LexisNexis
lslaw

Legal and business news analysis - June/July 2019

Legal and business news analysis - June/July 2019

American Presidency: the Mueller Report and the Barr report

MICHAEL GOLDHABER, IBA US CORRESPONDENT

In releasing the long-awaited Mueller Report on 18 April, US Attorney General (AG) William Barr repeatedly served up the sound bite ‘no collusion’. Barr’s summary makes the same point in legalese with a clipped quote: ‘[T]he investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities.’ Like much else in Barr’s presentations, this fragment is highly selective.

Mueller’s version clarifies that Russia and the Trump Campaign both expected to benefit by influencing the election through Russian email hacks – and Mueller documented over 100 Russian contacts by 16 Trump campaign officials. By some lights this amounts to collusion, but collusion is not a legal term. The legal term is conspiracy, and Mueller couldn’t prove an ‘agreement’ to violate US laws that went beyond ‘two parties taking actions that were informed by or responsive to the other’s actions or interests’.

On 29 May, in his first public statement on his inquiry, Mueller reiterated that his report did not exonerate the President: ‘If we had had confidence that the President clearly did not commit a crime, we would have said so,’ he stated.

In general, the AG claimed that the ‘White House fully cooperated with the Special Counsel’s investigation’, even as the President refused to be interviewed and claimed to forget the answer to over 30 written questions. On the second main issue – obstruction of justice – the AG accurately stated that Mueller reached no decision. But Barr suggests that the policy against indicting a President was not crucial to Mueller’s indecision on obstruction; that Mueller didn’t indicate he was leaving the decision to Congress; and that Mueller’s indecision ‘leaves it to the Attorney General to determine’. All these points are highly questionable. Then the AG went ahead and found ‘no obstruction’, with virtually no reasoning.

Various legal observers have a different take. Former federal prosecutor Renato Mariotti says the Mueller Report scans like an obstruction indictment that pulls up short of the conclusion. Mueller’s stated reason for pulling up short is that the Justice Department policy against indicting the President would deny Trump a chance to clear his name.

When the ten episodes of obstruction reviewed by Mueller are considered together, the case for obstruction seems strong. The report suggests that the legal standards for obstruction may even have been met in some individual instances – such as when the President ordered his White House Counsel to terminate Mueller and then deny the incident. In an underwhelming vote of confidence, Mueller is ‘unable to reach [the] judgment’ that ‘the President clearly did not commit obstruction of justice’.

Russia and the Trump Campaign expected to benefit through email hacks, says Mueller


Barr reached out to make the judgment that Mueller would not make, after publicly embracing two theories that Mueller expressly refutes. Barr wrote a memo last year opining that the President can’t commit obstruction through an act that falls within his power, like firing a subordinate. Yet ‘the Constitution does not categorically and permanently immunize a president for obstructing justice through the use of his Article II powers,’ Mueller retorts. ‘For example, the proper supervision of criminal law does not demand freedom for the President to act with a corrupt intention of shielding himself from criminal punishment, avoiding financial liability, or preventing personal embarrassment.’

Barr argues that a prosecutor’s inability to prove an underlying crime cuts against a finding of intent to obstruct. In Barr’s reading of the report, the President’s intent was pure because he was merely ‘frustrated and angered by a sincere belief that the investigation was undermining his presidency, propelled by his political opponents, and fuelled by illegal leaks’. What the report actually says is radically different. Mueller reasons that Trump’s motive to cover up his Russia links could have been corrupt, even if prosecutors couldn’t show that those links rose to the level of a conspiracy, either because the President was obsessed with the perceived legitimacy of his election triumph, or because the President worried about the genuine potential for criminal prosecution.

As for who should decide on obstruction, there is nothing to suggest that Mueller left the decision for Barr. In Mueller’s words, ‘The conclusion that Congress may apply the obstruction laws to the President’s corrupt exercise of the powers of office accords with our constitutional system of checks and balances and the principle that no person is above the law.’

Former Independent Counsel Carol Elder Bruce says the intrusive role played by Barr in the release of the Mueller Report reveals a flaw in design of the special counsel. ‘The whole purpose of having a special counsel is to avoid influence by political figures in the administration,’ she says. ‘The special counsel should make the final decision on what is charged or not. The regulations should require it.’

