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Sanctions Board to Post Decisions on Corruption, Fraud Cases

December 9, 2011

  • World Bank Group Sanctions Board will publish full-text corruption, fraud and collusion decisions for the first time.
  • The move is a "major step" toward greater transparency and accountability, says Bank President Robert B. Zoellick.
  • A new Sanctions Board Law Digest summarizes cases and related legal principles.

December 9, 2011 - More than a dozen firms vied for contracts on a World Bank-financed transportation project. But that bidding competition largely turned out to be a sham. A Bank investigation revealed evidence the contracts were steered to particular vendors in exchange for bribes, kickbacks and payments to designated losing bidders. Ultimately the case was escalated to an independent appeals body – the World Bank Group Sanctions Board. The result: seven firms and one individual were barred from World Bank contracts, two permanently – the strongest possible action.

While a press release announced the debarments, virtually nothing was published then about the evidence or deliberations in the case – one of the most egregious that have come before the Sanctions Board – or in similar cases involving errant contractors. As the World Bank marks Anti-corruption Day on December 9, that’s about to change.

Under new procedures promoting greater transparency and accountability, the Sanctions Board will begin publishing the full text of new legal opinions in cases concerning contractor corruption, fraud and collusion. The opinions will be posted on the World Bank website at www.worldbank.org/sanctions.

The Sanctions Board has also released a new Law Digest that describes all cases appealed to the Sanctions Board since its inception in 2007, and the legal principles that have guided the Board’s decision-making.

"The Bank Group has taken a major step toward greater transparency and accountability by authorizing the publication of decisions in new sanctions cases," says World Bank President Robert Zoellick. "The release of the Sanctions Board's inaugural Law Digest is another milestone demonstrating the Bank Group's commitment to a fair and accountable sanctions process."

By opening up more information, the Board hopes to build a body of knowledge about fraud and corruption cases and show that all parties are treated equally under the process. "To be transparent, you need to publish decisions – good legal material showing we take each case on its merits and decide based on the evidence presented and our impartial application of relevant legal principles," says Sanctions Board Chair Dr. Fathi Kemicha, a Tunisian attorney and international arbitrator who has served as chair since 2009. "Each party is treated equally, whether from the Bank or outside the Bank. This is what our decisions reflect. This makes the system credible."

Part of Broader Transparency Effort

The move contributes to the World Bank’s efforts to open data and increase access to information. The Bank was recently ranked first among donors on transparency. Publishing Sanctions Board cases will allow the public to "hold us accountable in terms of whether we apply the same yardstick in an objective, transparent and fair way," says Sanctions Board member Hartwig Schafer, director of strategy and operations in the Bank’s Sustainable Development Network.

"Clarity and transparency about these cases are a huge plus, not only for the World Bank and the development community, but for the taxpayer, in the final analysis," says Sanctions Board Member Hassane Cissé, deputy general counsel for knowledge and research at the Bank.

The Sanctions Board—an independent body comprising four internationally recognized legal experts from outside the World Bank and three Bank officials—hears appeals on corruption and fraud cases that have been investigated by the Bank’s Integrity Vice Presidency (INT) and undergone a first level of review by the Bank’s Evaluation Officer (EO).

To date, the Bank has sanctioned some 456 firms and individuals, and temporarily suspended another 150 contractors. Of all contractors who have appealed to the Sanctions Board for a second, final tier of review, about 70% have received sanctions up to indefinite debarment. About 30% ultimately received no sanction, usually due to insufficient evidence in the record.

Under a 2010 cross-debarment agreement, contractors debarred by the World Bank may also be debarred by other multilateral development banks.

The seven-member Board is meeting in Washington this week to review new cases alleging fraud and corruption; the decisions will be among the first to be made public.

"We hope the publication of both the Law Digest and Sanctions Board decisions will make a significant contribution to the development of public international law and bolster antifraud and anticorruption efforts," says Kemicha, the Sanctions Board Chair.

Law Digest, Decisions to Show Full Range of Legal Analysis

Previously, the Bank published only the identity of the firm or individual, category of offense, and sanction applied in cases where the contractor was found to have engaged in fraud, corruption, or collusion. Cases in which contractors received no sanctions were not disclosed at all.

Now, decisions will provide factual background and legal analysis, give everyone the same access to the body of case law, and explain what offenders did wrong – a change that may particularly benefit companies and individuals operating in a culture where corruption is pervasive, says Kemicha.

"We hope opening up this information will help educate the public about our fraud and corruption standards, enhance our credibility and accountability by showing how we approach each case on its merits, and add an extra level of deterrence against wrongdoing," says Sanctions Board Secretary Elizabeth Lin Forder.

The increased transparency of Bank Group corruption-case rulings is also expected to influence other multilateral development banks seeking to strengthen their administrative-sanctions systems, she adds.

"Openness creates opportunities for the public to know more, for journalists to dig deeper because they have more information, for academicians who are looking at longer-term issues regarding fraud and corruption to also look into these matters, and for civil society groups to do the same," says Cissé. "So I think it’s going to make a difference."