News from the IBA - June 2012
Nobel Laureate Joseph E Stiglitz announced as keynote speaker for IBA Annual Conference
The Nobel Laureate in Economics, Joseph E Stiglitz, has been confirmed as the keynote speaker for the opening ceremony at this year’s IBA Annual Conference, to be held in Dublin from 30 September – 5 October 2012.
As former Chief Economist and Senior Vice-President of the World Bank between 1997 and 2000, a frequently cited expert and a renowned leading educator in economics, Mr Stiglitz’s remarks will provide the audience with the latest thinking on the most salient issues of the day, including the global economy and the sovereign debt crisis.
Mr Stiglitz’s work has focused on explaining the circumstances in which markets do not work well, and how selective government intervention can improve their performance. Policy analysts and theorists alike have adopted, as standard tools, the pivotal concepts of adverse selection and moral hazard, pioneered by the new branch of economics that Mr Stilgitz helped to create and which explores the consequences of information asymmetries, ‘The Economics of Information’.
Currently, University Professor at Columbia University in New York and Chair of Columbia University’s Committee on Global Thought, as well as Co-President of the Iniative for Policy Dialogue, Mr Stiglitz has also taught at the MIT (Massachusetts Institute of Technology), Oxford, Princeton and Stanford universities. Other prestigious positions held by Mr Stiglitz include: Chairman of the US Council of Economic Advisors (1995–1996); Chair of the Commission on the Measurement of Economic Performance and Social Progress which released its report in 2009; and by appointment of the President of the United Nations General Assembly, Chair of the Commission of Experts on Reform of the International Financial and Monetary System, which also released its report in 2009.
Mr Stilgitz’s extensive curriculum vitae includes major contributions to the fields of macroeconomics and monetary theory, development economics and trade theory, public and corporate finance theory, and also to the theories of industrial and rural organisation, welfare economics and income and wealth distribution.
For further information and registration visit the IBA Annual Conference 2012 minisite at www.int-bar.org/Conferences/Dublin2012.
Sovereign wealth funds target India
Pia Heikkila
‘Optimism’ is the byword when it comes to economic growth in India. From the humble kabadiwallah up to the country’s economics minister, Pranab Mukherjee, everyone still believes in India’s growth story. And on the side-lines the sovereign wealth funds (SWFs) – those ever hungry beasts – are watching the Indian elephant amble along.
India’s story has become huge for the SWFs. Take the Singapore-run SWF, Government of Singapore Investment Corporation (GIC), which recently opened an office in India. Or the world’s largest SWF, the Abu Dhabi Investment Authority which, until now has invested in India largely through private equity funds, but now is reportedly hiring an India-based fund scout to look for real estate deals in the country. China and Australia are also scouting for targets in the subcontinent.
The country has been on the radar of many SWFs for some time, but only recently has it opened up to institutional investors who picked up on India’s growth story. The global SWFs registered in India invested up to $10bn in India last year alone, according to the Sovereign Wealth Fund Institute.
‘Traditionally India has not been a great deal of interest to SWFs,’ says Raj Bhatt, Chairman of the Mumbai-based Elara Capital, ‘but because of changes in the global economy and growth opportunities presented in India, there has been an increase in interest.’
The recent regulatory changes have also fuelled the SWFs’ interest. Last year a new takeover code was introduced by the Securities and Exchange Board of India (SEBI), which allowed SWFs to acquire a much larger stake in a local publicly listed firm without having to launch an open offer for the rest of the company. The new rule has given an even larger investment window to many SWFs working actively in India, experts note.
‘These SWFs do not participate actively in day-to-day management activities and mainly act as passive investors; hence they refrain from taking higher exposure so as to invite SEBI’s rule,’ explains Amar Ranu, Senior Manager, Research & Advisory (Third Party Products) at Motilal Oswal Wealth Management. ‘Many active SWFs like Singapore’s GIC and Temasek Holdings, Malaysia’s Khazanah, Abu Dhabi’s ADIA and so on have major exposures in Indian stocks, and are likely to benefit from these changed regulations,’ he added.
The Indian government is slowly waking up to the importance of SWFs and is keen to tap into these huge pools of wealth. ‘The SWFs’ interests match well with India’s needs for capital for building up its infrastructure, energy and healthcare sectors, which require “patient” capital,’ according to Richie Sancheti, Senior Associate in the funds team at the legal and tax specialists Nishith Desai Associates. ‘These spaces should attract the SWFs’ attention as they have capacity for a larger capital deployment opportunity matched with ability to generate higher returns.’
The Indian government is not known for its speedy progress but the country has, for a while, been considering the establishment of its own sovereign wealth fund as it continues to privatise energy and raw material assets. Local press reports have claimed that about a third of the proceeds from the sale of government equity would be placed in a state-owned SWF, and it could also leverage its equity to raise debt and to invest the cash for the common good.
