The World Bank’s Sanctions System: Tackling Corruption through a Two-Tier Administrative Sanctions Process  Promoting good governance and tackling corruption are critical to achieving sustainable development and poverty reduction. Diversion of funds from development projects through corruption impairs the ability of governments, donors and the World Bank to achieve the goals of reducing poverty, attracting investment, and encouraging good governance.  One way that the World Bank combats corruption is through the use of administrative sanctions against firms or individuals that have engaged in fraud, corruption, coercion, collusion or obstruction (Sanctionable Misconduct) in connection with World Bank-financed projects.   The sanctions regime is designed to protect the funds entrusted to the World Bank, while offering the firms and individuals involved an opportunity to respond to the allegations against them.  Allegations that a firm or individual has engaged in Sanctionable Misconduct are investigated by the World Bank’s Integrity Vice Presidency (INT). If INT believes there is sufficient evidence to substantiate the allegations, the case is referred to the Evaluation and Suspension Officer (EO)* the first tier of the World Bank’s two-tier administrative sanctions process.  The EO reviews the evidence submitted by INT and determines if the evidence supports a finding that the alleged Sanctionable Misconduct has occurred. If so, the EO issues a Notice of Sanctions Proceedings to the firm or individual alleged to have engaged in the Sanctionable Misconduct. This Notice includes the allegations, the evidence and a recommended sanction. The EO also determines whether the firm or individual will be temporarily suspended from eligibility for new World Bank-financed contracts pending the final outcome of the sanctions process.  The firm or individual can choose not to contest the allegations or the recommended sanction, in which case the recommended sanction is imposed. If the firm or individual does contest the allegations or the recommended sanction, the case is referred to the World Bank’s Sanctions Board—the second tier of the Bank’s two-tier administrative sanctions process.  The Board is comprised of three World Bank staff and four external members.** The Board considers the allegations in the Notice, along with any response from the firm or individual, before taking a final decision.  The Board reviews all of the evidence in the case and may hold a hearing as part of its deliberations.  There are five possible administrative sanctions: Public Letter of Reprimand, Debarment, Conditional Non-Debarment, Debarment with Conditional Release, or Restitution.  Since 2001, more than 367 firms and individuals have been publicly sanctioned by the World Bank (visit  www.worldbank.org/debarr for the full list of debarred firms and individuals).
Working with Member Countries, Civil Society, and Private Sector to Fight Corruption  The World Bank helps strengthen governance and address corruption through projects and programs that improve transparency in public financial management; strengthen tax and customs administration; enhance civil service performance; support legal and judicial reform; combat corruption; and enable local and central governments to deliver services and regulate the economy more effectively.  The World Bank’s assistance in improving governance and combating corruption is aimed at helping countries lift their people out of poverty by improving the delivery of basic services to the poor and creating growth and employment opportunities by encouraging private investment.  The World Bank also has a fiduciary responsibility to its stakeholders to ensure that development funds are used for the intended purpose of promoting development and reducing poverty, and are not jeopardized by corruption.  In March 2007, following extensive consultations, the World Bank Group’s Board of Directors approved a strategy to scale up assistance to improve governance and fight corruption in member countries, known as the Governance and Anticorruption Strategy (GAC).   The GAC Strategy has three main pillars:  - Helping countries build capable, transparent, and accountable institutions
 - Expanding partnerships with multilateral and bilateral development institutions, civil society, the private sector, and other actors in joint initiatives to address corruption
 - Minimizing corruption in World Bank-funded projects by assessing corruption risk in projects upstream, actively investigating allegations of fraud and corruption, and strengthening project oversight and supervision
The World Bank’s two-tier sanctions process (conducted by the EO and the Sanctions Board) is a key component of the work being done within the World Bank, its member countries and its partners to tackle corruption and promote good governance.    The use of administrative sanctions helps to protect the funds entrusted to the World Bank by increasing the costs to firms and individuals that engage in fraud and corruption on World Bank-financed projects. ____________________________________________________________________________  For more information on the sanctions regime and the GAC Strategy, please visit the following websites:                                                                              Â
*Â The World Bank Group has four EOs, including one for each of (i) IBRD/IDA (World Bank), (ii) International Finance Corporation (IFC), (iii); Multilateral Investment Guarantee Agency (MIGA), and (iv) investment projects guaranteed by the World Bank (known as partial risk guarantees or PRGs). Â |
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