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Legal and business news analysis - April/May 2019

Legal and business news analysis - April/May 2019

American presidency: judges weigh crimes of Trump campaign chief Manafort in major wins for Mueller probe

RUTH GREEN, IBA MULTIMEDIA JOURNALIST

In a pair of sentencing hearings in March, two judges rendered the different judgments of the two Americas for the crimes of Paul Manafort, who served as President Trump’s campaign chief.

The sentences mark the most significant wins for Special Counsel Robert Mueller in his now-concluded investigation into links between the Russian government and individuals associated with Trump’s presidential campaign. The role of Paul Manafort goes to the core of the Special Counsel’s investigation.

In total, Manafort was sentenced to seven-and-a-half years in federal prison, on a maximum potential sentence of 34 years. Prosecutors also moved to seize about $24m of Manafort’s real estate, bank accounts and life insurance.

Judge T S Ellis III, appointed by President Ronald Reagan, gave Manafort just under four years in prison – on a maximum recommended sentence of 24 years – after a Virginia jury convicted him of multiple tax and bank frauds. Judge Ellis stated Manafort has lived ‘an otherwise blameless life’.

Judge Amy Berman Jackson, appointed by President Barack Obama, gave Manafort the statutory maximum of five years for a broad conspiracy to defraud the US, to which he pleaded guilty, also encompassing money laundering, secret foreign bank accounts and secret foreign lobbying. Judge Jackson said it’s ‘hard to overstate the number of lies and the amount of fraud’ Manafort committed merely ‘to sustain a lifestyle at the most opulent and extravagant level’.

Because of overlapping conduct, Judge Jackson made half the conspiracy sentence concurrent with Judge Ellis’s. She gave Manafort a year in prison, on a statutory maximum sentence of five years, for witness tampering.

Former US Attorney for Michigan, Barbara McQuade, called Ellis’s sentence ‘absurdly low’, and Jackson’s somewhat lenient, though well-reasoned. Former federal prosecutor Seth Waxman found Ellis’s sentence ‘extremely light’ and Jackson’s ‘a bit light’, but perhaps justifiable as Manafort has turned 70. McQuade felt it’s ‘still too low for such egregious conduct’, and possibly too lenient to deter a conspiracy so lucrative.

Paul Manafort

Judge Ellis called the sentencing guideline ‘way out of whack’. He complained that the Justice Department treats secret foreign bank accounts with undue seriousness and expressed the wish to avoid sentencing disparities between similar defendants.

McQuade criticised Ellis for ignoring the guidelines based merely on his sentiment that they are too high for certain white-collar crimes. ‘You don’t hear that sentiment expressed about other kinds of crime,’ says McQuade.

If Manafort demonstrates any disparities, he ‘demonstrates the disparities between the haves and the have-nots’. The day before Manafort received 47 months, Brooklyn public defender Scott Hechinger saw a client offered 36–72 months ‘for stealing $100 worth of quarters’.

To view Manafort as ‘otherwise blameless’ is highly questionable. Manafort’s plea admitted all the conduct in the ten counts on which the jury hung, as well as the lobbying offences for which he’s not been tried.

Prosecutor Andrew Weissmann argued to Judge Ellis that Manafort’s crimes ‘served to undermine and not promote American ideals’. Manafort exported the dark arts of US campaign consulting to foreign figures exemplified by ex-convict Viktor Yanukovych, whose earlier efforts to steal the Ukrainian election triggered the Orange Revolution.

Manafort resurrected Yanukovych by stoking hatred between Ukrainian and Russian speakers. Manafort collected millions in secret payments, as Yanukovych distributed Ukraine’s wealth to allied oligarchs and looted an estimated $40bn from the Treasury.

Significantly, court papers refer to an alleged liaison in August 2016 between Manafort and Kiev collaborator Konstantin Kilimnik, who is linked by Mueller to Russian intelligence. According to the papers, Manafort shared 75 pages of Trump campaign polling data with Kilimnik.

Manafort has admitted reaching out through Kilimnik to tamper with witnesses at his trial. And Judge Jackson later found that Special Counsel Mueller was justified in voiding Manafort’s cooperation agreement because Manafort repeatedly lied to him about Kilimnik.

