World Bank debarment actions show value of ABC compliance

January 01, 1970 by Mark Dunn

The World Bank has been busy. In a press release issued at the end of the World Bank's fiscal year on June 30, the organisation announced that it had debarred 16 companies for sanctions violations and entered into eight Negotiated Resolution Agreements (NRA) in the past quarter. The latest actions bring the total number of debarred and cross-debarred companies and individuals to 204 since the beginning of 2017.

What compliance failures lead to debarment?

The most recent World Bank action, which took place on July 17, was the debarment of AECOM Asia Company Limited for 18 months for misrepresenting use of consultants and other staff members and failing to disclose a conflict of interest in a project proposal. An FCPA blog notes that the debarment is part of the terms of the NRA, which also mandates that the company "… adopt a Corporate Compliance Program consistent with the World Bank Group Integrity Compliance Guidelines." A second debarment and NRA was issued against AECOM New Zealand Limited.

Another recent action debarred German engineering services company Fichtner GmbH & Co. KG over bribes accepted by a former employee in an attempt to influence contract awards for a project in the Democratic Republic of the Congo. According to a report on the FCPA blog, Fichtner cooperated with the World Bank's investigation, admitted to the misconduct and made changes to its compliance program to address the shortcomings. Despite the corrective actions, however, Fichtner will miss out on potential opportunities for World Bank-financed projects for the next 15 months.


Why the World Bank's anti-bribery and corruption focus is important

Criminal prosecution of corruption continues to be challenging, but administrative penalties can close the gap on compliance failures. The World Bank is going a step further in supporting such administrative solutions by creating a "Global Information Sharing Mechanism on Administrative Remedies against Corruption (ARC)." The World Bank states, "Our intention is to make this database a global good, available to any that are interested." And there are signs that the World Bank's approach is effective.

Last year, Mokhles Bustami, Chief Strategy Officer of Jospon Group of Companies and former COO of Zoomlion, one of Jopson Group's affiliates, was interviewed by the World Bank in a follow-up to Zoomlion's release from the World Bank debarment list. Asked if it was difficult to make a business case for compliance, Bustami remarked that board members recognised that establishing a robust compliance programme was critical to success. He said, "A weak compliance culture is a high risk considering our size and exposure. A 'business as usual' approach especially in many environments where we operate is tempting. Often times, companies will ask: who is watching? For a rapidly growing company like Zoomlion, the smarter choice was to invest in compliance." The investment paid off; on the day that the debarment ended, Zoomlion received bid invitations for several projects across Africa. Bustami concluded, "A new standard of compliance translated into new partners, more contracts and a credible position in a rapidly growing international development market. It was the right thing to do." Has your organisation prioritised the due diligence and monitoring processes that are part of a robust compliance programme? If not, what are you waiting for?