Lawyers have a key role to play in rebuilding public trust in institutions, the head of one of the globe’s most important bodies told thousands of lawyers gathered for the IBA’s annual conference.
Christine Lagarde, managing director of the International Monetary Fund and former chair of international firm Baker & McKenzie, opened the conference with a warning of a growing backlash against globalisation, particularly in industrialised countries.
While the immediate cause may be shifts in global production throwing people out of work, the backlash has evolved into a deeper problem: ‘a growing gap in trust in institutions’, especially in governments and in financial services.
‘A key factor fueling this distrust is corrupt and unethical behaviour, actual or perceived.’ Lagarde said. Today, corruption has direct and indirect costs. The annual cost of bribery, which is only part of the picture, is between 1.5 and 2 trillion dollars a year, or 2% of global GDP.
Enhancing integrity in public and private sector governance is critical in mending the trust divide. Only then can we have enough confidence in the very institutions that are essential for sustained and inclusive growth.’
Lagarde proposed two key steps to closing the trust gap.
Strengthening the rule of law: Lagarde cited the IMF’s engagement with Ukraine, which led to legislative reforms, setting up a new anti-corruption agency, streamlining and simplifying business regulation - as well as judicial reform, to enhance its independence and integrity.
Increased fiscal transparency, including anti-money laundering measures. These have taken on added significance following the Panama papers leak, the said. ‘These leaks gave us a window into the scale of global financial secrecy and the opportunities for illicit behaviour.’
Despite this, a survey found that over 50% of executives in financial services continue to feel that, in order to succeed, they will need to be ‘flexible’ on ethical standards. ‘This is troubling,’ she said.
Read the Gazette’s live blog from the IBA here