World Bank Group
Office of Evaluation and Suspension (OES)
World Bank Sanctions System
and Anti-Corruption Efforts
ABA SIL 2011 Spring Meeting
Corruption: Enforcement, Compliance and Futility.
Fighting Corruption in the Second Decade of the
21st Century
April 8, 2011
Pascale Hélène Dubois
Evaluation and Suspension Officer
Office of Evaluation and Suspension (OES)
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www.worldbank.org/sanctions
Collateral Consequences
Ineligible to receive export licenses
(Lockheed)
Barred from securities business
Suspended from agency programs of the
Commodity Futures Trading Commission
and the Overseas Private Investment Corp
World Bank Group
Office of Evaluation and Suspension (OES)
Collateral Consequences
Plaintiff actions or competitor lawsuits
Aluminum Bahrain, B.S.C. v. Alcoa, Inc., 08-299
(W.D. Pa. Feb. 27, 2008): alleging under the
Racketeer Influenced and Corrupt Organizations
Act (RICO) that assignments of supply contracts
were used to bribe Bahraini government officials)
Korea Supply Co. v. Lockheed Martin Corp., 63
P.3d 937 (Cal. 2003) (private lawsuit under
California’s unfair competition law alleging that
bids for military sales were tainted by corrupt
payments to Korean government officials)
World Bank Group
Office of Evaluation and Suspension (OES)
Collateral Consequences
Management’s responsibility and liability
as result of Sarbanes-Oxley
Legal fees and disruption of business
resulting from a government investigation
Significant damage to the reputation of a
company (affecting its business
opportunities and its stock value)
World Bank Group
Office of Evaluation and Suspension (OES)
Collateral Consequences
• Local law issues (anti-corruption
statutes, debarment, fair trade
violations)
• Commercial bribery
• Wire and Mail Fraud
• Money laundering (the FCPA is a
predicate offense)
World Bank Group
Office of Evaluation and Suspension (OES)
(More) Collateral Consequences
Barred from doing business with the
federal government and IFI’s
For example, debarment by the World Bank
World Bank Group
Office of Evaluation and Suspension (OES)
FCPA
OECD
UNCAC
World Bank Group
Office of Evaluation and Suspension (OES)
Sanctions Timeline
1996 2002 2006 2007
Wolfensohn “Cancer of Thornburgh Sanctions Reform Launch of GAC
Corruption” Speech Report on Voluntary Disclosure Implementation
Procurement Debarment Program Program
Sanctions IFI Harmonization
1998 2004
Sanctions Board Adopts Thornburgh
Committee Recommendations
2009
2001 ETS Approved
INT created
2011
2003 420 World Bank
United Nations Convention Debarments
Against Corruption
1999
1st World Bank Debarment 8
World Bank GroupConvention
OECD Anti-Bribery
Office of Evaluation and Suspension (OES)
The World Bank
• International Financial Institution (IFI)
• Owned by 186 member countries
• Largest Multilateral Development Bank (MDB)
• Mission: “A World Free of Poverty”
• Financial and technical assistance to developing countries
IBRD: Middle-Income Countries
• low-interest loans, guarantees, advisory services
IDA: Poorest Countries
• Interest-free loans, grants
• 100+ country offices
• $58.7 billion committed by IBRD/IDA in FY 2010
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World Bank Group
Office of Evaluation and Suspension (OES)
Why Do MDBs Care About Corruption?
Ensure proceeds of loans are used for purposes
intended
Corruption is a cancer on effective development
More than $1 trillion are paid in bribes each year out
of a world economy of just over $30 trillion, equaling
3% of the world’s economy
Corruption has been estimated to be a 20% tax on
foreign investment
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World Bank Group
Office of Evaluation and Suspension (OES)
Why is the Bank Involved?
1996 Wolfensohn “Cancer of Corruption”
speech
Articles of Agreement
• Fiduciary responsibility to ensure Bank funds are
used with “due attention to considerations of
economy and efficiency”
• Bank funds to be used for their “intended purpose”
Development Effectiveness
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World Bank Group
Office of Evaluation and Suspension (OES)
How Committed is the Bank?
$8.01
billion Loans targeting
governance and
rule of law*
Total $72.9 billion *FY 2010
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World Bank Group
Office of Evaluation and Suspension (OES)
What Do Donors Want?
“We must not simply tally the dollars we
spend or the number of programs we
run, but measure the lasting changes
that these dollars and programs help
achieve. And we must share the proof
of our progress with the public.”
