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Anti-Corruption Guidelines and Sanctions Reform

This presentation discusses the Anti-Corruption Guidelines and Sanctions Reform implemented by the World Bank Group, focusing on the scope of application, obligations of borrowers and recipients, remedies for fraud and corruption, sanctions process, and types of sanctions.

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Anti-Corruption Guidelines and Sanctions Reform

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  1. The Anti-Corruption Guidelines and Sanctions ReformFiduciary ForumMarch 26, 2008 Presented by:LEG: Lisa Lui, Senior Counsel Alison Micheli, Senior CounselOES: Paul Ezzeddin, Consultant

  2. Anti-Corruption Guidelines • Apply to all projects for which a PCN is issued on or after October 15, 2006 • Incorporated by reference in IBRD and IDA lending agreements

  3. Anti-Corruption Guidelines • Scope of Application • What: Use of IBRD and IDA proceeds • Who: All “Recipients” • Borrowers and Recipients have an obligation to prevent and combat fraud and corruption • Bank may sanction parties (other than member government or officials) in the event of fraud and corruption

  4. Anti-Corruption Guidelines • Additional Financing • Project Papers issued after October 15, 2006 • New activities • Do not cover Parallel co-financing and counterpart funds • Do not cover Development Policy Loans – unless IL components included • Pending issue: Application to Trust Funds

  5. Obligations of Borrowers and Other Recipients of IBRD & IDA Financing • Borrower • Take appropriate measures to prevent fraud and corruption, including adopting appropriate fiduciary and administrative practices, and ensuring all representatives involved receive the Guidelines • Report immediately to Bank allegations of fraud and corruption • Cooperate fully with Bank investigations • Take timely and appropriate action to address fraud and corruption when such occurs

  6. Obligations of Borrowers and Other Recipients of IBRD & IDA Financing • Borrower • Incorporate anti-corruption provisions into subsidiary agreements (including Anti-Corruption Guidelines, by reference) • Enforce Bank sanctions by early termination of subsidiary agreements and/or seek restitution • Obligations of other Recipients to mirror those of the Borrower

  7. General Conditions- Remedies • Suspension • If Bank determines that fraud and corruption has occurred in connection with the use of Loan proceeds, without the Borrower (or Guarantor or Project Implementing Entity (PIE)) having taken timely and appropriate action, satisfactory to the Bank, to address such practices when they occur • If Borrower (if not a Member Country) is sanctioned under another project • Cancellation • Expanded beyond procurement

  8. What are Sanctions? • One WBG tool to deter corruption in Bank Projects • A question of “whether or not to do business” with an individual or firm • Based on WBG definitions of fraud and corruption • Administrative not criminal • Apply to firms and individuals, not government officials, notBank staff

  9. What Activities Can Be Sanctioned? • Fraud • Corruption • Collusion • Coercion • Obstructive Practicesnew • Definitions found in: Consultant and Procurement Guidelines; Sanctions Procedures; Anti-Corruption Guidelines for Borrowing Countries

  10. What Does INT Do With its Investigative Results? Investigation Investigative Report Referral Report Proposed Notice of Sanctions Proceedings EO & Sanctions Board

  11. Two-Tier Sanctions Management Process INT Investigation (EO) Evaluation and Suspension Officer 1st Tier Sanctions Board 2nd Tier

  12. Two-Tier Sanctions Management Process • Evaluation and Suspension Officer (EO) is 1st Tier • Evaluates evidence • May temporarily suspend companies • Recommends a sanction (which becomes effective if respondent does not contest) • Four EOs (IDA/IBRD full-time; MIGA, IFC & Bank Guarantee Projects part-time)

  13. Two-Tier Sanctions Management Process • Sanctions Board is 2nd Tier • Comprised of three (3) Bank staff and four (4) external members • Evaluates evidence • Considers allegations • Considers recommended sanction • May hold a hearing • Hears a case only if respondents contests • Alternate members (internal and external) for IFC, MIGA, Bank Guarantee Projects

  14. Types of Sanctions • Debarment • Letter of Reprimand • Conditional Non-Debarmentnew • Debarment with Conditional Releasenew • Restitutionnew • More flexibility for the Bank • More incentives for companies to cooperate • Referrals are made to member countries involved • Sanctions are public: www.worldbank.org/debarr

  15. More information • Anticorruption Guidelines Implementation: • Information Note to Borrowers • “Reader friendly” version of the Anti-Corruption Guidelines • Bank website www.worldbank.org/sanctionsreform • Commentaries on the Anti-Corruption Guidelines (under preparation)

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