Canada Supreme Court rules in support of World Bank, strengthens global anti-corruption fight
Thursday, May 5, 2016 at 9:18AM
Stephen Zimmermann and Giuliana Dunham-Irving in Bangladesh, Canada, Padma Bridge Project, SNC-Lavalin, World Bank, World Bank Integrity Vice Presidency

Here is the astounding opening passage from a decision by the Supreme Court of Canada issued on April 29 in World Bank v. Wallace:

Corruption is a significant obstacle to international development. It undermines confidence in public institutions, diverts funds from those who are in great need of financial support, and violates business integrity. Corruption often transcends borders. In order to tackle this global problem, worldwide cooperation is needed. When international financial organizations, such as the World Bank Group, share information gathered from informants across the world with the law enforcement agencies of member states, they help achieve what neither could do on their own.

The first lines of the decision sound like they could have come from someone from within the World Bank Group, underscoring the value of the Bank’s work in the fight against corruption. But this decision from the Supreme Court of Canada endorsed the integrity efforts of international organizations while upholding the privileges and immunities of the World Bank.

Wallace v. World Bank thus serves as a reminder that better results in the fight against corruption can be achieved when all the actors in the global fight come together in their respective roles. 

The investigation and prosecution that led to this decision stand as a clear example of the power we can harness when we work together. They also illustrate the challenges of aggressively fighting corruption while simultaneously pursuing a development agenda focused on ending poverty.

In 2011, the World Bank’s Integrity Vice-Presidency (INT) learned that representatives of SNC-Lavalin were planning to bribe officials of the Government of Bangladesh to obtain a contract related to the construction of a bridge over the Padma River. The World Bank had already agreed to provide more than $1 billion in financing for this project that was projected to be among the most significant and impactful development projects in the region. 

As the INT's investigation unfolded, it voluntarily shared information of its findings initially with the Royal Canadian Mounted Police (RCMP) and subsequently with the Bangladeshi Anti-Corruption Commission.

To its credit, the RCMP zealously pursued the case and was able to use the information received from the Bank together with other information it gathered to obtain authorization for a wiretap. Canadian authorities were ultimately able to gather evidence sufficient to indict several individuals under their Corruption of Foreign Public Officials Act. Bangladesh, however, concluded the evidence was not sufficient to continue its own investigation into the matter.

Based on its own investigation as well as evidence discovered in Canada, the World Bank debarred SNC-Lavalin for ten years. The Bank also cancelled the proposed financing for the Padma Bridge announcing that it will not turn a blind eye to corruption in a press release announcing the cancellation.

In last week’s decision, the Canadian Supreme Court soundly rejected an effort by the defendants in Canada to derail the corruption prosecution by claiming an entitlement to INT’s records that had never formed part of Canada’s case against them. 

This decision is of great significance. In the context of INT operations, were cooperation with national authorities to be construed as an implied waiver of all of the Bank’s immunities, the institution’s ability to report violations of national laws would be constrained. Further, the Bank would be forced to choose between protecting its immunities and reporting suspected violations of national laws. 

The Supreme Court of Canada resolved these legal issues in the Bank’s favor, recognizing that a contrary holding would undermine the efforts of international organizations to fight fraud and corruption in development projects. The decision recognized that the World Bank and other multilateral development banks, through their investigations, “serve at the front line of international anti-corruption efforts.”

The Supreme Court made clear that the Bank’s privileges and immunities stand firm in preventing access by third parties to its archives and its staff, noting that any implied waiver of its immunities would “have a chilling effect on collaboration with domestic law enforcement.” 

This decision by Canada’s highest court is a landmark with respect to the immunities of international organizations, and also in ensuring that a critical corruption prosecution can proceed. This decision recognizes that it takes all the members of the global enforcement community to come together to successfully fight international corruption. Investigators, prosecutors, judges and international organizations each have a crucial role to play within their own legal framework, as well as in supporting each other to the extent they are able. 

The challenges presented and overcome in this case are a call for us all to find new and innovative tools for cooperation, assistance and joined efforts across borders to achieve what is often impossible to achieve on our own. 

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Stephen Zimmermann is the Director of Operations at the World Bank Integrity Vice Presidency.

Giuliana Dunham Irving is Senior Counsel at the Wold Bank Legal Vice Presidency.

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