the world bank department of institutional integrity 1 business integrity and anticorruption...
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Business Integrity and Anticorruption Initiatives
of the World Bank
Department of Institutional IntegrityMaarten de Jong, Director
June 2005
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
“All of us – lenders, borrowers, contractors and civil society – have
to make a strong commitment against corruption, the number one challenge in reducing poverty now.”
James D. Wolfensohn (April 21, 2004)
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
“Corruption is a terrible disease that eats away at development successes. INT’s work is part of the core business of the World Bank.”
Paul D. Wolfowitz (June 9, 2005)
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Issues to Discuss Together
The anti-corruption imperative World Bank’s anti-corruption strategy Dept of Institutional Integrity update Recent World Bank policy changes Voluntary Disclosure Program Issues of mutual interest
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Context: The Anti-Corruption Imperative
Growing pressure from donors to enhance aid effectiveness
Similar pressure from civil society to improve accountability
Anti-corruption conventions at national, regional, and global levels making bribe payments illegal
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Changing Business Environment
More firms (but not all) want a level playing field and an end to the need for illegal payments
Increasing competitive international business environment – bribes raise costs, cut profits
Tension between international and local firms More chances of getting caught Reputational risk greater than ever
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
World Bank’s Anti-corruption Strategy
Prevent fraud and corruption in World Bank-financed projects
Help countries that request the Bank’s support in their efforts to reduce corruption
Mainstream anti-corruption in all aspects of the Bank’s relations with its borrowing member countries
Support international efforts to reduce corruption
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
• Prevent and deter fraud and corruption
• Outreach/educate Bank staff and clients• Investigate allegations of fraud, corruption, and
misconduct
• Feed lessons learned “upstream” into lending
• Leverage results through collaboration
• Confront bribe-payers through sanctions process.
Department of Institutional Integrity
In compliance with World Bank rules, ensuring all due process safeguards, INT’s mission is to:
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Hotline, Website, etc.Hotline, Website, etc.
Preliminary InquiryPreliminary Inquiry
PrioritizationPrioritization
Full InvestigationFull Investigation
Sanctions Cttee/Debarment ListSanctions Cttee/Debarment List
Misprocurement DeclaredMisprocurement Declared
Internal Disciplinary ProceedingInternal Disciplinary Proceeding
Referral for Prosecution or Relevant ActionReferral for Prosecution or Relevant Action
Support to Country TeamsSupport to Country Teams
Lessons LearnedLessons Learned
Publicize ResultsPublicize Results
Capacity of ClientsCapacity of Clients
Receipt of AllegationReceipt of Allegation
InvestigateInvestigate
DeterrenceDeterrence
PreventionPrevention
What Does INT Do?The World Bank’s Department of Institutional Integrity (INT) was created in March 2001. Its core functions are to:
Investigate allegations of fraud and corruption in World Bank Group projects,
Investigate allegations of misconduct by Bank staff, and
Train and educate staff and clients in detecting and reporting fraud and corruption in World
Bank Group projects.
The World Bank’s Department of Institutional Integrity (INT) was created in March 2001. Its core functions are to:
Investigate allegations of fraud and corruption in World Bank Group projects,
Investigate allegations of misconduct by Bank staff, and
Train and educate staff and clients in detecting and reporting fraud and corruption in World
Bank Group projects.
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Investigative Capacity
$10 million budget Staff has grown from 20 to over 50 in 3 years International, multi-lingual staff Investigators, forensic accountants, lawyers Able to travel and do on-site interviews Interactive database
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
More Information About Business
More knowledge about companies, individuals, and money flows than ever
INT database World Bank databases Worldwide web Working relationships with other MDBs
and investigative bodies
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Reactive Approach
Traditional response to allegations and fraud and corruption– Staff Reports– Contractor complaints– Results of Sanctions– Hotline/e-mail—sometimes anonymous
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Proactive/Preventive Approach INT data review
– Case data/results Detailed Implementation Review (DIR)
– Documentation examination– Forensic Accounting
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
End Results CONTRACTOR
Criminal Referral
Permanent Debarment
Temporary Debarment
Reprimand Other
Imposition of Sanction
Hearing Before the Sanctions Committee
Notice of Debarment Misprocurement
Finding of Fraud or Corruption
Public Announcement
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
End Results
BORROWER STAFF
Referral to a Member
Government
Misprocurement Suspension of Loan &/or Portfolio
Request removal
Finding of Fraud or Corruption
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Results So Far
In six years:• Over 200 substantiated cases• Over 300 firms and individuals sanctioned• 25 criminal convictions obtained in multiple
jurisdictions (U.S., Sweden, Guinea, Bolivia, etc)• Many more cases in the pipeline • Result: Better understanding of how corruption
works in development projects• But more to be done
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
World Bank Policy Changes
World Bank Board of Directors approved significant sanctions reforms in July 2004
Bank now implementing these changes Thornburgh Reports available on web
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Sanctions Policy Changes• Recognition of cooperation as a mitigating
factor• Incentives to disclose information • Temporary suspensions of firms during
sanctions proceedings• Development of a wider range of sanctions• New Sanctions Board -- outside majority• Expanded disclosure of investigations and
sanctions
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Proposed Voluntary Disclosure Program
Encourage firms that have engaged in fraudulent or corrupt practices in Bank-financed operations to disclose the details of those activities
In return for reduction in sanctions and confidentiality of identity
Not an amnesty, immunity, or pardon program Not a plea bargain program Pilot program underway over past year Formal launch anticipated soon
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
ProposedVoluntary Disclosure Program
Results from firms’ self-monitoring Not triggered by an investigation For firms committed to stopping corrupt
practices Supplements existing sanctions process Aggregate information supplied to
governments for own action Faster, less expensive resolutions
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Enhanced Communications for Deterrence and Compliance
World Bank Board also approved disclosure policy for sanctions and investigations
Stepping up our efforts to publicize final results of investigations worldwide
Sanctions, press releases, reports and other information available on worldwide web
First INT annual report for FY04
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Upstream Rule Changes
Tightening procurement rules for tendering as well as implementation and execution
Also pursuing standardization via closer cooperation with other MDB’s via harmonization process
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
New Integrity clause
Standard bid documents for large civil works, Sec II, para 9: “We hereby certify that we have taken steps to ensure that no person acting for us or on our behalf will engage in bribery.”
In cooperation with Transparency International
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Revised Procurement Guidelines
Based on INT’s input from casework in Bosnia, Albania, Columbia, etc.
New definitions of “fraudulent practice,” “corrupt practice,” and of “public officials” to include MDB staff;
Prohibitions on “collusive and coercive practices”
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Broader Definitions
Dialogue between MDBs about developing common definitions of fraud and corruption
NGOs and contractors both criticize lack of common definitions
Ensure that each organization treats the same conduct as acceptable -- and the same misconduct as sanctionable
Cover all funding, not just procurement
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The World Bank Department of Institutional Integrity
The World Bank Department of Institutional Integrity
Issues of Mutual Interest
Increasing compliance Assessing impact of investigations and
sanctions for upstream policy changes Raising awareness for prevention Raising standards Incentives for business integrity programs Working together for level playing field