The World Bank has become an international leader in the battle against corruption.  As the leading multilateral development financier in the world, the World Bank has established itself as a major force in the battle against corruption.  Its influence is bound to grow with time, and the leadership and staff are extremely committed to making a mark in this area.

The World Bank has launched several initiatives in the last few years, including the International Corruption Hunters Network, which is made up of 120 officials from over 30 countries, aimed at strengthening international information sharing and cooperation among law enforcement agencies to increase cross-border enforcement and share important intelligence information.

In late 2010, the International Corruption Hunters Network met in Washington, D.C. to conduct a number of workshops.  I was privileged to be invited to attend and assist in this effort.  It was an impressive and a very productive meeting among law enforcement agencies.

Companies that are involved in World Bank financed projects need to pay special attention to the set of anti-corruption initiatives and programs to make sure they are in compliance.  World Bank financing is an import source of capital for projects particularly in developing countries where access to capital may be more difficult.   In 2010, the World Bank financed almost $20 billion in private industry projects, and issued guarantees for loans totaling almost $2 billion.

Project sponsors need to address anti-corruption compliance and undergo a due diligence procedure.  Such due diligence focuses on identifying the parties the project, reviewing the contractual terms, and confirming the absence of any government affiliations.  If the project does not pass the anti-corruption due diligence, then the World Bank may delay financing until it is satisfied on the issues flagged during the review.

The World Bank also has instituted new procedures for monitoring its investments and projects.  It reviews annual and quarterly financial statements which are prepared by internal and external auditors.  It consults with local government agencies, NGOs and other parties who may be involved or interested in the project. 

If the World Bank detects fraud and/or corruption, it has a number of remedies, including cancellation or termination of credit arrangements and obligations.  In addition, the World Bank can seek to impose sanctions against the participating and offending parties.  The World Bank, along with other multilateral development banks, the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank Group, can debar parties from participating in any of the five multilateral banking programs. 

If the World Bank discovers or identifies suspected corruption or misconduct, the World Bank’s anti-corruption unit may investigate the allegations.  If they determine that such misconduct occurred, they can file a notice of sanctions to conduct an administrative inquiry which may lead to sanctions and debarment.  The initial review of the unit’s recommendations and factual investigation is  conducted by an Evaluation and Suspension Officer.  If the matter is not resolved, it is then passed on to the Sanctions Board for review where the charged party is able to contest the allegations and findings.  The Sanctions Board will resolve the matter and make a final decision on the sanctions to impose which could range from a reprimand to debarment for a period of time.  The list of debarred parties is publicly available on the World Bank’s website.   The World Bank also has the authority to refer matters to foreign government for investigation.

 The World Bank has a close working relationship wit the Justice Department’s Fraud Section and shares information, to the extent permitted under law. 

The World Bank has established a voluntary disclosure process which allows parties to disclose potential violations and avoid some of the more severe sanctions such as debarment.  Parties conduct internal investigations, report the results to the World Bank and then avoid penalties.  As part of the process, parties have to adopt and implement comprehensive anti-corruption compliance programs.  The parties identities are not disclosed and remain confidential.