Investigations intended to reveal potentially awkward truths proceed apace in the Democratic House of Representatives. In early March, for example, the Senate Judiciary Committee sent 81 cover-the-waterfront document requests to Trump’s businesses, sons, executives, lawyers and advisers – with special attention to obstruction, collusion, hush money, emoluments and pardons. In April, the Financial Services and Intelligence Committees issued subpoenas to Deutsche Bank for information on its funding of Trump businesses, as well as to JP Morgan and Bank of America.

Back to top


IBA-OECD task force: key principles to tackle illegal conduct in international commercial transactions


The role of the legal profession in preventing illegal conduct in commercial transactions is underlined in a new report by the IBA and the Organisation for Economic Co-operation and Development.

It sets out key principles for how lawyers and law firms should conduct themselves when engaged in or undertaking work associated with international commercial structures.

The report was produced by a task force set up by the two organisations under a Memorandum of Understanding that’s been in place since 2012. It’s been prompted by the controversies relating to the Panama and Paradise Papers, which have shone a spotlight on offshore commercial structures and the role of lawyers in facilitating potentially illegal conduct.

‘A lawyer must not act unethically, unprofessionally or in any manner that condones, encourages or constitutes participation in illegal conduct,’ says the report. ‘A lawyer is well placed not only to identify or detect illegal conduct, but also to facilitate it, by action or inaction, or prevent it.’

Although lawyers’ professional obligations and clients’ rights are regulated by domestic laws and ethical codes, there are eight key principles for the legal profession that should apply. They can be summarised as:

  • Non-facilitation of illegal conduct: by the nature of a lawyer’s professional functions, they may be unwittingly associated with illegal conduct. A lawyer should not facilitate illegal conduct, and should undertake the necessary due diligence to avoid doing so inadvertently.
  • Misuse of the duty of confidence and privilege: a lawyer should not use the confidential nature of the lawyer-client relationship or the principles of legal professional privilege to shield wrongdoers.
  • Client due diligence: a lawyer should undertake and document all reasonable and proportionate enquiries to identify and verify a client, as well as identify any ultimate beneficiary of the conduct or transaction, the origin of the funds, the substantive nature of the conduct or transaction. These enquiries should be heightened if the above falls within established international benchmarks for jurisdictions with increased risk of bribery, corruption and commercial crime.
  • Action where client conduct is, may be or becomes illegal: where the conduct of a client is, may be or becomes illegal, even if it was originally legal and the lawyer continues to be retained by the client, a lawyer should advise the client of the consequences and recommend they pursue alternative solutions. If the client persists, the lawyer should give due and proper consideration to ceasing to act, and terminate the retainer.
  • Multijurisdictional risk: where a transaction involves conduct by a client, agents or representatives of a client in more than one jurisdiction and the lawyer has reasonable grounds to believe the conduct may be or become illegal in a jurisdiction(s), a lawyer should verify that expert advice is or has been obtained by the client from a lawyer experienced in the conduct or transaction in that jurisdiction.
  • Use of illegally obtained information: lawyers should strongly discourage a client from paying private parties or public officials for illegally obtained evidence, which may constitute a criminal offence in many jurisdictions.
  • Disclosure of beneficial ownership: a lawyer should obtain and maintain up-to-date beneficial ownership information and take reasonable measures to verify its accuracy in relation to the lawyer’s clients.
  • Advertising by lawyers on international commercial structures: any advertising by lawyers should be transparent, accurate and truthful.

The task force says the principles should be recommended to governments, national bar associations and law societies, to ensure the proper administration of justice and to uphold the rule of law.

To download the report, go to tinyurl.com/iba-oecd-principles

Back to top


IBA calls time on endemic sexual harassment

A landmark report by the IBA reveals that bullying and sexual harassment is endemic across the global legal profession.

Launched on 15 May, the report sets out the findings of the largest-ever survey on the subject. It identifies startling rates of bullying and harassment in legal workplaces and makes ten recommendations for change.

The survey was carried out by the IBA Legal Policy & Research Unit.

