World Bank Debarment – effective tool in fighting corruption
22 Oct 2015 12:00 am by Mark Dunn
Figures released last year showed that the World Bank, which is based in Washington DC, debarred more than 250 companies and individuals in 2013 – more than in the previous seven years combined. The sectors impacted most were water, energy, transport, agriculture and healthcare, and more firms based in the US and Canada were debarred than in the rest of the world. As of 2013, Canada had 119 entities which were debarred by the bank, the US 46, Indonesia 43 and the UK 40.
Debarment for fraud, bribery & corruption offences
The bank debars companies and individuals which have been involved in fraud, bribery and corruption related to any of its programmes around the world. It has also blacklisted companies which have relationships with individuals who have already been debarred. In a debarment earlier this year, the bank banned the Louis Berger Group (LBG) – an engineering, architecture management and economic development firm based in New Jersey – for two years from bank-financed projects. Following an inquiry, the bank found that LBG had made corrupt payments for officials involved in two World Bank-financed projects in Vietnam. It also imposed a one-year debarment on Berger Group Holdings (BGH) – LBG's parent company.
The penalties imposed by the bank could have been higher had the group not conducted its own investigation following agreement of terms with the bank. It uncovered the misconduct and then reported its findings.
Leonard Frank McCarthy, the World Bank's Integrity vice president, said: "A company's response to misconduct is clear evidence of where its commitment to integrity lies. What this case demonstrates is an investigative process and outcome that has pushed the company to take remedial action toward achieving a stronger standard of compliance and accountability across the board."
Under the terms of the deal, both LBG and its parent must take appropriate remedial measures to address the misconduct that was uncovered and to adopt and implement an effective integrity compliance program consistent with the bank's guidelines.
New settlement mechanism
The bank's regulatory regime, which it is now aggressively imposing on all entities engaged in bidding on projects it is funding, is similar to other international regimes designed to tackle bribery and corruption. In 2010, the bank adopted a settlement mechanism which includes a period of debarment, obligations on the entity debarred to cooperate fully and signing up to having its compliance procedures monitored.
Following its adoption, the new policy has seen several major settlements between multinationals and the World Bank. The largest to date has been a 10-year debarment following a settlement with SNC Lavalin – Canada's largest engineering group.
Any companies or contractors engaged in World Bank projects or servicing any aspect of its business, as well as those considering bidding, should examine their anti-bribery and corruption guidelines and tighten where necessary to ensure an effective and comprehensive regime.
- "Adoption Day" - due diligence in legal preparations for lifting of Iranian sanctions
- Shipping due diligence: more at risk than piracy on the high seas
ps 3 ways you can apply this information right now to…
- To protect your business and reputation you need to better understand your customers, employees and vendors. Lexis Diligence brings together all the intelligence you need in one place to conduct consistent due diligence and comply with anti-money laundering and anti-bribery regulatory requirements.
- Keep up to speed on developing news and expert opinion with our regular posts on Anti-Bribery & Corruption; subscribe to our blog to have updates delivered directly to your inbox.
- Leave a comment below. Let's start a conversation!