Martin Polaine was engaged by the Council of Europe (CoE) to jointly conduct a two day workshop for the Azerbaijan Anti-Corruption Directorate on dealing with criminal liability of legal entities (Martin's paper is entitled Liability of the Legal Person (Entity)).
The issue of the liability of the legal person is a crucial, yet vexed, one. In all jurisdictions, the criminal law evolved as the response of society and the State to the actions of individuals. In the modern world, in relation to corruption cases in particular, it is, however, very often the legal person (typically the company or corporation) which drives, and benefits from, corrupt activity.
With that in mind, jurisdictions which traditionally have, or have introduced, criminal liability for legal persons have had to consider how to make that liability workable and, in particular, how to attribute corrupt acts to the legal entity. Meanwhile, those with no liability for legal persons or with only administrative or civil liability available have had to consider whether to go down the path of criminalization. Whichever basis of liability is chosen, no anti-corruption strategy will have a real chance of success unless the liability of legal persons is capable of enforcement.
Azerbaijan has recently enacted a law on corporate liability (not yet in force), and at the request of the Anti-Corruption Directorate, the workshop was aimed at discussing the practice and challenges faced in other jurisdictions when dealing with corporate liability in the corruption context, and emerging international good practices. To that end, the group discussed:
- Basis of corporate liability: a comparison of the approaches in different legal systems to impute criminal liability in respect of corporate: intent, vicarious and strict;
- How the corporate vehicle is exploited in corruption, money laundering and economic crime;
- How a corporate structure can exploit and evade administrative and criminal liability (e.g. use of anonymity of nominees or bearer shares; using off shore locations and tax havens, etc.);
- Strategies and tools necessary for investigating corporate criminal activity, and how the approach differs in key respects from investigating individuals for corruption/bribery;
- Challenges faced by other jurisdictions, e.g. dealing with large corporates with global presence;
- international co-operation: how to make and receive requests for mutual legal assistance;
- International best practices in addressing corporate ‘criminal’ conduct.
The second day of the workshop focussed on Asset Tracing & Recovery and examined the international asset recovery standard set out in Chapter V of UNCAC.
Most legal systems today recognise the need to have in place effective preventive and confiscation regimes for acquisitive crimes. By and large, such an approach may be adequate for most crimes, but it has not proven to be sufficient when it comes to bribery and corruption, in particular, grand corruption. What singles bribery and corruption from other acquisitive offences is the position of the public official as a beneficiary of the crime, and often times, a high ranking official, up to and including a head of state, who in direct breach of his mandate as an official, loot and plunder state assets for personal gain, move the assets either through complex corporate vehicles or straight forward banking transactions in the full knowledge that it is unlikely to be queried in the national system, and even less so in a foreign financial system. Such looting and plundering of state assets by high ranking officials, or politically exposed persons (PEPs) is well documented over the years which simply helps to illustrate the inadequacy of the pre-UNCAC asset recovery framework.
The session addressed:
- Bases of recovery: conviction based confiscation, confiscation in rem and civil recovery;
- Tools, including special investigative means, for asset tracing;
- Role and function of financial intelligence and FIUs;
- Use of forensic accountants in understanding financial movements;
- International co-operation which underpins asset recovery (requests for evidence gathering, freezing and confiscation);
- Recovery of assets.
Useful links:
Azerbaijan FIU: http://www.fiu.az/eng/anti-corruption
Business Anti-Corruption Portal: http://www.business-anti-corruption.com/country-profiles/europe-central-asia/azerbaijan/initiatives/public-anti-corruption-initiatives.aspx
Council of Europe Workshop news item.