Judge Ellis noted at the sentencing that Manafort had never ‘decided the wisdom or appropriateness of delegating to special prosecutors broad powers’.

In a revealing pre-trial moment, the judge exclaimed: ‘You don’t really care about Mr Manafort’s bank fraud. What you really care about is what information Mr Manafort could give that would reflect on Mr Trump and lead to his prosecution and impeachment.’

By contrast, Judge Jackson rebuked Manafort’s lawyers for suggesting she had found ‘no collusion’ – as collusion had never been charged and was never under discussion before either judge. ‘Court is one of those places where facts still matter,’ said Judge Jackson.

Nevertheless, outside court, Manafort’s lead lawyer Kevin Downing told the press: ‘Judge Jackson conceded that there was absolutely no evidence of any Russian collusion in this case. So… two courts have ruled no evidence of any collusion.’ Hecklers drowned out Downing with cries of ‘That’s not what she said!’

McQuade was shocked. ‘Judge Jackson clearly said this case is not about collusion, and to suggest otherwise is wrong. For Downing then to go out on the courthouse steps and carry on a disinformation campaign was quite bold and inaccurate. I can’t believe he had the nerve.’

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Seoul 2019 – registration opens for this year's IBA Annual Conference



Registration is now open for the 2019 IBA Annual Conference – the largest and most prestigious event for international lawyers.

Taking place in Seoul, South Korea, on 22–27 September, the Conference will feature the winning formula of exceptional showcase sessions, committee sessions, as well as updates on Presidential Task Forces and a packed social programme, culminating in the Rule of Law Symposium.

Some of the leading thinkers in law today will highlight the role the legal profession plays in society, while officials from government and multilateral institutions, general counsel and experts across all practice areas will assess key developments.

The Conference attracts more than 6,000 individuals representing over 2,700 law firms, corporations, governments and regulators from over 130 jurisdictions.

Launching the registration, IBA President Horacio Bernardes Neto said: ‘The IBA Annual Conference is the central event of the international legal community’s calendar, presenting an unequalled opportunity to exchange knowledge and to create and renew a global network of colleagues and business contacts.’

Substantive committee sessions will focus on practice areas, while other sessions will cover, for example, challenges of law firm management and international relationships, ethics, the future of the legal profession and human rights.

Bernardes Neto added: ‘I’m also planning three showcases to highlight a selection of my presidential focuses: addressing bullying, sexual harassment and other barriers to diversity in the legal profession; a refugee crisis initiative and the prevention of abuse and slavery; and examining open and closed legal markets.’

For more information on Seoul 2019 and to register, go to tinyurl.com/iba-seoul-2019. Book before 5 July to receive early registration discounts.

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Arb40 launches guide to technology resources for cross-border arbitration

A new online guide to technology advances that can support international arbitration has been launched by the IBA Arb40 Subcommittee.

The guide has been developed in light of the difficulties many arbitration lawyers face in keeping abreast of new technology, and whether it can be applied to their proceedings. It provides information on tech resources that can be used by arbitration practitioners, parties and tribunal members to make arbitration more efficient, cost-effective, secure and dynamic.

Outlining how different types of technology can be used, the guide gives examples of vendors and providers. It includes sections on, for example, cybersecurity and data privacy, document processing, data transfer, virtual reality technology, mind mapping and the presentation of evidence.

There is a multitude of programs and systems on the market to support arbitration – including software and machine learning for document collection and review, cloud-based systems that serve as central repositories for arbitration data, and more sophisticated platforms for storing, editing and sharing information.

The guide also outlines virtual reality and augmented reality technology. The latter superimposes computer graphics onto the user’s view of the real world. ‘The potential applications to arbitration are many,’ says the guide, ‘for example, the ability to bring the tribunal on a virtual “visit” of a construction, industrial or mining site, or demonstrate how a different approach might have altered the effects of environmental contamination.’

Analytical tools and mind mapping are other technologies highlighted in the guide. These tools can be used to map case strategies, identify critical information and uncover patterns, relationships, priorities and trends.

