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Integrity Vice Presidency

FY13 ANNUAL UPDATE

WORLD BANK GROUP

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The Integrity Vice Presidency (INT) is an independent unit within the World Bank Group

that has the unique function of investigating and pursuing sanctions related to allegations

of fraud and corruption in Bank Group-financed activities. As an integral part of the Bank

Group’s overall Governance and Anti-corruption Strategy, INT performs a preventive function

as well, working closely with other World Bank units and external stakeholders to mitigate

risks through advice, training, and outreach efforts. Where the World Bank’s own staff

may be implicated in such misconduct, INT similarly investigates and acts in relation to

those allegations. This is our fifth annual report as a Vice Presidency based on INT’s new

strategic framework, following the recommendations of a panel headed by Mr. Paul Volcker.

The World Bank fiscal year 2013 runs from July 1, 2012 to June 30, 2013.

Download the Integrity App, free from iTunes, to identify and report fraud and corruption

in World Bank financed projects.

1ANNUAL UPDATE 2013

Are we winning the fight against corruption? World Bank President Jim Yong Kim

Since becoming President of the World Bank Group, I’ve met many people who care deeply about development and improving the lives of the poor. They often ask me if we are winning the fight against corruption, and I always answer “yes.”

Thankfully, I have a number of reasons to stay optimistic about the global picture. Citizens’ voices continue to act as a strong moderating force against corruption. In countries like Brazil, China, Russia, and Nigeria, among others, transparency has started to blossom. In other countries, we’ve funded successful projects that enable citizens to use their cell phones to monitor how their governments actually spend public funds. Our support for “publish what you pay” transparency initiatives has likewise made it easier to scrutinize the construction and extractive industries, both of which have historically been prone to fraud and corruption.

CEOs of major corporations tell us that cleaning up their businesses increases their profit margins. Many private sector firms now check the World Bank’s list of debarred entities as part of their routine due diligence and business intelligence. When major international firms — like Siemens, Alstom, Oxford University Press, and SNC-Lavalin — admit wrongdoing and end up sanctioned or on the Bank’s debarment list, it serves as a wake-up call to other companies that refusing to play by set rules will have serious, negative consequences. Better still, many firms on the debarment list have publicly claimed that they no longer engage in corruption and report others that do.

And yet, when Transparency International published its Corruption Barometer earlier this year, it represented a stark reminder of what we’re up against. More than one out of four survey respondents said they had paid a bribe in the past 12 months dur-ing their interactions with public institutions or services. The survey also finds that the majority of people do not believe their government is effective at fighting corruption and that corruption in their countries is getting worse.

As the president of an institution whose existence is tied to public trust, I want to make it abundantly clear that the World Bank Group has zero tolerance for corrup-tion. We are committed to supporting good governance efforts everywhere in the world. The value of setting the right tone at the top, and dealing forthrightly with problems when they emerge, cannot be underestimated. Countries with a better track record in fighting corruption have vocal leaders and solid institutions that are more capable of preventing illicit behavior before it happens. In six recent investiga-tions of fraud and corruption affecting projects financed by the World Bank Group, the turning point came when the CEOs became personally involved in fixing the problems we raised.

1ANNUAL UPDATE 2013

2 THE WORLD BANK GROUP INTEGRITY VICE PRESIDENCY

A zero tolerance policy sounds harsh precisely because it is harsh. It is also firmly rooted in a reality filled with financial and political risks, and in which problems inevitably arise. Within this challenging context, the World Bank Group has set an ambitious target to eliminate extreme poverty by 2030. Some have argued that stringent efforts to root out fraud and corruption could undermine commerce, slow economic growth, and ultimately work against our goal to end poverty. I couldn’t disagree more. In fact, I don’t think we can end poverty unless we have clear, fair, and well-enforced rules that help improve the lives of the poor.

