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Lawyers and observers of international law ought to pay close attention to the disturbing drama playing out this summer at the G-8 summit in Russia. This year’s delegates are attending a conference premised on democratic values, with an agenda ostensibly to focus on energy security, but it’s hosted by a country that has failed to ratify the Energy Charter Treaty and that has a long track record of trade and human rights violations. The irony of the situation is obvious; less obvious is the destructive precedent it sets, and the threat it poses to lawyers working in this region and in other emerging markets. There is an insidious process at work: Complicity through inaction in the international political arena has a detrimental impact in the international legal arena. The tacit political message to Russia of late has been: “We don’t approve of your attacks on the media, federalism, human rights and energy imperialism, but we want a piece of the energy pie, so we won’t speak up.” Thus, the energy bullying and legal violations continue. There are all too many examples of Russia’s disregard for the rule of law. Most prominent, the Yukos case is a chilling example of a multibillion-dollar expropriation made through severe abuses of state power. The circumstances surrounding that case are shady indeed. The government launched an assault on the company of Mikhail Khodorkovsky, based on ludicrous tax claims. For 2004, the company was taxed at the rate of $8 of tax for every dollar of revenue. Rosneft, a state-owned oil company, forcibly acquired Yukos’ $40 billion production arm in a rigged auction for a preposterously low price. The auction went fully against basic legal principles, as did the recent trials of Khodorkovsky and other Yukos executives, which sought “to weaken an outspoken political opponent, intimidate other wealthy individuals and regain control of strategic economic assets,” according to the Parliamentary Assembly of the Council of Europe (Resolution 1418, of Jan. 25, 2005). Former Russian presidential advisor Andre Illarionov even resigned in protest over the Yukos affair, calling it the “swindle of the year.” But, to date, the swindle has been sustained. With the vast majority of Rosneft’s value now composed of former Yukos assets, the company is preparing for a flotation, likely to take place this summer in London. The intent of the Kremlin is clearly to legitimize state theft by gaining Western investors as accomplices. So far, this plan seems to be working: The unsavory history of the initial public offering does not appear to concern such major financial institutions as Morgan Stanley, JP Morgan, Dresdner Bank and ABN AMRO, all rushing in to assist as virtual handmaidens of expropriation. The cost of complicity Legally, this is significant. At least two of these banks are signatories to the United Nations’ Global Compact, which Kofi Annan established to demonstrate corporate commitment to core values of human rights. In view of this inconsistency, we might ask if the banks’ commitment to corporate social responsibility is real or imagined. Although the money must seem inviting, the international business and legal community ought to understand the cost of such complicity. We, as lawyers, need to understand that silence is a political statement, and that when we attempt to make ourselves comfortable by defining client choices according to business, rather than legal, standards, we are passing the buck with our eyes wide shut. Complicity, though ethically unacceptable, is understandable. There has been a trickle-down effect: International banks are taking the lead from politicians and governments, which have made opportunism in the face of perceived energy scarcity the mantra of this decade. When Norway sells out a commitment to human rights for access to Russian gas fields, we all know we’re in a new world. Clearly, the political ironies underlying the G-8 summit agenda are not singular phenomena; such ironies are increasingly evident not only in politics, but also in trade. Complicity, whether it involves governments, banks or even lawyers, is costly and viral in nature. In the end, complicity is a strike against democracy. Whether of the high-intensity or low-intensity variety, democracy is about more than elections. It is about the rule of law over the rule of people. No one should understand that fact better than lawyers. And it is the task of the legal community to raise its voice when the rule of law is under such threat. Robert R. Amsterdam ([email protected]) is a partner and co-founder of Toronto-based Amsterdam & Peroff. With an active trade and subsidy practice on behalf of governments and international corporations, he and his firm have also pioneered work in the area of corporate human rights. He was one of the attorneys who represented Mikhail Khodorkovsky in his recent trial.

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