World Bank sanctioned 58 entities this year, longest debarment was 22.5 years
Monday, October 10, 2016 at 9:08AM
Leonard McCarthy in Canada, World Bank, World Bank Integrity Vice Presidency, debarment

Last Friday, we released our 2016 Annual Update which outlines how we have countered the threat of corruption on behalf of the World Bank, the collective effort of 83 dedicated staff in Washington, DC and countless partners around the world. 

During FY2016, the World Bank Integrity Vice Presidency (INT) substantiated investigations that involved 43 projects and 124 contracts worth about $633 million, resulting in 58 sanctioned entities.

In addition, the World Bank Group entered into a record 18 Negotiated Resolution Agreements (NRAs) with companies that have acknowledged misconduct and committed to implementing World Bank Group compliance standards.

The Integrity Compliance Office (ICO) released 20 companies from the debarment list following their satisfactory implementation of compliance programs and fulfilling other conditions of their sanctions.

A list of all World Bank debarred entities and individuals is here.

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The 2016 report covers investigative outcomes, the size of corrupt payments, the scope of settlements and restitution, the amount of money not awarded to entities implicated in misconduct, our referrals of investigative information to national authorities, the value of contracts scrutinized by forensic audits, the impact our compliance function has on the private sector, and our efforts to embed integrity precautions in World Bank Group projects.

For all development organizations, tracking and publicizing similar results reinforces efforts to prevent and deter corruption, while also assuring donors that their funds are spent responsibly. This is especially important to the World Bank Group. However, numerical results often fail to convey the heroic human effort that goes into achieving them. 

The groundbreaking ruling by the Canadian Supreme Court in the matter of Wallace and Others vs. the World Bank in April reaffirmed the unique role international organizations have in leading coordinated efforts to stop corruption. In legal terms, the court upheld the privileges and immunities of the World Bank Group.  In human terms, the court helped acknowledge the courageous actions of witnesses (some of whom ultimately had to leave Bangladesh) and the resilience of our own investigators who stood firm in the face of resistance and naysayers.

Later in June, the World Bank Group’s Sanctions Board issued one of its most formidable decisions, handing down a 22½-year debarment to the Ukrainian IT firm, Information Computer Systems CJSC (Incom) for its corrupt involvement in a bid-rigging scheme and its attempts to obstruct a World Bank Group investigation. 

Last week, lawyers and investigators from the INT met with the confidential witness who was so pivotal to our investigation into Incom. His decision to provide us with evidence, including a hard-drive with 19,000 emails, eventually forced him and his family to flee their country under mounting threats. Like others who have faced the same difficult choices, he told us he did not savor the thought of becoming a witness in a World Bank Group investigation. 

Nonetheless, he felt compelled to subject himself to the rigors of an investigation, driven by a desire to help change the status quo. He did not fully anticipate the toll it would take on him and his family or that his involvement would stretch to five years. On reflection, he modestly noted, “Although this investigation did not change the entire country, I hope that it was a big and important step in that direction.”

The outcome of this investigation was indeed an important step in the right direction. The lengthy period of debarment should serve as a strong deterrent to other entities wavering on the cusp of wrongdoing. The reasoning behind the debarment sets an important precedent which recognizes the critical role whistleblowers play in major investigations. In that regard, I am hopeful the ruling will have a positive impact on the other ongoing cases we have in which potential witnesses are weighing the risk of exposure and the disruption of their lives should they come forward with more information.

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To take things one step further, we should ask ourselves if our anti-corruption initiatives and policies are grounded in the reality of what people face every day when they try to do something about corruption. A good starting point is the database Transparency International just unveiled which categorizes and tracks the 648 commitments made at the London Anti-Corruption Summit this summer. 

What mechanisms do we have, at both the national and international level, to support people who have credible allegations and who are willing to provide evidence?

What incentives are we creating for all types of stakeholders so that we don’t have to rely on the extraordinary courage of whistleblowers to advance a case? 

What more can we do to ensure we make the most of information obtained at a high personal cost? 

How do we break the cycle of impunity that single-handedly allows corruption to spread from one generation to the next and across borders?

These are all questions that will define priorities and shape actions in the next couple of years, not only for international organizations like the World Bank but for every concerned entity that shares the commitment to save the world from corruption.

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Leonard McCarthy is the Integrity Vice President of the World Bank Group, a position he has held since June 2008. The mandate of the Integrity Vice Presidency (INT) is to anticipate, detect, deter and prevent fraud and corruption in Bank Group-supported activities. Prior to joining the World Bank Group, Mr. McCarthy headed the Directorate of Special Operations (DSO) in South Africa.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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