Secretary Clinton at the Center for Global Development
January 6, 2010
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World Bank Group
Office of Evaluation and Suspension (OES)
Why Fighting Corruption Matters
New baby-warmer
• Does not fit the specifications
of the procurement
• User risks electric shock
• Procurement unit accepted
the delivery
• Contract paid in full
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World Bank Group
Office of Evaluation and Suspension (OES)
Why Fighting Corruption Matters
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World Bank Group
Office of Evaluation and Suspension (OES)
Why Fighting Corruption Matters
30 days to completion – more than 50% of funds disbursed
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World Bank Group
Office of Evaluation and Suspension (OES)
Major World Bank Players
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World Bank Group
Office of Evaluation and Suspension (OES)
The World Bank works on both the
preventive and enforcement side
Today: Preventing Corruption through
Administrative Sanctions
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World Bank Group
Office of Evaluation and Suspension (OES)
What Do We Mean by “Sanctions”?
Administrative sanctions are one way in
which the World Bank combats corruption
Debarment is the most common sanction
Debarred companies and individuals are
not eligible to receive new contracts for
Bank projects
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World Bank Group
Office of Evaluation and Suspension (OES)
Who Can Be Sanctioned?
YES NO
Companies and Bank staff members
individuals that have Member country
engaged in sanctionable governments /
misconduct in competing government officials
for, or executing, Bank-
financed contracts.
World Bank Group 20
Office of Evaluation and Suspension (OES)
What if a Company is Accused of
Fraud and Corruption?
Allegation is received by Integrity Vice
Presidency (INTVP)
Allegation is investigated by INTVP
INTVP
• Fact-finder only
• Seeks and presents both exculpatory
and inculpatory evidence
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World Bank Group
Office of Evaluation and Suspension (OES)
What Does INT Do With Its
Investigative Results?
INT External Investigations of World Bank-Financed Projects
Action
Final Statement of
Referral Redacted
Product Investigative
Report Report Accusations and
Report (FIR) Evidence
Evaluation and
Suspension Officer
Recipients President/VPs
Gov’t(s) Public
IFC/MIGA
Sanctions Board
Recipient’s • Misprocure- • Suspension of • Temporary
ment corrupt officials Suspension
decisions • Cancellation • Investigation • Sanctions
• Review of • Project reviews
contracts
World Bank Group 22
Office of Evaluation and Suspension (OES)
Two-Tier Sanctions System
Integrity Vice Presidency
Investigation
(INTVP)
Evaluates evidence
Evaluation and Temporarily suspends
Recommends a sanction (becomes
Suspension Officer effective if respondent does not
contest)
1st Tier
Comprised of Bank staff (3) and
external members (4)
Sanctions Board Evaluates evidence
Imposes sanctions (not bound by
EO’s recommendation)
2nd Tier May hold a hearing if
INTVP/respondent requests
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World Bank Group
Office of Evaluation and Suspension (OES)
What is Sanctionable at the
World Bank?
Fraud
Corruption
Collusion
Coercion
Obstructive Practices
Definitions found in: Consultant and
Procurement Guidelines; Sanctions Procedures;
Anti-Corruption Guidelines for Borrowing
Countries
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World Bank Group
Office of Evaluation and Suspension (OES)
Types of Sanctions
Debarment
Letter of Reprimand
Conditional Non-Debarment
Debarment with Conditional Release
Restitution
More flexibility for the Bank
More incentives for companies to cooperate
Sanctions are public: www.worldbank.org/debarr
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World Bank Group
Office of Evaluation and Suspension (OES)
What is the Effect of Debarment?
Sanctions are public: www.worldbank.org/debarr
Publication of Sanctions Board decisions and EO
determinations
Debarred companies and individuals are not eligible to
receive new contracts for Bank projects
In most instances, companies controlled by a
debarred entity will also be ineligible
Sanctions can also extend to other affiliates under
certain circumstances
Cross-Debarment among Multilateral Development
Banks (MDBs)
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World Bank Group
Office of Evaluation and Suspension (OES)
Incentives For Cooperation
VDP SETTLEMENTS SANCTIONS
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World Bank Group
Office of Evaluation and Suspension (OES)
World Bank Enforcement
Making an Impact
Since 1999…
419 firms and individuals
publicly debarred
28 criminal convictions
based on INT referrals
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World Bank Group
Office of Evaluation and Suspension (OES)
Sanctions are Public Information
Web and Media Coverage List of Debarred Entities
www.worldbank.org/debarr
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World Bank Group
Office of Evaluation and Suspension (OES)
For More Information on Sanctions, Please
Visit www.worldbank.org/sanctions
External website
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World Bank Group
Office of Evaluation and Suspension (OES)