Nearly 7,000 individuals from 135 countries responded, providing insight into the nature, prevalence and impact of bullying and sexual harassment.


The IBA is running a global campaign to outline the survey results and how the profession can urgently tackle these issues.

Us Too? Bullying and Sexual Harassment in the Legal Profession is available at tinyurl.com/iba-ustoo

For extensive coverage of the report’s findings, see our feature, ‘Bullying and harassment in the legal profession’.

Back to top


Data protection roadmap for arbitration


The IBA and the International Council for Commercial Arbitration (ICCA) have set up a task force to develop practical guidance on data protection in arbitration. The ‘roadmap’ guide will help practitioners to identify the ways in which data protection needs to be taken into account during arbitration proceedings.

An inaugural consultation meeting was held by the task force during the IBA Arbitration Day in March. Drafting of the guidance is under way, with a number of leading arbitral institutions providing input.

The guide will offer an overview of the regulatory framework and explain how data protection obligations may affect both the individuals involved in arbitration and the arbitral process itself.

It will include checklists and sample notices to help determine the applicable data protection regime and assess how the obligations can be complied with.

As it’s not possible to address all the data protection laws that might apply to an arbitration, the guide will use the European Union’s General Data Protection Regulation (GDPR) as an example of the types of rules that may be imposed. Introduced in May 2018, the GDPR has brought unprecedented attention to the importance of data protection and the risks imposed by failure to comply.

Back to top


Global workplace challenges examined by IBA GEI

Cutting-edge trends in human resources law are assessed in a new report from the IBA’s Global Employment Institute (IBA GEI).

Based on a survey of lawyers across 46 countries, the Institute’s Seventh Annual Global Report examines regulatory trends relating to a wide range of human resources (HR) issues during 2017 and the start of 2018. Topics covered include corruption and whistleblowing, the gender pay gap, global leadership issues, absenteeism due to stress and mental health issues, data protection and technology and artificial intelligence.

IBA GEI Council Member, Todd Solomon, said: ‘It delivers a succinct account of the most significant legal issues facing the profession. Each year, the report evolves and shines a light on new trends in the law, presenting information that can assist HR in spotting and managing legal risks.’

The report’s conclusions include:

  • Various countries have been grappling with how best to manage the use of technology, and cite data privacy and security as a focal point. In addition, few countries have seriously considered or adopted legal rules governing artificial intelligence in the workplace.
  • Many countries expressed concern about the impact of increasing protectionism on labour mobility, particularly on the part of the United States. Operational concerns posed by Brexit are also highlighted.
  • Although the #MeToo movement has increased social and legal awareness of gender discrimination, only a few countries have adopted legislation to address these issues.
  • Employment litigation has been most common in the areas of unfair dismissals and termination of employment, interpretation of collective bargaining agreements, non-compete enforcement, occupational safety and discrimination.

Going forward, the HR areas expected to present the greatest challenges include: gender-based harassment and pay gaps; millennial demand for flexible working and non-traditional employment arrangements; an increasing number of retirees creating a strain on pension schemes; talent shortages; and data privacy.

The report is available at tinyurl.com/iba-gei-annual-report

Back to top


Seoul 2019 – update on IBA Annual Conference


With the 2019 Annual Conference in Seoul fast approaching, the IBA has released the preliminary programme for the event and created a new video series offering practical tips for delegates.

The programme details the current schedule of exceptional showcase and committee sessions, special events and general meetings during Conference Week on 22–27 September. It also provides information on the Rule of Law Symposium, social functions and other elements of the event.

Top tips on how to make the most of the Annual Conference are set out in a new series of videos. A leading expert on networking and business development offers advice to help delegates connect to the right people, attract more referrals and develop their legal careers.

For more details on the Annual Conference and to download the programme, go to tinyurl.com/iba-seoul-2019. Watch the business development videos at tinyurl.com/iba-ac-videos

Back to top


Offshore finance: UK government halts push for greater transparency

JONATHAN WATSON, IBA FINANCE CORRESPONDENT

In March, the UK Parliament was due to debate a Bill requiring the UK’s Crown Dependencies – Guernsey, the Isle of Man and Jersey – to introduce public registers to bring about greater transparency in the hope that this would prevent illicit financial flows. The registers in these major offshore financial centres would be required to show the ultimate beneficial owners of companies, or parties who own more than 25 per cent, by the end of 2020.