Now is the time to honestly assess what works in fighting corruption, where we still face obstacles, and how we can engage new groups in this process. One group we must engage is young people. Today, half of the world’s population is under the age of 25. Across the world, youth have a fervent desire to combat corruption, because they are most often on the losing end of it. By drawing on the passionate morality of youth and the steady hand of those who are older and wise, I believe we can elimi-nate any remaining cultural complacency associated with corruption. In doing so, we will take a major step toward meeting our goals to end poverty and build shared prosperity for all.

“I want to make it abundantly clear that the World Bank Group has zero tolerance for corruption.”

DOMINIC CHAVEZ / WORLD BANK

3ANNUAL UPDATE 2013

While the scope of fraud and corruption varies, it is often the poor who suffer the most. What we’ve seen over this past fiscal year through our investigations, audits, preventive engagements, and collaboration with members of our International Cor-ruption Hunters Alliance (ICHA) is no different.

Sometimes, the poor are affected directly, like the citizens who had to pay kickbacks to the local manager of a community program in order to receive goods and services that were supposed to be free. Sometimes a corrupt official disregards his role to serve the public interest so that he can claim his “just reward”— in this instance, a holiday for him and his family paid for by the firm to which he steered a World Bank-financed contract. We have seen evidence of a firm willing to pay nearly US$6.5 mil-lion in bribes so that it can guarantee becoming the winning bidder. Since companies are in the business of making money, they often try to recover the cost of paying bribes by cutting corners, reducing quality, and ultimately compromising the safety of their projects.

The State of Affairs

Development has inherent risks that we can’t shy away from. Those who have the greatest need are also the most vulnerable. It is precisely because institutions may be weak, systems lacking, and resources scarce that countries turn to the World Bank for financial and technical assistance. Where lending is high or environments are fragile, we have to be especially vigilant.

Dealing with corruption in development: what works and what comes next? World Bank Vice President for Integrity Leonard McCarthy

3ANNUAL UPDATE 2013

When the World Bank received multiple complaints related to the procurement of a major power project in a fragile state, we were able to intervene in time, get the project back on track, and save $5.8 million.

SIMONE D. MCCOURTIE / WORLD BANK


For example, infrastructure support accounts for 35 percent of total assistance to client countries, representing the World Bank’s largest business line. In this sector we’ve seen examples of some engineering and construction firms abusing mobiliza-tion payments, which are intended to help defray the initial high cost of moving large equipment on site. In some of our most prominent cases this past fiscal year, we found that often the biggest chunk of bribes came out of mobilization payments, which can be returned as cash and distributed among corrupt players. Ensuring that mobilization payments are used for the intended purposes of the project and not be-ing funneled elsewhere will be the challenge of supervision. This type of insight is of interest to country authorities who want to rein in corruption.

Strengthening health systems and helping countries to achieve universal health care are also central elements of the Bank’s work. Since 2000, the World Bank has provided $26.64 billion to health programs. Unfortunately, investigations have uncovered drugs lacking the active ingredient, embezzled funds intended for HIV/AIDS awareness activities, and a cartel of pharmaceutical firms bidding on contracts inflating prices and paying bribes. In the next fiscal year, World Bank prevention and health experts will roll out a comprehensive review of the sector that will inform new threat assessments, project preparation checklists, and other effective precautions.

MISCONDUCT BY INTERNATIONALLY BASED ENTITY

13 Corruption 5 Fraud

The World Bank’s Integrity Vice Presidency substantiated 49 cases in FY13

MISCONDUCT BY LOCALLY BASED ENTITY

24 Fraud 4 Collusion 2 Corruption 1 Coercion

5ANNUAL UPDATE 2013

Corruption cases are usually the ones that grab headlines, revealing systematic lapses in ethical behavior and a disregard for the public good. Nearly half of the active investigations we have (41 of 86) involve allegations of corruption. Fifteen of the 49 cases we substantiated last fiscal year involved corruption as the primary viola-tion. In 13 of the 15 cases, the bribe was paid by a firm based outside the country in which the project was being implemented. While projects tainted by corruption may be implemented in developing countries, our efforts to curb corruption need to be more global. Developed countries are not exonerated from perpetuating the prob-lem. Looking at the World Bank’s list of debarred entities (www.worldbank.org/de-barr), more than half are headquartered in industrialized countries. This dictates that more work may need to be done in such countries to address wrongdoing involving corporations which reside in their jurisdictions.

