Bridgetown, Barbados–2013

Integrity in IDB Group Operations

Inter-American Development Bank

MEMBER MEMBER COUNTRIESCOUNTRIES

BORROWERBORROWER

Integrity Dividend

Accountability

WHY DO WE CARE?

INSTITUTIONAL INTEGRITY IN THE IDB GROUP

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IDB Integrity Framework• Promoting the highest levels of integrity within the IDB Group/ Ethics Office

• Ensuring that activities financed by the IDB Group are free of fraud and corruption/ OII

• Supporting programs that strengthen good governance, enforce the rule of law and combat corruption/ VPS /IFD/ ICS

Roles and Responsibilities vis a vis Integrity

To verify eligibility of contractors/suppliers/consultants

AllAll To report suspected prohibited practices

Sector Specialists, OIISector Specialists, OIITo manage integrity risk at the design and execution phases of IDB-financed

operations and Country Strategies

Office of Institutional Office of Institutional Integrity Integrity

To investigate, to advice operational teams regarding the

Case Officer and Case Officer and Sanctions CommitteeSanctions Committee To sanction

Executing Agency, Executing Agency,

Fiduciary SpecialistsFiduciary Specialists

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Prohibited Practices as recognized by the IDB (1)

• Corruption - offering, giving, receiving, or soliciting anything of value to influence the actions of another party

• Fraud - misrepresentation that knowingly or recklessly misleads a party in order to obtain a benefit or to avoid an obligation

• Coercion - threatening to impair or harm a party in order to influence improperly the actions of that party

Prohibited Practices as recognized by the IDB (2)

• Collusion - arrangement between two or more parties designed to achieve an improper purpose

• Obstruction - deliberately destroying, falsifying, altering or concealing evidence material to the investigation or making false statements to investigators in order to materially impede a Bank Group investigation into allegations of a prohibited practice

Office of Institutional Integrity (OII) Activities

OII CaseloadJanuary 1, 2007 – December 31, 2012

2007 2008 2009 2010 2011 2012

Pending Investigations (prior year) 123 97 69 80 65 45

New Investigations (Allegations) 136 122 163 139 130 127

Active Investigations 259 219 232 219 195 172

Completed Investigations 162 150 152 154 150 104 Pending Investigations (period's

end)97 69 80 65 45 68

Post-Investigation Activities (cases)

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Source of allegationsJanuary 1, 2007 – December 31, 2012,

(in percentage)

INVESTIGATIONS

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Investigative Process: Anatomy of an Investigation

Cross-debarment: rising the cost of corruption for the private sector

An innovative coordinated global initiative

•5 MDBs including the AfDB, ADB, EBRD, IDB, WBG agreed to mutually enforce each other’s debarment actions, with respect to corruption, fraud, coercion, and collusion.

– Deterrent to firms and individuals engaged in fraud and corruption in MDB-financed development projects; and

– Provides an incentive for firms to clean up their operations.

Prevention

IDB’S PREVENTIVE STRATEGYIdentification of risk factors at the sector

level and relevant stakeholders

Agreement on relevant risk indicators to

monitor across the procurement phases

Perform risk assessment

Based on assessment, identify areas for action,

allies and incentives systems

Implement mitigation actions

Monitor & Evaluation of interventions

Country contextCountry context

Identification and assessment of integrity risks in SG Operations

During the procurement process: looking for ‘red-flags’ and consulting with OII

Regular monitoring of disbursements: checking anomalies (cash payments, off-shore places, data-mining)

During the life of the operation: using the Project Risk Management tool (GRP for its Spanish name) and consulting with OII

During execution: conducting due diligence concerning the Bank’s Sanctions

Supervision of the Auditors: making sure that independent recommendations in management letters are implemented

Integrity Due Diligence in NSG Operations

Confidential

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Contacting OII

Web page: http://www.idbfc.org

PhoneInternational Line+(877) 223-4551

Fax+(001) - 202 312-4029

Mail or in person:Inter-American Development

BankOffice of Institutional Integrity1300 New York Avenue, N.W.

Stop B-680Washington D.C. 20577, USA“Personal and Confidential”

E-mailallegations@idbfc.orgOII-Consult@iadb.org

THANK YOU VERY MUCH