Research Paper Number

46/2014

Alberto Salazar

View the research paper on SSRN here.

Document Type

Article

Publication Date

2014

Keywords

corporate lawyers; corruption; professional ethics; developing countries; Foreign Corrupt Practices Act; Newmont; Yanacocha; Peru; abogados de empresas; corrupcion; etica professional; paises subdesarrollados; Ley Anti-Corrupcion de USA; Newmont; Yanacocha; Peru

Abstract

This work discusses the possibility of applying anti-corruption laws of first-world countries to third world lawyers that, while representing domestic or transnational companies, commit acts of corruption in their home countries. In particular, the Foreign Corrupt Practices Act (FCPA) of the United States allows for the reporting of agents or employees of individuals or companies that commit acts of corruption outside of the United States borders. For example, such a law would apply to Peruvian lawyers that, while acting as agents, employees, directors or executives of said companies commit acts of corruption and would allow these lawyers to be brought before the courts of the United States. This work contends that despite their benefits and the recent sanction of a British lawyer Mr. Tesler, interest group opposition and the apathy of first and third world governments can drastically reduce the effectiveness of such anti-corruption laws. The Newmont case in Peru demonstrates the effectiveness of interest group pressure in curtailing investigations that are in accordance with FCPA provisions as well as the reluctance of governments to push investigations further despite strong evidence pointing to the involvement of employees and the company in acts of corruption. Newmont is the majority shareholder of Yanacocha and his case also illustrates how transnational companies can worsen the deterioration of domestic institutions and the ethical conduct of lawyers in the third world. This case suggests the need to include promises not to aggravate institutions and ethical practices in countries that are the recipients of foreign investment as part of foreign investors’ social responsibility. This article also argues that third world public interest groups and organizations can contribute to reducing the impact of interest group opposition and government apathy if they lodge complaints of corruption by lawyers directly before the Department of Justice and the US Securities and Exchange Commission. Public interest groups may also participate in investigations, victim compensation and the implementation of programs that promote ethical conduct by lawyers. This would contribute not only to improving the ethical conduct and social responsibility of lawyers and the strengthening of institutions in the third world, but also will ensure that countries of the first world do not contribute to worsening the deterioration of democracy and poverty in the third world, particularly in those countries in which their companies invest.

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