Although the average person tends to view corruption as more serious, the negative impact of fraud on development cannot be overlooked. First, fraud can result in poorly implemented projects. Firms that falsify their bids may very well be unqualified to implement multimillion dollar projects. This year we had at least three cases deriving from complaints about the poor quality of services in projects. The implicated firms had either falsified their financial information or past experience. In one investigation, when a government tried to cash a performance guarantee fol-lowing overly extended project delays, the guarantee turned out to be false. As part of their contracts, firms working on large projects provide performance guarantees backed by banks; governments can collect on the guarantees in the event a firm does not deliver as promised. In this case, it turned out that the firm had stolen the name of another legitimate firm. The World Bank has already sanctioned one firm and the others are in the sanctions process.

More troublesome is that fraud can be the smoke that indicates the bigger problem is a fire. In a recent case, a subcontractor was hired as a conduit to pay bribes and given a fraudulent contract to cover up payments made to public officials. The sub-contractor received close to US$500,000, half of which was paid up-front. When we investigated, it became apparent that the subcontractor did not do any work beyond making photocopies, for which it even billed separately.

Knowing that each allegation we receive represents a potential act of injustice, we face difficult choices in selecting which allegations warrant a full investigation. Last fiscal year, the Integrity Vice Presidency (INT) received 449 complaints about possible fraud or corruption in World Bank-financed projects. We opened 89 new investiga-tions based on these complaints because of the seriousness of the allegations, the credibility of the complaint, and the presence of corroborating evidence. We also took into consideration whether they involved high-risk sectors and projects, systems prone to corruption, if there was a critical reputational risk to the World Bank, or where large sums of money were at risk.

Investigations help protect World Bank funds, provide insight about how to better prevent similar problems in the future, and can result in sanctions. Detecting and

www.worldbank.org/debarr

www.worldbank.org/debarr


preventing problems before they happen is preferable to dealing with them after the fact. However, sanctions are important because they help maintain equilibrium in business ethics and discourage potential wrongdoers from acting on their intentions. In fiscal 2013, The World Bank debarred 47 entities (and their affiliates), prevent-ing them from participating in future Bank-financed projects and activities. To give a sense of the effect a sanction can have, the SNC-Lavalin debarment also rendered 196 affiliates ineligible to do business with the World Bank. Thanks to the cross-de-barment agreement we have with the Asian Development Bank, the Inter-American Development Bank, the European Bank for Reconstruction and Development, and the African Development Bank, 295 entities were jointly declared ineligible. The word “sanctions” is a strong deterrent, but in dealing with corrupt entities, it is fitting to quote Huguette Labelle, Chair of the Board of Transparency International: “When you put your fingers in the meat grinder of corruption, the whole body goes.”

What We’ve Seen Work in the Fight against Corruption

The corrupt economy can be as fast-paced, global and sophisticated as the above-board one. Investigating a firm headquartered in North America that replicates the corrupt scheme it successfully implemented in Asia in the Middle East presents a number of logistical and legal challenges. Our investigations today are more complex than ever before, and the strong partnerships we have with national anti-corruption and law enforcement authorities ever more important.

National authorities share information with the World Bank when their investigations touch upon Bank-financed projects. In addition to generating some of the biggest corruption cases worldwide, the U.S. Foreign Corrupt Practices Act (FCPA) has led to a number of leads in World Bank investiga-tions. Often a condition to the amnesty or re-duced sanctions granted by the U.S. Department of Justice stipulates that the party in question cooperate fully with other enforcement bodies and international financial institutions such as the World Bank. As a result of such disclosures, we’re wrapping up investigations on two companies for fraud on contracts worth US$41.5 million.

