Vytautas Nekrošius: notaries paying „kick-backs” shall be fired
“Kick-backs” paid by notaries to real estate (RE) developers and brokers in return to clients is an established practice in Lithuania. The notarial self-governance authority hired mystery shoppers in order to uncover such practices, then summoned wrongdoers to explain their behaviour, but illegal agreements are common.
According to Professor of the Faculty of Law at Vilnius University (VU) Vytautas Nekrošius, notaries giving “kick-backs” shall be fired.
“Notaries are bound by administrative or criminal liability – just as civil servant are. Such practices have features of corruption; so we have to sit with relevant public authorities, to draw a clear roadmap and once and for all get rid of the people who believe their colleagues are stupid and who discredit the notarial profession”, said Prof. Nekrošius to ELTA.
Impeccable notarial reputation and liability is emphasised during legal studies, at universities. However, some of the notaries stumble over the wish to earn extra euro, Prof. Nekrošius said.
“I have a very simple solution here – people of this kind may not serve as notaries”, the researcher of law, co-author and reformer of the Civil Procedure Code of the Republic of Lithuania said.
According to ELTA, a very simple scheme has been used for many years: some notaries agree with real estate developers and brokers for a certain percentage (usually, 10-20% from the notarial charge) to take their clients to notaries who kick-back for the service in “black money”.
According to Paulius Murauskas, project coordinator at Transparency International Lithuania Chapter, undeclared payments in cash for a service is not a legal activity.
“Legal acts require impeccable reputation and integrity from notaries. Undeclared payments in cash obviously are not in line with the law”, said representative of Transparency International Lithuania Chapter.
President of the Chamber of Notaries of Lithuania, Klaipėda notary Marius Stračkaitis emphasised that the Chamber of Notaries of Lithuania and the Court of Honours of Notaries spare no effort in fighting against the so-called “kick-back” practice when real estate brokers are paid cash by notaries for bringing their clients to certify real estate transactions.
“The Law on the Notariate and the Code of Ethics of Notaries provide for very high standards for notaries, whereas payments to real estate brokers may only be seen in one light – as abuse of office”, said Stračkaitis to ELTA, who called payments to RE brokers as totally unacceptable and inappropriate.
For several years the Chamber of Notaries of Lithuania have been running the mystery shopper programme, during which, according to Stračkaitis, several incidents were reported when notaries showed their tendency to act inappropriately and readiness to discuss a reduction of the notarial charge or reimbursement of the part thereof to their clients.
According to the President of the Chamber of Notaries, a notary has no right, without a legal ground, to relieve a person from the payment of the charge nor reimburse part of the charge paid, because this is regarded as unfair mutual competition, a gross violation of the code of ethics giving ground for disciplinary sanction.
The data collected from the mystery shopper programme were handed over to the President of the Chamber of Notaries.
“Unfortunately, in order to use the data collected by a mystery shopper as a ground for disciplinary sanction, some amendments to the Law on the Notariate and broadening of the remit for the Chamber of Notaries to inspect notaries are necessary. As a result, all notaries who came under suspicion were summoned for individual meetings and were warned of the obligation to abide by the requirements of the code of ethics and discipline”, Stračkaitis said. RE brokers and notaries interviewed by ELTA said that such reprimands were of no use, as part of the notaries keep on their anti-competitive practices and pay “kick-backs” – everybody knows it.
“Problem number one is that the parties to the process are happy – both the one who gives and the other one who gets. Problem number two is that sending a mystery shopper to do his job does not prove anything. If notaries are s dismissed on the ground of the testimony given by a mystery shopper, the court will reinstate them. On the other hand, we might be looking into the possibility of obtaining hard evidence in this case such as video or audio recordings. It is not that easy to make it happen, but it is possible in cooperation with relevant authorities” Professor Nekrošius from VU Law Faculty commented the situation.
President of the Chamber of Notaries Stračkaitis is calling on people who have reliable information and testimonies on illegal payments by notaries to inform the Chamber of Notaries of Lithuania. The Law on the Notariate of the Republic of Lithuania provides for that notary is a person delegated by the state to perform the delegated functions to rule out the possibility of illegal transactions and documents in civil legal relations.
Transparency International Lithuania Chapter do not have data on the prevalence of the so-called “kick-back” practice among notaries.
“First we need to understand whether Lithuanian notaries and real estate brokers realise it as a problem or vicious flaw which has to be changed. If that is not the case, it becomes a much bigger challenge of abolishing such practice, because the fact alone of coming under scrutiny of law enforcement or getting a sanctions is not going to be helpful.
To conclude, it is really necessary to involve representatives of notaries and real estate brokers into the discussion so as to understand which of the decisions they have already applied and which ones they would expect to get”, Murauskas, representative of Transparency International Lithuania Chapter thus commented the situation. According to him, first of all the roots of such practice have to be uncovered and uprooted instead of fighting the consequences.
ELTA would like to remind the readers that notaries while discharging their obligations stay immune to the influence of public and regulatory authorities and are bound by the law only.