Overview

Tackling Corruption through a Two-Tier Sanctions Management Process

Promoting good governance and tackling corruption are critical to achieving sustainable development and poverty reduction. At the World Bank, all allegations that a firm or individual has engaged in fraud, corruption, coercion, collusion or obstructive practices (Sanctionable Misconduct) in relation to a World Bank-financed project are investigated by the Department of Institutional Integrity (INT).

If INT finds evidence of Sanctionable Misconduct by a firm or individual, it presents the case to a Sanctions Evaluation and Suspension Officer (EO)* – the first tier in the Sanctions Management process. The EO (i) evaluates whether the evidence presented by INT is sufficient to support a finding of Sanctionable Misconduct; (ii) issues a “Notice of Sanctions Proceedings” that recommends a sanction; and (iii) determines whether a temporary suspension shall come into effect pending the final outcome of the case.

If the firm or individual contests the allegations made by INT and/or the sanction recommended by the EO, the case is referred to the World Bank’s Sanctions Board (Board) – the second tier in the Sanctions Management process. The Board, comprised of three World Bank staff and four external members, considers the evidence against the firm or individual, along with any response from the firm or individual, before taking a final decision in the case. The Board may hold a hearing as part of its deliberations.

The World Bank has five possible sanctions: Public Letter of Reprimand, Debarment, Conditional Non-Debarment, Debarment with Conditional Release, or Restitution.

Since 2001, more than 340 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 Tackle 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 to deliver basic services better to the poor and to create growth and employment opportunities by encouraging private investment – both means of lifting people out of poverty.

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).

There are three pillars of the GAC Strategy:

• Building capable, transparent, and accountable institutions and country systems, through assistance to countries.
• 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.
• Expanding partnerships with multilateral and bilateral development institutions, civil society, the private sector, and other actors in joint initiatives to address corruption.

By using public sanctions to raise the cost to businesses of engaging in corruption, the World Bank promotes anticorruption. The World Bank’s two-tier Sanctions Management process and the Office of Evaluation and Suspension (OES) are key components of the work being done within the World Bank, its member countries and its partners to tackle corruption and promote good governance.

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For more information on the Sanctions Management process or the Governance and Anticorruption Strategy, visit the following websites:

Office of Evaluation and Suspension -  www.worldbank.org/sanctions

Department of Institutional Integrity -  www.worldbank.org/integrity

Voluntary Disclosure Program -  www.worldbank.org/vdp

Sanctions Reform -  www.worldbank.org/sanctionsreform

Anticorruption -  www.worldbank.org/corruption

List of Debarred Firms -  www.worldbank.org/debarr

Doing Business -  www.doingbusiness.org

Governance Indicators -  www.worldbank.org/wbi/governance

Governance and Anticorruption Strategy -  www.worldbank.org/governance

* There are four EOs within the World Bank Group for: (1) International Bank for Reconstruction and Development (IBRD)/International Development Association (IDA); (2) Multilateral Investment Guarantee Agency (MIGA); (3) International Finance Corporation (IFC); and (4) investment projects guaranteed by the World Bank (known as partial risk guarantees or PRGs). For cases involving IFC, MIGA, and PRGs, separate external and internal Sanctions Board members with specific expertise have been appointed.