Other advances may make it possible to make reasonably accurate predictions of outcomes in a particular case. For example, a program that was fed a dataset of sample decisions of the European Court of Human Rights was able to predict the outcome of other cases with 79 per cent accuracy, by looking for relationships between words.

The guide, Technology Resources for Arbitration Practitioners, can be accessed at tinyurl.com/arb40-tech-resources

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Webinars explore #MeToo for employers, sustainable investment in agriculture and a shared vision for law firms


#MeToo

The IBA’s webinar series continues in 2019, exploring diverse subjects including the impact of #MeToo, sustainable investment in agriculture and building common clients in law firms. Dates and registration details can be found at the end of this article.

In the Law Firm Management Committee’s webinar, a panel of law firm leaders will examine the theme ‘My client’ or ‘our client’?

It considers how a firm’s culture often moves away from partners having personal clients and towards ‘institution building’, to encourage longer-term growth. Discussion areas include balancing the aims of the ‘individual’ with the ‘group’ through a common vision, and the use and abuse of financial metrics in partner remuneration.

In its webinar, the Asia Pacific Regional Forum’s India Contact Group explores the impact of #MeToo on employers. It assesses how the #MeToo movement has created a seismic cultural shift in the awareness of sexual harassment and assault.

Examining the lessons for employers in terms of effective harassment prevention policies, credible workplace investigations and updated training, it focuses on the impact of legislation in India.

The Agricultural Law Committee hosts a webinar on sustainable investment in agriculture, assessing emerging legal issues and international guidance in this area. This webinar considers how to ensure agricultural investment evolves in a way that keeps pace with the world’s demand for food, while doing so sustainably and respecting rights.

You can register for the Law Firm Management webinar at tinyurl.com/lfmc-webinar-april-2019 before 1300 BST on 16 April. It will be available at tinyurl.com/lfmc-media after this date.

To register for the Asia Pacific Forum webinar, go to tinyurl.com/aprf-webinar-april-2019 before 1200 BST on 24 April. View it after this date at tinyurl.com/iba-india-contact-group

To watch the Agricultural webinar, register by 22 May at tinyurl.com/agricultural-webinar

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Bar Leaders’ Conference and Mid-Year Meetings

The legal, business and political communities in the Hungarian capital, Budapest, will host the IBA Bar Leaders’ Conference and Mid-Year Meetings on 22–25 May.

This year’s Conference, presented by the IBA Bar Issues Commission, will discuss some of the latest developments including: professional indemnity insurance; how bars can help young lawyers develop soft skills; ‘fair trade’ in legal services; bullying and harassment; and lawyer wellness.

Leaders from more than 190 bar associations and law societies spanning over 170 countries will be among those attending.

Register at tinyurl.com/bar-leaders-2019

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Nominations open for IBA’s 2019 annual awards

The IBA has launched its annual awards for 2019, recognising pro bono achievements, outstanding young lawyers and work to advance human rights. The awards will be presented at the IBA Annual Conference in Seoul, South Korea, in September.

The Pro Bono Committee invites nominations for its prestigious award, part of its ongoing push to build a pro bono culture across the legal profession. Last year’s recipient, Baasanjargal Khurelbaatar from Mongolia, was awarded for her efforts behind a government ban on children taking part in winter horse racing.

Applications can also be made for Outstanding Young Lawyer of the Year, which honours former IBA President William Reece Smith Jr. Awarded by the Young Lawyers’ Committee, it recognises an individual who has shown excellence and a commitment to professional and ethical standards. Niusha Ghasemi collected the 2018 award for working in difficult circumstances to help people affected by human rights violations.

Nominations are open, too, for Outstanding Contribution by a Legal Practitioner to Human Rights. Nigerian lawyer Adeola Oyinlade received last year’s award for his pioneering public information initiative to promote constitutional rights.

For more information, go to tinyurl.com/iba-awards-2019. The deadline for applications is midnight BST on 9 June 2019

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African mining pollution case could tighten law on parent company liability

MEG WEDDLE, IBA SENIOR CONTENT EDITOR

An international mining company has appealed to the UK Supreme Court in a pollution case brought by over 1,800 Zambian villagers. The Court’s upcoming decision on whether the case against Vedanta Resources and its subsidiary, Konkola Copper Mines (KCM), can proceed to trial in the UK could help clarify the law on parent company liability. It could also have major repercussions for multinationals with extractive operations abroad.

