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Catching Corrupt Lawyers, Part I

Two professional groups say they'll punish any lawyers involved in KBR's $182 million scheme to bribe Nigerian officials in exchange for contracts worth $6 billion.

A past president of the International Bar Association (IBA) visiting Nigeria last week reportedly "threatened to use its internal disciplinary mechanism to punish accordingly any of its members indicted in the scandal," according to a story in the Nigerian press (here). The report said the IBA "vowed that it would wield its big stick against any lawyer practicing in any part of the world found to have been involved or indicted in the Halliburton bribery scandal."

KBR (formerly part of Halliburton) pleaded guilty in February this year to violating the Foreign Corrupt Practices Act and agreed to pay a $579 million in penalties. And in September 2008, its former CEO, Albert "Jack" Stanley, pleaded guilty to FCPA and mail and wire fraud charges. He's cooperating with prosecutors and is scheduled to be sentenced on August 27, 2009.

But does the IBA really have a big stick? Not likely. It was created in 1947 as a sort of U.N. for lawyers. It claims voluntary membership of 30,000 individual lawyers and more than 195 bar associations and law societies around the world. That's impressive, and we know the group does some great work -- helping lawyers stay on top of issues, keeping in touch with each other, and protecting themselves in countries where they're vulnerable to political attacks and intimidation.

But the IBA wouldn't have jurisdiction to punish non-members. And even for members, suspension or expulsion from the organization looks like the only possible sanction.

The Nigerian Bar Association (NBA), on the other hand, is a mandatory organization, meaning anyone admitted to practice law in Nigeria must be a member. Mandatory bar groups are usually self-regulating and allowed to impose several layers of discipline on errant members. So it should have authority to suspend or disbar unethical local lawyers, and perhaps recommend prosecution of those found to have broken the law.

But even the NBA isn't getting far. In a local report, it said it's having "difficulty in moving against any of its members who might be involved in the scandal for now because the Federal Government is allegedly not transparent about the investigation and prosecution of indicted Nigerians in the scam."

Outside Nigeria, at least one lawyer involved with KBR faces prosecution. Jeffrey Tesler, 60, was indicted in February by a Houston grand jury for violating the Foreign Corrupt Practices Act. He was arrested by British police in March at the request of American authorities, who are trying to extradite him to stand trial in the U.S. They say the London lawyer was a middleman who handled or arranged many of the corrupt payments from KBR to Nigerian officials.

In Part II, we'll look at other FCPA enforcement actions involving lawyers accused of being on the wrong side of the law.
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Full post as published by The FCPA Blog on April 27, 2009 (boomark / email).