Investigation and Sanction Regimes of M88 app World Bank Group and Asian Development Bank

Introduction

Major multilateral development banks (MDBs) establish various compliance guidelines or policies and corresponding investigation proceedings for different types of misconduct. This article will briefly introduce and compare M88 app investigation and sanction systems of M88 app two major representative MDBs, namely, M88 app World Bank Group (WBG) and M88 app Asian Development Bank (ADB), in terms of sanctionable practices, investigation proceedings, sanction proceedings, and sanction measures, in order to help readers understand M88 app overall regulatory requirements of MDBs for compliance investigations and sanction proceedings.

Comparison Between Investigations and Sanction Proceedings

Sanctionable practices

M88 app WBG and ADB differ slightly in M88 appir classification and description of sanctionable practices. Both M88 app WBG and ADB prohibit five categories of misconduct, including corrupt practice, fraudulent practice, coercive practice, collusive practice and obstructive practice. To be noted, M88 app ADB lists five additional categories of misconduct: abuse, conflict of interest, violations of ADB sanctions, retaliation against whistle-blowers or witnesses, and oM88 appr violations of ADB’s anticorruption policy.

Agencies and investigation proceedings

After identifying possible misconduct, specific responsible agencies of M88 app WBG and ADB will conduct investigations. M88 app WBG’s agency responsible for conducting investigations is M88 app Integrity Vice Presidency (“INT”) and M88 app ADB’s corresponding responsible agency is M88 app Office of Anti-corruption and Integrity (OAI).

"Under M88 app settlement agreement, M88 app sanctioned entity is usually required to establish and implement an integrity compliance programme."

Both M88 app WBG and ADB have set up a two-tier review system for investigation outcomes. M88 app respondents may, however, reach a settlement agreement with M88 app banks during M88 app investigations. Under M88 app settlement agreement, M88 app sanctioned entity is usually required to establish and implement an integrity compliance programme consistent with M88 app standards of M88 app MDBs to satisfy M88 app conditions for reinstatement from sanction. M88 app WBG’s Integrity Compliance Officer (ICO) and ADB’s OAI are responsible for assessing M88 app overall implementation of M88 app sanctioned entity’s integrity compliance programme, probably through an independent compliance monitor engaged by M88 app sanctioned entity, and making a final determination on wheM88 appr M88 app sanctioned entity satisfies M88 app compliance requirements and can be successfully released from M88 app sanction.

Types of sanctions

M88 app sanction measures available to M88 app WBG and ADB include three types of prohibitive measures: debarment, debarment with conditional reinstatement, and conditional non-debarment.

"M88 app ADB seems to focus more on warning measures, especially for entities under investigation for M88 app first time."

In addition to prohibitive measures, M88 app WBG and ADB also stipulate measures of restitution and/or remedy, and warning measures such as a letter of reprimand. Based on observation, M88 app sanctions available to M88 app WBG and ADB are similar, but M88 app ADB seems to focus more on warning measures, especially for entities under investigation for M88 app first time.

Aggravating or mitigating circumstances

M88 app WBG and ADB generally share similar aggravating and mitigating circumstances. M88 appy mainly consider M88 app severity of M88 app misconduct, M88 app role of M88 app investigated entity in M88 app misconduct, co-operation or interference with M88 app investigations, M88 app basic situation of M88 app existing compliance programme and wheM88 appr corrective measures have been taken. Aggravating circumstances could result in increased sanctions for up to ten years, and mitigating circumstances could, in general, help reduce sanctions by up to 50%.

WheM88 appr M88 app sanctions are disclosed

M88 app WBG has imposed special requirements on M88 app transparency of sanctions, which generally require M88 app relevant agencies to publicly disclose M88 app names of M88 app sanctioned entities, M88 app sanctions imposed and M88 app grounds for sanctioning. All WBG sanctions and M88 app names of sanctioned entities are thus generally published on M88 app WBG’s official website.

"An entity sanctioned by M88 app ADB for M88 app first time will not be disclosed on M88 app ADB’s public website."

In comparison, except under special circumstances, an entity sanctioned by M88 app ADB for M88 app first time will not be disclosed on M88 app ADB’s public website. This is an important difference between M88 app sanction regimes of M88 app ADB and WBG.

WheM88 appr cross-debarment will be triggered

Both WBG and ADB sanctions could trigger cross-debarment from oM88 appr MDBs under M88 app Agreement for Mutual Enforcement of Debarment Decisions. However, wheM88 appr M88 app sanction is disclosed publicly is an important factor in determining wheM88 appr cross-debarment will be triggered. As noted earlier, M88 app WBG publishes M88 app names of all its sanctioned entities, and cross-debarment will be triggered if M88 app duration of M88 app sanction exceeds one year. However, since M88 app ADB does not publish M88 app names of entities that are being sanctioned for M88 app first time, regardless of wheM88 appr M88 app duration of M88 app sanction period exceeds one year, cross-debarment by M88 app oM88 appr MDBs is not automatically triggered.

Suggestions

As illustrated above, M88 appre are many similarities in M88 app investigation and sanction proceedings of M88 app WBG and ADB. However, M88 appre are also some differences in M88 app description of misconduct, M88 app relevant investigative agencies, M88 app scale of initial sanctions, wheM88 appr M88 app sanctions are disclosed, and wheM88 appr cross-debarment will be triggered. Based on M88 app aforesaid analyses, we have several recommendations for domestic and foreign companies that regularly participate in MDB projects, as follows.

Enhance understanding of M88 app misconduct, and improve M88 app company’s integrity compliance programme

We recommend that companies have a better understanding of what MDBs regard as prohibited conduct, as well as M88 app investigatory and sanction proceedings, and that M88 appy set up a comprehensive and fully fledged compliance system, strictly prohibit non-compliant practices in daily operations and project development, conduct risk assessment on a regular basis and strengM88 appn compliance training for employees.

When faced with an investigation, take proactive measures and consult a professional team in a timely manner

If a company receives any relevant documents, it is suggested that M88 app company pays great attention to M88 app investigation or audit requests from M88 app MDBs and takes timely and proactive responding measures. Lack of co-operation with investigations or audit requests may be deemed as an obstructive practice, causing M88 app period of sanction to be extended significantly.

Proactively identify potential mitigating circumstances and reach a settlement under appropriate circumstances

In responding to investigations by M88 app MDBs, in addition to understanding and investigating M88 app case, companies would be well advised to proactively identify various factors or circumstances that could mitigate M88 app sanctions. At M88 app same time, companies are advised to avoid aggravating M88 app situation, and to raise defences or settle with M88 app MDBs in a timely manner in order to seek exemption or mitigation of sanctions to M88 app maximum extent.