the world bank department of institutional integrity 1 business integrity and anticorruption...

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The World Bank Department of Institutional Integrity


Business Integrity and Anticorruption Initiatives

of the World Bank

Department of Institutional IntegrityMaarten de Jong, Director

June 2005

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“All of us – lenders, borrowers, contractors and civil society – have

to make a strong commitment against corruption, the number one challenge in reducing poverty now.”

James D. Wolfensohn (April 21, 2004)

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“Corruption is a terrible disease that eats away at development successes. INT’s work is part of the core business of the World Bank.”

Paul D. Wolfowitz (June 9, 2005)

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Issues to Discuss Together

The anti-corruption imperative World Bank’s anti-corruption strategy Dept of Institutional Integrity update Recent World Bank policy changes Voluntary Disclosure Program Issues of mutual interest

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Context: The Anti-Corruption Imperative

Growing pressure from donors to enhance aid effectiveness

Similar pressure from civil society to improve accountability

Anti-corruption conventions at national, regional, and global levels making bribe payments illegal

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Changing Business Environment

More firms (but not all) want a level playing field and an end to the need for illegal payments

Increasing competitive international business environment – bribes raise costs, cut profits

Tension between international and local firms More chances of getting caught Reputational risk greater than ever

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World Bank’s Anti-corruption Strategy

Prevent fraud and corruption in World Bank-financed projects

Help countries that request the Bank’s support in their efforts to reduce corruption

Mainstream anti-corruption in all aspects of the Bank’s relations with its borrowing member countries

Support international efforts to reduce corruption

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• Prevent and deter fraud and corruption

• Outreach/educate Bank staff and clients• Investigate allegations of fraud, corruption, and

misconduct

• Feed lessons learned “upstream” into lending

• Leverage results through collaboration

• Confront bribe-payers through sanctions process.

Department of Institutional Integrity

In compliance with World Bank rules, ensuring all due process safeguards, INT’s mission is to:

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Hotline, Website, etc.Hotline, Website, etc.

Preliminary InquiryPreliminary Inquiry

PrioritizationPrioritization

Full InvestigationFull Investigation

Sanctions Cttee/Debarment ListSanctions Cttee/Debarment List

Misprocurement DeclaredMisprocurement Declared

Internal Disciplinary ProceedingInternal Disciplinary Proceeding

Referral for Prosecution or Relevant ActionReferral for Prosecution or Relevant Action

Support to Country TeamsSupport to Country Teams

Lessons LearnedLessons Learned

Publicize ResultsPublicize Results

Capacity of ClientsCapacity of Clients

Receipt of AllegationReceipt of Allegation

InvestigateInvestigate

DeterrenceDeterrence

PreventionPrevention

What Does INT Do?The World Bank’s Department of Institutional Integrity (INT) was created in March 2001. Its core functions are to:

Investigate allegations of fraud and corruption in World Bank Group projects,

Investigate allegations of misconduct by Bank staff, and

Train and educate staff and clients in detecting and reporting fraud and corruption in World

Bank Group projects.

The World Bank’s Department of Institutional Integrity (INT) was created in March 2001. Its core functions are to:

Investigate allegations of fraud and corruption in World Bank Group projects,

Investigate allegations of misconduct by Bank staff, and

Train and educate staff and clients in detecting and reporting fraud and corruption in World

Bank Group projects.

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Investigative Capacity

$10 million budget Staff has grown from 20 to over 50 in 3 years International, multi-lingual staff Investigators, forensic accountants, lawyers Able to travel and do on-site interviews Interactive database

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More Information About Business

More knowledge about companies, individuals, and money flows than ever

INT database World Bank databases Worldwide web Working relationships with other MDBs

and investigative bodies

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Reactive Approach

Traditional response to allegations and fraud and corruption– Staff Reports– Contractor complaints– Results of Sanctions– Hotline/e-mail—sometimes anonymous

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Proactive/Preventive Approach INT data review

– Case data/results Detailed Implementation Review (DIR)

– Documentation examination– Forensic Accounting

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End Results CONTRACTOR

Criminal Referral

Permanent Debarment

Temporary Debarment

Reprimand Other

Imposition of Sanction

Hearing Before the Sanctions Committee

Notice of Debarment Misprocurement

Finding of Fraud or Corruption

Public Announcement

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End Results

BORROWER STAFF

Referral to a Member

Government

Misprocurement Suspension of Loan &/or Portfolio

Request removal

Finding of Fraud or Corruption

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Results So Far

In six years:• Over 200 substantiated cases• Over 300 firms and individuals sanctioned• 25 criminal convictions obtained in multiple

jurisdictions (U.S., Sweden, Guinea, Bolivia, etc)• Many more cases in the pipeline • Result: Better understanding of how corruption

works in development projects• But more to be done

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World Bank Policy Changes

World Bank Board of Directors approved significant sanctions reforms in July 2004

Bank now implementing these changes Thornburgh Reports available on web

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Sanctions Policy Changes• Recognition of cooperation as a mitigating

factor• Incentives to disclose information • Temporary suspensions of firms during

sanctions proceedings• Development of a wider range of sanctions• New Sanctions Board -- outside majority• Expanded disclosure of investigations and

sanctions

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Proposed Voluntary Disclosure Program

Encourage firms that have engaged in fraudulent or corrupt practices in Bank-financed operations to disclose the details of those activities

In return for reduction in sanctions and confidentiality of identity

Not an amnesty, immunity, or pardon program Not a plea bargain program Pilot program underway over past year Formal launch anticipated soon

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ProposedVoluntary Disclosure Program

Results from firms’ self-monitoring Not triggered by an investigation For firms committed to stopping corrupt

practices Supplements existing sanctions process Aggregate information supplied to

governments for own action Faster, less expensive resolutions

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Enhanced Communications for Deterrence and Compliance

World Bank Board also approved disclosure policy for sanctions and investigations

Stepping up our efforts to publicize final results of investigations worldwide

Sanctions, press releases, reports and other information available on worldwide web

First INT annual report for FY04

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Upstream Rule Changes

Tightening procurement rules for tendering as well as implementation and execution

Also pursuing standardization via closer cooperation with other MDB’s via harmonization process

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New Integrity clause

Standard bid documents for large civil works, Sec II, para 9: “We hereby certify that we have taken steps to ensure that no person acting for us or on our behalf will engage in bribery.”

In cooperation with Transparency International

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Revised Procurement Guidelines

Based on INT’s input from casework in Bosnia, Albania, Columbia, etc.

New definitions of “fraudulent practice,” “corrupt practice,” and of “public officials” to include MDB staff;

Prohibitions on “collusive and coercive practices”

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Broader Definitions

Dialogue between MDBs about developing common definitions of fraud and corruption

NGOs and contractors both criticize lack of common definitions

Ensure that each organization treats the same conduct as acceptable -- and the same misconduct as sanctionable

Cover all funding, not just procurement

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Issues of Mutual Interest

Increasing compliance Assessing impact of investigations and

sanctions for upstream policy changes Raising awareness for prevention Raising standards Incentives for business integrity programs Working together for level playing field

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Websites

www.worldbank.org/integrity www.worldbank.org/anticorruption www.worldbank.org/procurement

the world bank department of institutional integrity 1 business integrity and anticorruption...

Documents

world bank rules

corruption slide

world bank group projects

business integrity

anticorruption imperative

anticorruption conventions

mainstream anticorruption

banks support