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What could be worse than a several-hundred-million dollar Foreign Corrupt Practices Act fine hitting your company? How about not being allowed to even compete for many of your most important contracts for a period of several years. While most international companies are by now keenly aware of anti-corruption laws like the FCPA and the UK Bribery Act, there is generally less awareness of the enforcement regimes the World Bank Group and other multilateral development banks (MDBs) have developed to combat the improper use of the funds they lend. With more than 1,000 entities and individuals currently debarred by the bank alone, the MDBs have increasingly become investigative and enforcement heavyweights, capable of imposing crippling sanctions like multiyear debarments. Every company participating in MDB-financed projects must be cognizant of their compliance guidelines and the impact of their investigative and disciplinary functions.
World Bank as an Investigative and Disciplinary Entity
The bank views corruption as a challenge to accomplishing its mission of combating extreme poverty in several ways, including as a diversion of the bank’s own funds into illicit channels and away from projects aimed at helping poor. To address this, the bank, in collaboration with other MDBs, has defined specific acts of sanctionable conduct: fraud, corruption, collusion, coercion and obstruction of an investigation. These acts are prohibited by the bank’s Procurement and Consultant Guidelines, which are typically incorporated by reference in the bidding documents issued in connection with the procurement, and in the relevant contract. Investigations generally begin with what the bank calls an “audit,” but which feels much more like a full-fledged investigation. Audits typically involve the inspection of documents, including email, the review of books and records relating to bank-funded projects, and even interviews of relevant employees and agents. Following an audit, most companies receive a letter notifying the company of sanctionable misconduct that the bank’s investigative division—the Integrity Vice Presidency (INT)—has deemed “more likely than not” to have occurred, and inviting the company to show cause why it should not be sanctioned. Sanctions proceedings usually follow the issuance of this “show cause” letter.