Strong partnerships with national authorities not only facilitate World Bank investi-gations, but contribute to heightened rule of law in countries. When a World Bank investigation leads us to believe the laws of a member country have been broken, we refer those findings to the relevant authorities. The World Bank can prevent a firm or individual from participating in future projects through its sanctions, but criminal investigations are the jurisdiction of national authorities. Ten referrals the World Bank made this past fiscal year have prompted national authorities to launch their own investigations, and in the case of Sweden, have already led to convictions. These successes are tempered by the difficulty we face in getting some countries to act on referrals. The World Bank will continue to put the spotlight on this matter to induce more meaningful responses to referrals.

How does the World Bank define fraud and corruption?

See definitions at www.worldbank.org/sanctions

www.worldbank.org/sanctions

7ANNUAL UPDATE 2013

Similarly, the World Bank’s Negotiated Resolution Agreement (NRA) not only helps us conclude cases faster and save resources, but also generates new leads by requir-ing continued cooperation with our investigations. Disclosures are admissions of wrongdoing, backed by supporting documentation so they provide the World Bank with very credible information about the entities and individuals involved. Although the Bank will not sanction the NRA participant for disclosed past misconduct beyond the terms of the NRA, we have mounted additional investigations into the related consortium partners, subcontractors and agents, as well as referred matters to gov-ernment authorities to take action.

In FY13, for the first time since its inception, the World Bank Group’s Sanctions Board published all its fully reasoned final decisions. Doing so ensures that the sanc-tions system remains transparent, predictable and accessible for future respondents, academia and the general public. Publishing the factual findings in each case and the reasons for sanctioning the respondent provide for a better understanding of the prohibited practices and thus serve as a deterrent. For example, the Sanctions Board’s FY13 decisions reaffirmed the liability of an employer for its employees under the doctrine of respondeat superior. This doctrine applies if an employer at the time of the sanctionable practice does not have adequate controls in place to prevent misconduct and if the employee, when committing a sanctionable practice acted within the course and scope of his employment and was motivated at least in part to benefit the company. If large corporations more vigorously applied this principle, they could maximize good governance in their operations and expand the pool of clean bidders in development projects.

One-hundred-sixty-seven states are parties to the UN Convention against Corrup-tion. Since 2010 new or tougher legislation in the UK, China, Switzerland, the US, and Canada has been enacted. Yet no country is free of corruption. Implementing and enforcing laws has always been more difficult than drafting them. However, the current international legal framework already provides a solid platform from which to combat corruption.

China amended its laws to criminalize overseas bribery in 2011. In 2012, Russia ratified the OECD Anti-Bribery Convention, and amended its anti-corruption law, prohibiting certain public officials from keeping money in foreign banks, and obliging listed state corporations and public officials to explain sources of income to finance real estate and other acquisitions. This past July, Brazil passed a new law that creates civil and administrative liability, and provides for significant financial penalties for companies that bribe foreign public officials. Given these developments and on the back of referrals we made to client countries, we are working to build closer partner-ships with enforcement authorities in these countries. This fiscal year we had success using laws in a country that permit aggrieved entities to access records filed in related court cases. In one case, the World Bank convinced a company to produce records by noting that, if it did not, the Bank would request the information through a public court filing under a court records access statute. The


company, wishing to avoid publicity, agreed to provide the requested documents. For the first time, courts in another country recognized the World Bank as an aggrieved entity in a criminal investigation which had stemmed from information we provided. The Bank may now be able to recover misappropriated funds that were held in that country’s banks. The Bank was able to achieve these successes without waiver to and in a manner that respected the Bank’s privileges and immunities. Furthermore, the decision sets an important legal precedent for other international organizations fight-ing corruption. In light of these successes, the World Bank and others might be able to use similar options in other jurisdictions.

