of Europe has repeatedly noted that suppressing corruption in the judicial system is a top priority as corruption is a threat to the rule of law.

 

Attorneys and corruptions

Anti-Corruption/Anti-Bribery Law compliance by legal practitioners (Attorneys’ Offices and law firms) is an important prerequisite to furthering the concept of advocacy and its social functions in any democratic society.

It is no longer a secret that foreign companies operating in this country face significant corruption risks. For this reason, combating corruption is essential for the attorney-client relationship, particularly when the client is a non-resident. In fact, a foreign client may refuse to hire an attorney due to the faintest whiff or slightest suspicion of the attorney's potential engagement in corruption schemes.

Because of the nature and specifics of multiple state authorities whom practicing attorneys have to deal with on a daily basis, they may encounter manifestations of corruption in various forms. The community often perceives an attorney as a corrupt intermediary between the court, law-enforcement authorities and clients. However, this intermediary function is completely inconsistent with advocacy per se.

People often encounter offers of attorney services supported by a guarantee of a positive outcome of civil or criminal proceedings; this suggests either obvious corruption or routine deceit aimed at attracting clients. On the other hand, it is quite common for potential clients contacting a defense attorney to demand guarantees of a successful outcome and to sign a contract only when they receive such guarantees.

The above circumstances demonstrate the imperative need to devise and implement proper measures aimed at nipping corruption in the bud and preventing corrupt practices in the Attorney's Office.

 

International anti-corruption/anti-bribery law

The global legal system currently offers multiple laws and regulations governing anti-corruption activities. One of the key anti-corruption legal instruments is the United Nations Convention against Corruption (UNCAC); however, it is essentially a framework document.

For foreign companies, it is more important to have laws proven to be effective and hefty fines for any manifestation of corruption practices, even beyond the enacting jurisdiction.

In this context, we have two key laws in mind: the U.S. Foreign Corrupt Practices Act (the FCPA) and the UK Bribery Act (the UKBA).

In some cases record-breaking fines for violations of the FCPA come to USD 800 million. When it comes to fines for violations of this law by foreign companies operating in Ukraine and the CIS, the highest ever total fines from a foreign company exceed
USD 500 million.

Since these fines are significant, anti-corruption compliance is critical for foreign companies doing business (including providing legal services) in Ukraine.

It is important to mention another new landmark law — the French anti-corruption law known as Sapin II, which came into effect on 1 June 2017. Contrary to Sapin-I, the new law aims to combat corruption both in France and abroad. A corporation found to be in breach of the law or lacking an adequate anti-corruption program will either receive a notice of violation or must pay a fine of up to EUR 1 million. A non-compliant individual has either to pay a fine of up to EUR 200,000 or spend two years in prison.

 

Anti-corruption Measures in the Activities of the Attorney's Office

Amendments to anti-corruption legislation approved in 2014 have brought a number of additional requirements of corporations and their top management. In particular, companies are obliged to elaborate and use measures that are necessary, sufficient and appropriate to prevent, detect and counteract corruption in their activities. In addition, company management must provide for ongoing monitoring and assessment of corruption risks to identify and prevent such risks in the company’s activities.

We would like to highlight the following anti-corruption measures that an Attorney's Office should focus on:

regularly assessing potential corruption risks in the activities of the Attorney's Office;

elaborating and implementing anti-corruption standards and procedures (including anti-corruption programs);

appointing an anti-corruption officer/commissioner;

conducting corruption prevention training and awareness-raising events;

drafting standard provisions and incorporating them into relevant agreements and internal documents;

devising a whistleblowing mechanism and procedure for processing and responding to notices of violations of the anti-corruption program;

monitoring and supervising anti-corruption program compliance;

other measures that may be required.

It is important to note that having in place and implementing the provisions of the anti-corruption program do matter. It is demonstrative that laws of other jurisdictions also emphasize the significance of incorporating a comprehensive and efficient corporate anti-corruption program into a company's arsenal.

If we take a closer look at the UKBA, we would see a specific feature that differentiates it from anti-corruption laws enacted in other jurisdictions. Under the UKBA, to avoid liability a company must prove that its activity is compliant with several principles, in particular: having in place an adequate anti-corruption procedure to identify corruption risks; being interested and participating in initiatives to prevent corruption among the company's top echelon officers; exercising complex control that includes corruption risk identification and assessment.

Sapin-II is unique in its own way, since in addition to prohibiting any corruption practices it also establishes clear requirements for corporate anti-corruption programs. Under Sapin-II, a resident company's management is liable for taking actions aimed at combating and preventing corruption and bribery. It might be said that even French companies that are covered by the FCPA/UKBA and have already taken measures to comply with these laws will have to verify and improve their internal compliance and control systems.

Thus, an adequate and properly implemented anti-corruption program is an invaluable asset of any company and, first and foremost, of its Attorney's Office.

The above anti-corruption measures represent only a short “Things To Do” list for the Attorney's Office.

For example, we have been taking measures aimed at preventing and combating corruption. We have been consistently applying and updating an adequate anti-corruption program, and have appointed an Anti-Corruption Commissioner who exercises ongoing control over compliance with the anti-corruption program. We hope that other law firms operating in Ukraine will support our initiative.

 

Is an anti-corruption program a must for the Attorney's Office?

There is no rule that would explicitly require companies to have anti-corruption programs.

However, there are some exceptions. In particular, state-owned companies, municipal companies, and business entities (in which interests of 50% or more are under state or municipal ownership), with an
average headcount for the accounting (fiscal) year exceeding 50 persons and gross sales of goods (work, services) for the same period exceeding UAH 70 million, must have an anti-corruption program in place approved by the company's management.

There is one more exception which is more relevant for the Attorney's Office.

An anti-corruption program is a must for legal entities that participate in pre-qualification and/or public procurement under the Law of Ukraine On Public Procurement, where the total value of goods, work or services to be purchased is UAH 20 million or more.

It is no secret that many attorneys' offices bid for contracts on legal services through public procurement, and in some instances, the value of their services exceeds the above-mentioned cap significantly. However, at the time of bidding, some of them do not have an anti-corruption program that is consistent with statutory requirements and approved by management. Quite often, making a formal statement about the availability of such a program at the registration stage would suffice.

Consequently, when an Attorney's Office bids through public procurement and the quotes for its legal services are within the established limits, it is not required to have an anti-corruption program.

 

Conclusion

It is critical for a legal business to establish transparent rules that would govern relations within the attorney-client-government triangle. As demonstrated by global experience, an efficient anti-corruption strategy suggests a well-tuned and coherent system consisting of interrelated elements.

As we can see, a sterling reputation, transparency, and strict compliance with the requirements of both national and international anti-corruption laws are receiving more prominence as key criteria by which a company — in particular, a non-resident company — selects a counsel or a law firm in Ukraine. For this very reason, developing and implementing efficient anti-corruption measures is sure to be one of the priorities in the activities of both Attorneys' Offices and individual attorneys.

 

Sergey Smirnov, partner, Anti-Corruption Commissioner at Sayenko Kharenko