The government, however, removed the debate on the relevant bill from the House of Commons schedule, arguing that more time was needed for the amendment to be given ‘proper and thorough consideration’.

‘We have built a strong, cross-party consensus on the need for financial transparency in British tax havens,’ said Labour MP Margaret Hodge, who introduced the amendment requiring public registers along with Conservative MP Andrew Mitchell. ‘Public registers of beneficial ownership are the next step to tackling money laundering and tax avoidance. These registers will come sooner rather than later, it’s the will of Parliament.’

In 2016, the UK became the first Group of Twenty country to establish a public register of domestic company beneficial ownership. The 2017–2022 anti-corruption strategy emphasises that it will champion the adoption of public registers by all countries and commits itself to working with the UK’s Overseas Territories (such as Bermuda, the British Virgin Islands and Cayman Islands), as well as the Crown Dependencies to implement strengthened arrangements.

According to the 2016 arrangements, the Overseas Territories and Crown Dependencies pledged to establish central registers or similarly effective systems for collecting beneficial ownership information and to provide UK law enforcement with timely access. They did not commit to making those registers public, but the government expects that to follow if public registers became the norm.

The chief ministers of the Crown Dependencies have strongly opposed the move to introduce this level of transparency. In a joint statement, they noted that it is a ‘respected constitutional position’ that the UK does not legislate for them on domestic matters without their consent. ‘The proposed amendments are contrary to the established constitutional relationships that exist between the United Kingdom and each of the Crown Dependencies and, if passed, would produce inoperable legislation,’ they said.

Imposing public registers would have constitutional and economic implications


‘Clearly there are constitutional implications if Westminster tries to impose public registers on the Crown Dependencies, such a step being variously described as anything from “colonialist” and “undemocratic” to “unprecedented”,’ says Neil Swift, a partner at Peters & Peters. ‘To date, rather than legislate, the UK’s approach has been to negotiate and persuade.’

There also concerns about the economic consequences likely to flow from the imposition of public registers in the absence of a global standard and level playing field. ‘For those seeking privacy, the imposition of public registers in one jurisdiction will simply move the issue elsewhere,’ says Swift.

Campaign group Transparency International claimed that the government’s decision to drop the debate in Parliament was part of a ‘longstanding policy’ to shield the Dependencies and the British Overseas Territories from calls by anti-corruption campaigners for greater company transparency.

Louise Delahunty, an investigations lawyer, says the government does have to address the Crown Dependencies’ concerns. ‘Constitutional independence would be affected, any changes could have a major economic impact and the Dependencies believe they already have well-developed anti-money laundering laws in place. The British government has to find a solution for increased transparency that will get buy-in from the Dependencies.’

Another key issue is whether ownership registers really need to be made public to combat corruption and money laundering. ‘While transparency campaigners argue that public registers are the most effective way of deterring those who would hide their assets for illegitimate means, private registers should be equally effective,’ says Jessica Parker, Co-Chair of the IBA Business Crime Committee and a partner at Corker Binning. ‘The number of territories where ill-gotten gains can be hidden has been eroded by the more important focus of international cooperation, which is developed through mutual assistance treaties and the Organisation for Economic Co-operation and Development’s Common Reporting Standard.’

The Crown Dependencies maintain that they are already meeting or exceeding international standards in fighting financial crime, notes Swift. ‘They suggest that the fact that the information in their own registers is verified, although not public, is preferable to the UK’s approach of making public information that has not been verified.’

Daniel Simon, a partner at Collyer Bristow and former Co-Chair of the IBA Private Client Tax Committee, believes there’s a balance to be struck between defeating corruption, tax evasion or crime, and privacy.

‘If you have a register that is accessible to government or law enforcement upon proper enquiry, and you have a rigorous due diligence process if you want to open a trust, a company or a bank account in these jurisdictions, then you’ve achieved both goals,’ he says. ‘You don’t need to have a public register to achieve that goal. That’s just an invasion of personal privacy.’

Back to top