While the World Bank does not tolerate corruption in its projects and activities, neither do we avoid difficult situations. Effective preventive efforts play a large role in our ability to work in difficult situations. In the past fiscal year, our preventive services team worked with one hundred project task teams, identifying high-risk projects in the pipeline, briefing new Country Directors and Managers about potential issues in their portfolios, and building precautions against fraud and corruption into high-risk projects. We helped strengthen the grievance redress mechanism in the Ministry of Health in Afghanistan and developed an integrity toolkit for the roads sector in India.

The investigations we substantiated in 2013 involved 112 contracts worth approxi-mately US$998 million, up from 84 contracts and US$178 million in 2012. This is because investigations are increasingly focusing on large value contracts; 24 of the 112 contracts amounted to almost 80% of the total contract value. This past fiscal year, approximately $422 million spread across 34 contracts were not awarded to companies bidding on World Bank-financed projects because the wrongdoing was detected prior to contract award. World Bank staff and local project implementation unit officials undertaking procurement due diligence were effective in preventing 23 of these tainted contracts being awarded. Approximately 89%, or $374 million of the $422 million, was subsequently awarded to other vendors. In one case involving a $46 million contract, the World Bank did not fund the project while the remaining $2 million in contracts were either cancelled or have not yet been awarded.

When problems do arise, we deal with them. For example, one of the World Bank project teams received multiple complaints related to the procurement of a major power project in a fragile state, we were able to intervene in time. The project was hampered by a number of issues: two separate contracts for completing identical work; companies that were supposed to be competing against each other, but off the record one planned to be the subcontractor for the other and; a supervision consultant who had been intimidated by local police when he visited the project site. Our preventive services team proposed quick, cost-effective solutions. Eliminating one of the duplicate contracts saved US$5.8 million. Asking the supervision consul-tant to provide GPS date-stamped photos helped ensure work was being completed, while also allowing him to monitor thousands of kilometers of power lines in areas that were hard to access without compromising his safety.

9ANNUAL UPDATE 2013

Close engagement between our preventives services team and project teams ensure that risk analyses and lessons learned from investigations inform the Bank’s business decisions. This feedback loop is especially important in high-risk operations such as the one mentioned above. Sometimes, and despite our best preventive, operational, and investigative efforts, the World Bank cannot continue to fund a project which has become plagued by corruption. Although this outcome is as disappointing for us as it is for our clients, we are committed to promoting and protecting the integrity of our development projects.

We likewise believe in holding our own staff to the highest standards. Since Sep-tember 2012 the World Bank has discharged from service eight staff whose serious misconduct included fraud, corruption or collusion. While the vast majority of the Bank’s 13,064 staff abide by its rules and ethical standards, we cannot let the actions of a few damage the reputation of an institution whose people work every day to reduce poverty.

What Next?

The story of the Padma Bridge project in Bangladesh is well known, but less so the lessons learned from the case. The World Bank received credible evidence of high-level corruption among Bangladeshi government officials, SNC- Lavalin execu-tives and private individuals related to the Padma Multipurpose Bridge Project. We provided our evidence to the Bangladeshi government to investigate the matter, and pending additional corrective actions, would continue financing the project. When these conditions were not met, the Bank cancelled the US$2.1 billion credit. When

Investigations are increasingly focusing on large value contracts

24 OF THE 112 CONTRACTS AMOUNTED TO ALMOST 80% OF THE TOTAL CONTRACT VALUE

FY13 SUBSTANTIATED INVESTIGATIONS:

Total contracts: 112Total contract value: US$998M


the government of Bangladesh asked the Bank to reconsider its decision, an external panel of international anti-corruption experts was brought in to make an indepen-dent assessment of the Bangladesh Anti-Corruption Commission’s investigation. The panel’s findings also concluded the investigation was not full and fair. Ultimately, Bangladesh withdrew its credit request. In Canada, the Royal Canadian Mounted Po-lice launched their own investigation of SNC-Lavalin and prosecutions are underway.

