It would be difficult to "end poverty" if the integrity of our operations is in danger.
In four decisions* issued between 2013 and 2017, the Sanctions Board found that five medical equipment suppliers made undisclosed bribe payments to an STC to influence the procurement process in a series of Bank-financed health projects in numerous countries.
Risks like these abound and the Bank Group's sanctions system aims to address them. These medical equipment suppliers and their respective employees involved in the misconduct were ultimately sanctioned by the Bank Group.
Under the Bank's Articles of Agreement, we have the "fiduciary duty" to protect the use of Bank financing. Since its creation ten years ago, the World Bank Group's two-tier sanctions system has continued to safeguard the integrity of the Bank Group's operations and the funds entrusted to it. Since 2007, the Bank Group has sanctioned more than 480 firms and individuals.
As the Bank Group marks the 10th anniversary of its two-tier sanctions system, we sat down with Bank Group Sanctions Board Chair James Spinner to learn more about the system and why it is important to the Bank Group's operations, its staff, and the public.
Can you briefly describe what the "two tiers" are and how they work?
Allegations that a respondent (a firm or an individual) engaged in sanctionable misconduct are first submitted for review and a decision by the World Bank's Suspension and Debarment Officer (SDO). If the decision is contested by the respondent, the matter is referred to the Bank Group Sanctions Board for a full and independent final review. The Sanctions Board therefore serves as the final decision-maker in all contested cases. The same basic sanctions process applies to cases relating to the IFC, MIGA, and World Bank guarantee and carbon finance operations, with adjustments appropriate to each institution's different business model; in particular, separate Evaluation and Suspension Officers (EOs) and the appointment of IFC/MIGA members to comprise part of the Sanctions Board to review cases relating to private sector and guarantee operations.
What impact does the sanctions system have on the institution and the public?
The system sends a clear signal to Bank Group stakeholders and entities doing business with the institution that fraud and corruption involving its financings will not be tolerated. It is proof that the Bank Group takes seriously its commitment to ensuring that its funds are used exclusively for the purposes for which they are lent. The result is a keen awareness by all involved in Bank Group operations of the need to adhere to the rules of the game, including the norms and guidelines for Bank Group procurement and project execution, and corporate best practices.
What do you think are its biggest accomplishments?
Since 2012, the Sanctions Board has published fully reasoned decisions, making the Sanctions Board the only multilateral development bank (MDB) sanctions body to do so. I think that the decisions issued by the Sanctions Board have created a valuable set of precedents that serve to strengthen the guidance provided to the Bank Group, other MDBs, and those who want to work with the institution on Bank Group operations on what constitutes unacceptable practices. The two-tier process demonstrates the institution's commitment to deal with inappropriate conduct in the procurement process, provides a credible and fair process for investigations and decision-making, and ensures that a respondent can be fully heard by an independent body that reaches a decision based on a review of the full record.
What challenges has the Sanctions Board faced over the past years?
The challenge is always to ensure that respondents are provided with the opportunity to have "their day in court," that the system ensures due process for them in filing their claims and being heard, and that decisions are issued as promptly as possible.
How do you see the Bank Group's sanctions system evolving in the future?
I would focus on three areas. First, it is important that the system ensures that the lessons learned or best practices that are developed from the decisions of the SDO/EOs and the Sanctions Board be internalized in the Bank Group and taken into account in the design and execution of projects financed by the institution.
Second, it is critical that the MDBs continue to work together under the terms of the 2010 Agreement for Mutual Enforcement of Debarment Decisions, under which the Bank Group and other MDB signatories (ADB, AfDB Group, EBRD, and IDB Group) may determine whether to enforce a debarment on a sanctioned firm or individual, if the period of debarment is more than one year. The mutual enforcement of sanctions has demonstrated a united front and has been an effective deterrent in all our efforts to ensure resources are used for the purposes for which they were lent.
And third, the Bank Group should continue to work with member countries in their efforts to strengthen good governance and implement mechanisms that serve as deterrents to fraud and corruption in state procurement.
On September 11, 2017, the Sanctions Board and Office of Suspension and Debarment will host a half-day event to commemorate the 10th anniversary of the establishment of the Bank Group's two-tier sanctions system. We invite all Bank Group staff to join us in two panel discussions on lessons learned from the first 10 years of the two-tiered sanctions system and the expected future of multilateral development bank sanctions. Reception to follow.