The case centres on whether a parent company can owe a duty to third parties affected by its subsidiaries’ activities. In January 2019, the Supreme Court heard arguments from both Vedanta and the Zambian claimants regarding the proper jurisdiction for the trial.

The claimants, who live in the Chingola region of Zambia’s Copperbelt Province, allege that Vedanta failed to supervise its copper mining subsidiary, resulting in harmful effluent being discharged into local waterways and the surrounding environment. The claimants cite the Brussels Regulation – the rules on which courts have jurisdiction in legal disputes across the European Union. It states that ‘persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State’.

Vedanta Resources, which until October 2018 was listed in the UK, told the Supreme Court that it is not a ‘proper party’ to the claim, arguing that it did not have operational control over KCM’s activities. The High Court and Court of Appeal have both ruled that there is sufficient evidence that Vedanta exercised control over KCM and have allowed the suit to proceed.

However, conflicting decisions at the Court of Appeal in two similar cases, involving Royal Dutch Shell and Unilever, have highlighted a lack of clarity in the law regarding parent company liability. ‘If the Supreme Court finds in favour of the claimants, there would be a very strong argument for Parliament to clarify in statute what the actual expectations of company practice are,’ says Marilyn Croser, Director of CORE, a leading civil society coalition on corporate accountability. ‘Otherwise it’s just too easy for companies to say the right thing and then carry on with business as usual.’

Anil Agarwal, Chair of Vedanta Resources Group, met with Zambia’s President Edgar Lungu in February 2019. He spoke of his company’s continued commitment to Zambia’s development through it’s 50-year mining vision at KCM. Global Insight approached Vedanta for comment, but the company did not respond.

CORE and the International Commission of Jurists (ICJ) were granted permission to intervene in Vedanta’s appeal to the Supreme Court in January 2019. Their submission argues that the Court of Appeal’s 2018 ruling in the Vedanta case is supported by international standards including the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises.

The submission also notes that Vedanta describes its commitment to various international standards and guidelines on its website.

Parent company responsibility to protect human rights could be clarified by the case

‘We see these companies talking a very good game on respect for human rights, sustainability, corporate social responsibility, but when it really comes down to it, it seems these standards don’t matter,’ says Croser.

Kevin O’Callaghan, Co-Chair of the IBA Business Human Rights Committee, says companies operating extra-nationally will want to pay close attention to the outcome of this case. ‘These kinds of cases are opening up people’s eyes to the potential consequences of the gap between what [a company] says on its website and what they’re doing on the ground.’

Carlos Lopez, Senior Legal Adviser on Business and Human Rights at the ICJ, says the Vedanta case could be instrumental in tightening UK legislation. ‘This is the first case where the Supreme Court is going to take a position on a very difficult, complex issue of the possible responsibility of the parent company in relation to the communities or the neighbours to the operations of the subsidiary in a foreign country. It’s crucial to have clarity in the law and on the fairness of rights and obligations of all parties, including parent companies.’

Clarification to the law could underline that a parent company has a responsibility to respect human rights through its operations and to fulfil that responsibility through due diligence according to the UNGPs. Court proceedings, says Croser, should be a last resort: ‘We want companies to take action to prevent harms from occurring, and in cases where this hasn’t happened, to sit down with claimants and agree on an appropriate resolution and remedy.’

Carlos Vilhena, Co-Chair of the IBA Mining Law Committee and a partner at Brazilian firm Pinheiro Neto, agrees: ‘One would expect parent companies to take the lead in providing some sort of protection, in advance of redress through the courts,’ he says. ‘Creating and applying relevant policies, permanent or periodical due diligence, training, and making sure issues are dealt with immediately, are sensible actions.’

Various jurisdictions are already shoring up national law on the expectations of multinationals when it comes to human rights and environmental law. A recently passed French law places the onus on companies to prevent risks from their global activities, while Switzerland is considering a similar move.

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