Among a number of very pertinent observations, the report prepared by the external panel noted that “the other companies involved in the bidding process did not have enough incentives to publicly disclose information in their possession about illegal ac-tivities.” The Padma Bridge investigation is a reminder that the private sector needs stronger incentives to run their businesses cleanly, that we should better commu-nicate the incentives that do exist, and that we could be more effective in fighting corruption if we better encourage and protect whistleblowers.

A recent conversation with a leading chartered accountant underscored what incentivizes the private sector to run their businesses with integrity. He contended that corruption erodes trust, which leads to the public and governments to call for more regulation; when regulation proliferates, the cost of doing business goes up. Businesses end up competing more on price than brand, so customer loyalty goes down and gross margins come under pressure. Employees who are under that kind of pressure are unhappy, and either leave or are less productive, making the firm as a whole less productive. One solution is a recommendation by the Padma Bridge expert panel that the World Bank should “engage in a dialogue with companies involved in its operations to discuss how best to prevent unfair competition through illegal payments.”

The corporate compliance concept—a strong tone at the top, policies and systems to prevent and deal with fraud, corruption, and ethical lapses, employee educa-tion and training, and effective due diligence of third parties including suppliers and subcontractors—needs to penetrate more deeply. The experience of the World Bank’s Integrity Compliance Office, which determines whether ineligible entities can be reinstated at the end of their debarment period, has shown similar gaps. Accord-ing to the office, many small and medium sized enterprises (SMEs) are unfamiliar with corporate compliance principles or lack the financial resources to implement a comprehensive program. We are bringing in civil society counterparts to help develop resources specifically designed for SMEs so that the message of clean business reaches firms of all sizes.

Among the cases we substantiated in the past fiscal year, more people reported instances of fraud than corruption. Presumably at least part of the reason is that hard evidence of fraud is easier to come by, and the personal risk involved is lower. Offering whistleblowers enhanced protection against retaliation could encourage more people to come forward, especially to report possible corruption. The external panel of experts in the Padma Bridge case recommended that the World Bank consider offering monetary rewards for information to help whistleblowers overcome

11ANNUAL UPDATE 2013

some of the barriers they face. The idea is similar to the U.S. Dodd-Frank Act of 2010, which authorizes rewards to individuals who offer high-quality original information that leads to an enforcement action in which more than US$1 million in sanctions is ordered. Not surprisingly, paying for information is a controversial topic. The example in the U.S. and the recommendation by the Padma Panel would be particularly relevant to governments looking for innovative ways to deal with pervasive, high-level corruption. Much has been said about the role of the private sector in fighting corruption, but governments share equal responsibility. The World Bank has long advocated that good governance and strong, accountable institutions are the cornerstones of integrity. Countries struggling with corruption can look to a number of examples where others have turned things around.

For the past ten years, the Indonesian Corruption Eradication Commission (KPK) has aggressively tackled corruption, handling 332 high-profile cases--of which 169 have been processed in court—and recovering assets equivalent to more than US$80 million. Recognizing the importance of teaching integrity, the KPK has promoted initiatives such as “honesty shops” where customers pay by de-positing what they owe into a box.

The Philippines launched a successful public tip-off campaign, catching tax evaders and smugglers who defrauded the government. The “Pera ng Bayan” or People’s Money Program allows citizens to use social network tools to report corruption, but also to praise civil servants who perform their duties well.

Who reported what?FY13 Substantiated Investigations by Sanctionable Offence and Detecting Party

Fraud Collusion Corruption Coercion

Implementing NGO

Detected as a result of other INT

investigation

Bank Staff Whistlebower

Self-disclosure

Confidential source

Public Record/ Media Reports/

Journalists

Government/ Project

Implementation Unit/ Bid Evaluation

Committee

Local NGO or Anti-

Corruption Commission


The World Bank supported Colombia’s initiative to create a new High Level Reporting Mechanism to clamp down on the demand side of bribery. Instances of bribe solicitations in government procurement are handled by a special office that can quickly resolve issues, ensure effective law enforcement, and place instances of corruption under the public spotlight.