New PPID Committee to tackle the Regulation of Lawyers and Compliance
The PPID has created a new committee to focus on the regulation of law firms and lawyers from the business lawyers’ perspective and from an international viewpoint. This committee has been created after extensive discussion with the PPID officers and the officers of the Law Firm Management Committee. This new committee will be of particular iwnterest to members who are already active in the Law Firm Management Committee.
Commenting on the new committee, its Chair Stephen Revell said: ‘I am really excited about this new committee – it meets a need that many members of the IBA have recognised for several years. This new committee will focus on the regulation of law firms and lawyers from the business lawyers’ perspective and from an international viewpoint.’
If you have any ideas for this committee or questions about its approach, please contact Stephen Revell at stephen.revell@freshfields.com.
The Regulation of Lawyers and Compliance Committee page of the IBA website can be found at: tinyurl.com/Regulation-Lawyers-Compliance.
Women in the law webcast
Tom Maguire
On 26 April, the IBA hosted the 11th event in its webcast series, this time focusing on women in the law. Taking the form of a panel discussion, it featured high-ranking members of the legal profession: Helena Kennedy QC, leading barrister and human rights expert; Margaret Cole, former managing director of the UK Financial Services Authority’s Conduct Business Unit; Elizabeth Barrett, Slaughter and May partner and former head of litigation; and Katie Ghose, chief executive of the Electoral Reform Society and former director of the British Institute of Human Rights. The discussion was chaired by BBC radio broadcaster Fi Glover.
The panel began by considering cultural attitudes towards women in law, with Helena Kennedy noting a ‘battle with residual ideas that certain areas of law are better suited to men […]’ and commenting on initial reactions to her taking up criminal law rather than going into ‘areas that were [considered] fine for women’ such as family law.
The panel addressed the issue of the lack of women in senior positions despite the equality of numbers in the junior ranks of the profession. Discussion covered experiences of discrimination against women and its changing nature, in particular that it had become more subtle and in many cases subconscious. Margaret Cole said that she had seen it ‘starkly’ in the financial sector, and encouraged focus on diversity, stating that ‘there has to be a conscious effort to go for different people…[it is] absolutely critical for the future of our corporate environment.’ Katie Ghose responded to criticisms of quotas or perceived problems with appointing on merit: ‘[…] the idea that there wouldn’t be enough meritorious women out there to fill the handful of judicial posts in this country is a nonsense’.
The speakers commented on the perils of tokenism, with Elizabeth Barrett making the observation that: ‘In order for people to be respected they need to be valued […] is a “token woman” naturally going to encourage respect?’ However, Helena Kennedy commented that often, in a situation with only a small number of women present in an overwhelmingly male environment, the women would prove themselves to be ‘exceptional’.
Webcast viewers were able to submit questions to the panel in real time. This gave rise to varied topics including balancing the demands of family and work life with initiatives such as flexible working hours; to what extent women should be specifically helping other women to progress; how countries rate in terms of equality in the legal profession and the danger of grouping women as ‘one homogenous lump’, as Fi Glover put it. The panel conceded that, in comparison to many places, the UK was favourably positioned for women practising law, and that campaigning had brought about change, but concluded that there was more to be done: ‘Doing well, but a long way to go,’ said Helena Kennedy in summary.
The panel went on to speak on their specialisms, with Margaret Cole discussing the UK’s Financial Services Authority and regulation in light of the financial crisis. Katie Ghose and Helena Kennedy debated peer reform for the House of Lords.
The hour-long event ended with the speakers addressing the issue of the law as it relates to Twitter and other social media. Helena Kennedy commented: ‘The idea of being able to constrain new technology is a real challenge for law, and particularly when we’re talking about freedom of expression and so on, so there are these clashes of legal principle.’
The webcast is available to watch here, along with previous IBA webcasts and other film content.
IBA, OECD and UNODC Anti-Corruption Workshops roundup: Turkey, Italy and Moscow
The IBA, in collaboration with the Organization for Economic Co-operation and Development (OECD), and the United Nations Office on Drugs and Crime (UNODC), hosted three anti-corruption workshops in Europe. Held in Istanbul, Turkey (28 March); Rome, Italy (29 March) and Moscow, Russia (17 April), they were some of the best received to date.
Each was organised with the assistance of local supporters in each country. In Istanbul the IBA partnered with the Istanbul University Law School, in Rome the international oil company Eni S.p.A and in Moscow with the Russian Ministry of Justice.
The Rome workshop saw the largest attendance with over 100 legal professionals from firms in both Rome and Milan present. The Moscow workshop was held to commemorate Russia’s accession to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Anti-Bribery Convention). Further information about Russia’s accession to the OECD Convention can be found at tinyurl.com/OECDRussiaAccession.
The workshops are designed to generate awareness of international corruption, outlining the complexities of the schemes lawyers and law firms often become involved in and of the sanctions incurred for involvement in corruption.
