News
Latin American legal profession urged
to do more to tackle corruption
Only minority of clients
insisting that law firms ‘certify
anti-corruption compliance’,
according to sources
Calls for the Latin American
legal profession to take a tougher
stance on tackling corruption
have intensified in the light of
recent research revealing that
in-house lawyers at nine out of
ten companies in Latin America
say their companies are exposed
to corruption risk. There is also
anecdotal evidence that many
clients are not taking steps to ensure
that the law firms they use are
compliant with regulations aimed at
combating corruption.
Partners at law firms in the
region, speaking anonymously
to The Latin American Lawyer, said
the legal profession is not doing
enough to tackle corruption. One
partner at a law firm with offices
in Central America said that he
believed a significant proportion
of lawyers in the region would
be “willing to participate in, or
facilitate” international transactions
that they recognised were corrupt.
There are also indications that
clients are not doing enough to
ensure the law firms they use are
complying with regulations aimed
at tackling corruption. The partner
at the Central American firm said
that only around 30 to 40 per cent
of his firm’s clients require that the
firm must “certify anti-corruption
compliance”. The source added
that some jurisdictions in Central
America have a lack of ethical
guidelines for law practices.
Illicit payments
A recent survey by legal consulting
firm AlixPartners found that general
90%
Proportion of companies in Latin
America with general counsel
who believe their organisation is
exposed to the risk of corruption,
according to AlixPartners
www.thelatinamericanlawyer.com
counsel at 90 per cent of companies
operating in Latin America were
exposed to the risk of corruption.
Meanwhile, more than a third of
companies surveyed believed they
had lost business over the past year
due to their competitors making
illicit payments to governments to
secure contracts.
Latin American businesses have
been rattled by corruption scandals
over the past couple of years, the
largest of which involved Brazilian
engineering and infrastructure
conglomerate Odebrecht, which
was found guilty in a US court
in April 2017 of paying bribes
to secure contracts across the
region. In Brazil, Odebrecht and
its petrochemicals subsidiary
Braskem were found to have paid
around $780 million in bribes
to secure some 100 contracts in
Argentina, Brazil, Colombia,
Dominican Republic, Guatemala,
Ecuador, Mexico, Panama, Peru
and Venezuela, as well as in
Portugal and Switzerland. The
company was ordered to pay a $2.6
billion fine by a US federal judge,
and subsequently banned from
operating in various countries.
It is currently being sued by the
Colombian government over illicit
payments to secure contracts. The
reputational risk law firms face if
they are embroiled in a scandal
are immense. In one high profile
example in 2016, the so-called
‘Panama Papers’ scandal involved
a Panamanian law firm, Mossack
Fonseca, and the leak of documents
that revealed its involvement with
clients seeking to evade tax and
launder money. A Mexico-based
legal market source told The Latin
American Lawyer said they believed
their firm had lost business to other
law firms or individual lawyers
who were willing to “make illicit
payments to government officials
on behalf of, or for the benefit of,
foreign companies/investors”.
The source added that less than a
third of the firm’s clients stipulated
that the firm should demonstrate
compliance with the relevant anti-
corruption regulations.
News in brief
Marval advises on creation of
Mercado Crédito financial trust
Buenos Aires-headquartered
law firm Marval, O’Farrell &
Mairal acted as legal adviser
on the creation of the second
series of the Mercado Crédito
II financial trust, totalling
279.4 million pesos 10,519 ($7.3
million). Mercado Crédito II is
based on the same structure as
the Mercado Crédito I financial
trust, which offers 100 per
cent digital-format loans via
private instruments signed by
electronic signature on Mercado
Libre’s online platform.
Hunton Andrews Kurth and
BLP act for Promerica on $200m
debt issue
BLP advised Panama-
based Promerica Financial
Corporation (PFC) on a $200
million debt issue. PFC was
also advised by Hunton
Andrews Kurth. BLP also
acted for legal advisor to
PFC and Tenedora Promerica
Guatemala, as guarantors, on
the formalisation of the local
guarantee, subject to the debt
issuance documents.
Dentons opens in Nicaragua
Dentons has opened an office
in the Nicaraguan capital
Managua. Partner Edgard
Torres will lead a six-lawyer
team at Dentons Muñoz,
which will join forces with the
firm’s offices in Guatemala, El
Salvador, Panama, and San José
and Guanacaste in Costa Rica.
The Nicaragua opening follows
the strategic alliance the firm
launched last year with Brazil’s
Vella Pugliese Buosi Guidoni,
as well as the combination
with Gallo Barrios Pickmann
in Peru.
December 2018 • THE LATIN AMERICAN LAWYER •
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