Saudi Arabia has opened a Discharge Account into which people can deposit any money they believe has been unjustly taken. The fund has accrued more than US$63 million and is being used to fund social loan programs for low-income people.

Countries are also successfully using e-government to reduce opportunities for corruption. The Independent Advisory Board (IAB), which advises the World Bank on the functioning of INT, advocates more widespread use of technology. Following a visit to India last November, the Bank-funded BHOOMI project caught their attention. The project helped computerize almost 20 million records of land ownership, protect-ing the authenticity and integrity of records to the benefit of 6.7 million farmers in Karnakata. The IAB also noted how the Central Vigilance Commission is using e-government tools to enhance transparency and empower citizens against corruption.

In the same vein, we have leveraged technology to aid the fight against corruption, developing an Integrity App to facilitate complaint reporting; an interactive learning platform to guide national authorities through a simulated corruption investigation; and an online program in which investigators and project staff switch roles to model a high-risk project and subsequent investigation.

At the World Bank one of our top priorities is combatting corruption, to better pro-tect our projects and support client countries. Corruption consistently ranks among the top risks to our business. Through the Integrity Vice Presidency, we’ve established strong relationships with the countries mentioned above, and will continue to sup-port country-driven efforts through mechanisms like the World Bank’s International Corruption Hunters Alliance (ICHA). ICHA helps us comprehend the true state of cor-ruption around the world is, invigorate the actions of prosecutors and investigators, design counter strategies against criminal enterprises, and promote the rule of law. Corruption is, as Huguette Labelle argues, the common denominator among social destabilization, violence, illicit trade, money laundering, crumbling infrastructure, and other ills that befall development. It destroys opportunities, perpetuates and deepens inequalities, and depletes national wealth. That is why solu-tions, effective responses in client countries, blueprints for prevention, and successes in enforcement should underwrite the global onslaught against corruption in 2014 and beyond. We hope this report helps galvanize such efforts.

w w w.worldbank.org / integrit y

•

www.worldbank.org/integrity

WORLD BANK GROUP

Integrity Vice Presidency

FY13 FACTS & FIGURES

The Integrity Vice Presidency (INT) is an independent unit within the World Bank Group

that has the unique function of investigating and pursuing sanctions related to allegations

of fraud and corruption in Bank Group-financed activities. As an integral part of the Bank

Group’s overall Governance and Anti-corruption Strategy, INT performs a preventive function

as well, working closely with other World Bank units and external stakeholders to mitigate

risks through advice, training, and outreach efforts. Where the World Bank’s own staff

may be implicated in such misconduct, INT similarly investigates and acts in relation to

those allegations. This is our fifth annual report as a Vice Presidency based on INT’s new

strategic framework, following the recommendations of a panel headed by Mr. Paul Volcker.

The World Bank fiscal year 2013 runs from July 1, 2012 to June 30, 2013.

Download the Integrity App, free from iTunes, to identify and report fraud and corruption

in World Bank financed projects.

1FY13 FACTS & F IGURES

The World Bank Group’s Integrity Vice Presidency (INT) investigates allegations of fraud and corruption in Bank Group–financed activities as well as allegations of fraud and corruption involving staff.

By combining investigations and sanctions with an enhanced focus on compliance and prevention and detection of red flags in Bank-financed projects, INT promotes a proactive approach to managing fraud and corruption risks that impact development, particularly in fragile contexts and high-risk sectors. By mainstreaming lessons learned from investigations into allegations of fraud and corruption by Bank Group staff, INT helps strengthen internal controls and ensure Bank Group staff maintain the highest levels of integrity.