The workshops featured international experts from the OECD and UNODC and the IBA, as well as leading multi-national law firms and corporations such as Dechert, Paul Hastings and KPMG. The experts introduced the international anti-corruption framework, exposing the risks and threats that corruption poses to legal professionals. They also explained the growing expectation multinational clients require of their external legal counsel to adhere to rigorous anti-corruption compliance standards and shared methods on how anti-corruption compliance standards may be met.
Following the success of the anti-corruption workshops held in South Africa in Johannesburg (15 February) and Durban (16 February), the Law Societies of South Africa (LSSA) and Namibia (LSN), will assist us in hosting anti-corruption workshops for legal professionals in Cape Town and Windhoek on 24 and 25 October 2012 respectively. These workshops will be delivered to a select group of senior practitioners of the most relevant business law firms in these cities.
We will also be hosting our first regional workshop in Panama City, Panama on 6 December 2012, which will welcome legal professionals from Central America and the Caribbean including Antigua and Barbuda, Bahamas, Costa Rica, Dominican Republic, Honduras, Nicaragua, and others.
If you are interested in participating in this major global initiative, please contact Laverne Thomas, Legal Projects Administrative Assistant, IBA London, laverne.thomas@int-bar.org.
For further information on the IBA, OECD and UNODC Anti-Corruption Strategy for the Legal Profession, visit www.anticorruptionstrategy.org.
Behind Lubanga: the battle for gold in the Congo
Rebecca Lowe
The International Criminal Court conviction of Thomas Lubanga on 14 March highlighted the fierce power struggles that have ravaged the Democratic Republic of Congo (DRC) for decades. Yet, behind the abuses for which the region has become notorious, lies a timeless conflict: the battle for wealth and power. In DRC this means the battle for gold and other minerals.
It has long been known that profits from the gold industry fund and prolong conflict in DRC. Yet, while the problem of blood diamonds was tackled via the Kimberley Process, gold has proved more intractable. Almost untraceable, simple to melt down and easy to smuggle across borders, gold is not a straightforward substance to regulate.
Now, though, international efforts are gaining momentum. One proposal, due to take effect in June 2012, as part of the US 2010 Dodd-Frank Act, puts the burden on buyers: the law states that any public company sourcing gold from DRC or neighbouring regions must disclose far more information about its supply chain than those sourcing from elsewhere.
Critics of the law say it is a blunt tool that unfairly targets an entire geographical region. Supporters, however, claim it provides a strong incentive for the authorities to enforce good governance.
‘This will affect the economy gravely,’ says Kathryn Sturman, head of the Governance of Africa’s Resources Programme at the South African Institute of International Affairs. ‘It will affect small companies that do not have the means to find out where the gold comes from, and they will stop buying from the whole area.’
Sturman believes the Act will only have limited impact, pointing out that the biggest markets for gold are China and India, with much flowing through Dubai. Here, concerns about gold’s possibly unsavoury heritage are yet to gain traction, and supply chains often remain unscrutinised.
Phil Clark, lecturer in comparative and international politics at the School of Oriental and African Studies, University of London, agrees. ‘I think the impact of Dodd-Frank has been grossly exaggerated,’ he says. ‘They want you to see it as a panacea for Congo’s ills, but I think it is a very tiny component.’
Others believe the law could have a measurable impact. Jason Stearns led the UN Group of Experts on DRC, responsible for researching support of armed groups in eastern DRC, in 2008. ‘Dodd-Frank could be successful because it could provide incentives to overcome conflict in the area,’ he says. ‘It has already incentivised local businessmen to lobby the government to take measures.’
Such lobbying is evidently having an effect. In September 2011, the Kigali government put in place a requirement for all mining operators to exercise due diligence, as defined by the UN Group of Experts and the Organisation for Economic Co-operation and Development. The World Gold Council also recently drafted global due diligence standards for its members.
Enforcement, being expensive and time-consuming, clearly favours large multinationals. Such companies are encouraged further by a government keen for investment and tax revenue. The rights of artisanal mining groups are therefore frequently overlooked, and trade is pushed underground. As foreign companies move in and undermine local livelihoods, there is a fear that conflict may flair up once again.
‘International companies are coming in and wrestling business from the artisanal mining groups,’ says Clark. ‘It’s a little shady how they are capturing these gold concessions in the first place. Very few contracts have been made public.’
Indeed, a series of human rights scandals have hit industrial mining companies over recent years. In 2005, AngoGold Ashanti was accused in a Human Rights Watch (HRW) report of providing support for armed militia in return for security in the Mongbwala mining region. In response, the company told HRW the contacts had been ‘unavoidable’ and ‘kept to a minimum’. It added: ‘It is not the policy or practice of this company to seek to establish continuous, working relationships with militia groups in conflict zones.’
The challenge to combat conflict gold seems almost insurmountable. Until the DRC government improves security and combats corruption, the industry will remain semi-hidden underground. Until the eastern market improves due diligence, conflict-ridden supply chains will remain in place. And until industrial mines improve their relationships with local communities, tensions will almost certainly erupt into further conflict.