World Bank Sanctions Update: New Data Reveals Continued Focus on Anti-Corruption Enforcement
- Data reveals more sanctions cases have been issued in each of the past two years than in any of the years prior
- Companies must make sure their policies and practices align with compliance rules
On April 15, the World Bank released updated public disclosures of its suspension and debarment practices against companies that violate its compliance directives. The 80-page report, which was last updated in 2014, reveals that the Bank has stepped up its practice of imposing sanctions, suggesting a need for increased vigilance by companies subject to its authority.
While the report begins with a new introduction emphasizing positive “incentives” for compliance, the data reveals that more sanctions cases have been issued against respondents in each of the past two years than in any of the years prior. Whereas the first report noted an average of 19 cases per year issued against respondents (covering 2007-2013), the updated report notes 45 and 39 cases in 2014 and 2015, respectively. So while the Bank is increasing its emphasis on positive incentives, it is also ramping up enforcement activity. 2014 also saw the highest number of temporary suspensions in the Bank’s history (66) and the highest ever budget for the Bank’s Office of Suspension and Debarment ($1,638,000).
The report further reveals that settlement is becoming a more popular means for resolving corruption cases. In the past two years, the total number of settlements increased from 35 to 52, suggesting a 70% increase in the rate of settlement, from 5 per year during 2007-2013 to 8.5 per year during 2014-2015. Fewer cases are being appealed to the World Bank’s Sanctions Board as well.
Along with the updated report, the Bank released a summary of its Third Suspension and Debarment Colloquium that took place in December 2015. The summary notes, among other things, that some at the Bank see “clear signs” that the suspension and debarment program is having “its intended deterrent effects.” Companies should therefore expect the Bank to continue aggressively seeking to punish companies for compliance violations in connection with Bank-funded projects. Moreover, the Bank and its sister institutions often impose cross-suspension and debarment, meaning that companies that run afoul of one multilateral development bank could be suspended by a number of them.
In light of the Bank’s continued focus on enforcement and cooperation with other development bank enforcement regimes, any company that works or seeks to work in this area must ensure that its policies and practices align with applicable compliance rules, particularly the World Bank Group’s Integrity Compliance Guidelines.
Arent Fox has extensive experience in this area. We have written about and worked on numerous World Bank sanctions-related matters, including serving as independent compliance monitor of large multinational corporations pursuant to settlements of the Bank’s debarment proceedings, and helping companies revise, update, and implement state-of-the-art, risk-based compliance programs in line with the Bank’s norms and related governmental guidance. We also have significant experience with anti-corruption matters more generally, including conducting due diligence on third parties, leading large internal and external investigations, and defending anti-corruption enforcement actions.
For any questions regarding the above matters, please contact Kay C. Georgi, Peter V. B. Unger, Joseph C. Mauro, or any member of Arent Fox’s International Trade or White Collar & Investigations groups.