March 09, 2009
Compliance officers are often made uneasy by close personal relationships in opaque business settings. They’ll routinely conduct extensive due diligence to reassure themselves that the risk of inappropriate influence is remote. But what about appropriate influence? Employees in the Middle East and Asia are often baffled at the determination of many US companies to choose a stranger over a friend or family member for their business needs. In this entry, Bruce Horowitz of Paz Horowitz describes how relationships can be fostered to reduce bribe demands.
Working with clients, colleagues and foreign intermediaries in Quito and elsewhere, Bruce has developed some imaginative strategies to address -- ethically and successfully -- extortion at the local level.
Judicial courts can be a playground for extortionate government functionaries, including some judges, judges’ secretaries, bailiffs and judicial property custodians. Judges’ secretaries handle many of the judges’ functions and control which, when and sometimes how cases are decided by the judges. Bruce has discussed with groups of trial attorneys which strategies and tactics succeed and which fail when dealing with extortionate mid-level court functionaries.
* * *
STRATEGIC EMPLOYMENT OF SPECIALIZED PARALEGALS
One method that has shown success involves the selection and specialization of court-liaison paralegals that are needed to move cases through the court system. In the country in question, almost all judicial secretaries are either law students or recently graduated lawyers. While not all judicial secretaries are extortionists, those who are will generally not move a case through the judicial process without a bribe at most steps in the process. To deal with this problem, one trial attorney says that his firm succeeds without paying bribes based on a combination of strategies. For instance, since many or most of the judicial secretaries who control the court docket are either law students or recently graduated lawyers, one successful tactic is to hire and train trial paralegals, who study at the same law schools as the judicial secretaries. He has found that judicial secretaries shy away from demanding bribes from their law school classmates, or from paralegals who are friends, or even friends of friends, of the judicial secretary’s law school classmates.
THE “INEDIBLES BUBBLE” – EXTORTIONATE GOVERNMENT FUNCTIONARIES ARE NOT OMNIVOROUS
Why does this work? This tactic of employing law school classmates works. It is based on the reality that extortionate government functionaries are not “omnivorous”. They are not ogres who eat any goat that comes over their bridge. Extortionate functionaries do not extort their mothers, their sisters, their priests, their best friends or their legally-recognized children. They tend not to extort co-workers or supervisors, unless blackmail is also involved. Although this “Inedibles” bubble weakens as it expands, it may predictably embrace classmates, weekend football buddies, fellow church members, cousins and uncles, friends of siblings, and friends of friends. For extortionists who are law students or are new lawyers, the “Inedibles” can include law school classmates and friends of laws school classmates.”
* * *
Of course, once these relationships are in place, lawyers must be careful to resist any temptation to use them to gain a benefit and not simply to avoid extortionate demands. Compliance officers are right to proceed cautiously where personal relationships are concerned.