11 March 2013 | By Yun Kriegler
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Christopher Stephens recently left Orrick to help the Asian Development Bank achieve its goals as GC
There are many great reasons to change career course, but former Orrick Herrington & Sutcliffe partner Christopher Stephens probably has one of the most interesting. Towards the end of last year he left private practice after 28 years to take the general counsel role at Asian Development Bank (ADB).
To Stephens, who has moved from Hong Kong to Manila, the principal attraction of the Philippines-headquartered development bank was the nature and scope of its mission - to facilitate economic development and alleviate poverty in its developing member countries in the Asia Pacific region.
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“Whether it be through investment in roads and power generation, developing financial or public administration systems, helping prepare for the impact of climate change or the better management of natural resources, the mission of ADB is different from that of any commercial enterprise I have worked with,” says Stephens. “The big attraction of ADB is its critical role in the development of the Asia Pacific area. Its ambition to alleviate poverty and facilitate broader economic opportunities is not just the right thing to do, it’s important to the region’s development.”
As a finance lawyer in Asia for 15 years, the breadth of projects, clients and target countries he has dealt with have provided Stephens with variety, but nothing like that of ADB, a multilateral institution with 67 member countries. The bank, established in 1966, covers a vast catchment area, stretching 10,000 miles from Turkmenistan to the Cook Islands.
“The geographical area covered by ADB is almost 40 per cent of the circumference of the world” says Stephens. “The diversity of cultures, governments, climates, social norms, markets, capacities and expectations is enormous. These differences make our work more challenging and important, but also more interesting and rewarding.”
This diversity is reflected in the bank’s personnel, with 3,000 employees from almost 60 countries. Its legal department, formally known as the office of the general counsel (OGC), is similarly diverse. Around 42 lawyers from 16 countries work together with Stephens in the OGC.
Under Stephens’ leadership, the legal department also has a deputy general counsel who functions like a chief operating office of the department and four assistant general counsel. Each assistant oversees a team of lawyers covering specific operations and leads a different practice area, with three focusing on public sector work and one on the private sector.
Whether it be a rail project in Afghanistan, a Sharia-compliant loan in Pakistan or an energy programme in China the OGC handles a range of legal matters for the bank. Its involvement with a project starts at an early stage, from planning, appraisal and assessment through to negotiation and completion.
Most of the bank’s projects arise on the public sector side. For any given country those projects are based on a multi-year country partnership strategy (CPS) developed by ADB and the relevant country. The CPS is aligned with ADB’s broader strategic plan, Strategy 2020, and individual countries’ development strategies. Projects may comprise loans, guarantees or technical help.
For example, within the CPS with India, the bank has provided loans for a four-part $800m (£530m) programme to build 9,000km of rural roads in five states, connecting 4,200 far-flung communities to markets and services. Such transactions are mainly supported by the OGC with internal resources.
“The team of lawyers at OGC is impressive,” says Stephens. “These are talented and seasoned practitioners with a level of skills, experience, enthusiasm and commitment that would rival any law firm or private legal department in the world.”
But even with a capable in-house legal function, external counsel are engaged for complex or PPP projects. Recently, the bank instructed Clifford Chance for a number of agreements in relation to the Turkmenistan, Afghanistan, Pakistan, India (Tapi) pipeline project.
In fundraising transactions the OGC usually works with external advisers. One of the highlights was the bank’s issuance of 1.2bn Yuan RMB bonds listed on the Hong Kong stock exchange in 2010. Allen & Overy acted for ADB in this ground-breaking deal.
In cases where external counsel are required Stephens’ team typically solicits proposals from three or more firms and selects the best one for the job.
“This gives us flexibility and allows us to execute our assignments more effectively and efficiently than through a panel approach,” says Stephens. “It also takes into account the realities of a market for legal services where personnel, expertise and resources move more fluidly than can be tracked by a panel system.”
For his new role, Stephens and his family moved from Hong Kong to the capital of the Philippines, Manila. The hustle and bustle of this vast, tropical and at times chaotic city could be an intimidating start to a new life but Stephens finds the friendliness of people has helped him and his family settle in.
“The people we’ve met here are exceptionally friendly, hospitable and helpful, and we’ve needed all the help that’s been offered,” he says. “There’s also a discernible buzz about the place. The Philippines is clearly on the rise and the people feel this, and the excitement and energy it generates.”
In his new role Stephens says his immediate plan is to learn from the established team he has taken over from his predecessor, long-serving general counsel Jeremy Hovland, who has retired.
“I plan to learn as much as I can, support the existing team and not break anything,” he says. “In the longer term we’ll take a collaborative approach to identifying departmental goals and determining how to prioritise and execute these.”
According to ADB estimates near-term development needs in the Asia Pacific region are enormous. Between 2010 and 2020, Asia’s infrastructure needs have been estimated at around $8trn.
As ADB remains a driving force behind new fundings and investments for the region’s development, Stephens and his team will continue to be key enablers of the bank’s mission.
Stanley T Park, senior legal counsel, Daiwa Capital Markets Singapore
Two significant matters in South East Asia have been preoccupying in-house lawyers in the finance industry in recent months, both related to international legislative initiatives.
The first is global in scope, emanating from the G20’s resolution to reform the financial infrastructure for over-the-counter (OTC) derivatives, encompassing legislation from the US, the EU and local jurisdictions.
All countries in the region are focused on the extra-territorial implications, mainly with the US’ Dodd-Frank and the EU’s European Market Infrastructure Regulation initiatives.
Requirements relating to registration, clearing and trade reporting have been particular issues and several concerns about extra-territorial reach have been raised, namely: (i) who needs to register and under what conditions? (ii) what are the clearing requirements for financial institutions that enter into transactions with US/EU counterparts? (iii) which transactions need to be reported, by whom and to whom?
Among other issues, the risk of conflicting or inconsistent requirements imposed by different jurisdictions troubles many.
The second initiative is US-centric, deriving from the desire of the US Treasury to track down deadbeat US tax payers. Although the Foreign Account Tax Compliance Act (FATCA) technically applies only to persons under the jurisdiction of the US, FATCA has broader ramifications as it requires the withholding of a prohibitive amount of certain US-source payments to any foreign financial institution that does not comply.
The obligations imposed by FATCA are withholding, reporting and due diligence. Although the first two pertain only to accounts held by US persons, each foreign financial institution is required to comply with the due diligence requirements regardless of whether it holds any accounts for US persons.
One concern is the potential conflict with local laws relating to banking secrecy or data privacy.
In response, the US Treasury has forged special inter-governmental agreements (IGAs) with certain countries. Japan, Singapore and Hong Kong are reported to be among those in negotiations about entering into IGAs.
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