As a public institution, the World Bank Group needs to ensure that development resources reach their intended beneficiaries. Working with governments, the private sector, and other international institutions, the work of the Integrity Vice Presidency is critical to the Bank’s governance and anti-corruption efforts. Large-scale initiatives like the World Bank’s International Corruption Hunters Alliance bring together these stakeholders and ensure a coordinated, global approach to the fight against corruption.


“Let me say it loud and clear: When corruption is discovered in our projects and activities, we have zero tolerance for it within the World Bank Group.”–World Bank President Jim Yong Kim



Investigative DataINT groups its investigations into two categories, external and internal investigations. External investigations look into allegations of five types of misconduct: fraud, cor-ruption, collusion, coercion, and obstruction. These are the five practices for which the Bank Group may impose sanctions on entities doing business with the Bank Group. (See www. worldbank.org/sanctions.) Evidence of misconduct by government officials is generally referred to national authorities for action.

Internal investigations assess allegations of significant fraud and corruption involving Bank Group staff occurring in Bank Group-financed projects or supported activities (i.e., operational fraud and corruption) or affecting the Bank Group administra-tive budgets (i.e., corporate fraud and corruption). INT also investigates allegations against corporate vendors involving the five sanctionable practices in support of the Bank’s corporate vendor eligibility determinations, leading to corporate debar-ment proceedings and in some cases operational cross-debarments. (See www.go.worldbank.org/C3YIALVBF0.)

External Investigations

Complaint intakeINT receives complaints from all over the world and from many sources. Of the exter-nal cases opened in FY13, 23% of complaints received came from Bank Staff, 57% of complaints were from non-Bank sources, and 20% were anonymous. Non-Bank sources include contractors, concerned citizens, government officials, employees of NGOs, and other multilateral development banks. INT routinely conducts outreach to all groups in an effort to increase overall awareness and reporting of complaints.

INT screens the complaints it receives to ensure they pertain to one or more sanction-able practice and involve a Bank Group-supported activity. If the complaints meet both criteria, INT opens a complaints file and conducts further assessment of the allegations. In determining whether to move from a preliminary inquiry to a full in-vestigation, INT analyzes the seriousness of the allegations, the credibility of the com-plaint, and the presence of corroborating evidence. INT also considers aspects such as the amount of project and contract funds involved, the quality of the information or evidence, the potential development impact, the ability to investigate and the investigation risks, as well as the reputational risk to the World Bank Group. When an allegation is not pursued or a preliminary investigation involving Bank-Group ac-tivities is not opened for a full investigation, INT works with operational staff or other interlocutors to address the issues raised.

In FY13, INT opened 449 complaints from 90 countries, of which 89 were opened as new cases.

worldbank.org/sanctions

www.go.worldbank.org

www.go.worldbank.org


Investigation of casesThrough investigations, INT ascertains whether firms and/or individuals have engaged in one of the Bank Group’s five sanctionable practices. If INT finds sufficient evidence to conclude that it is more likely than not that the alleged conduct, or other sanction-able conduct, occurred, then the matter is deemed substantiated. The allegation is considered unsubstantiated if there was insufficient evidence to prove or disprove it, and unfounded if INT concludes that the alleged sanctionable conduct did not occur. INT continues to refine its selection process for matters going to full investigation, and has devoted additional resources to more thorough preliminary screening of al-legations before commencing a full investigation. INT increased its substantiation rate over the course of the fiscal year, from 46% in FY11 to 67% in FY13.

New Cases Opened by Region, FY09–FY13

REGION FY09 FY10 FY11 FY12 FY13

Africa 36 58 21 31 24

East Asia Pacific 23 27 8 8 15

Europe & Central Asia 28 30 12 17 14

Latin America & Caribbean 10 25 10 8 10

Middle East & North Africa 7 18 5 6 5

South Asia 34 36 17 11 16

IFC 5

GRAND TOTAL 138 194 73 81 89

New Cases Opened by Region, FY13

LATIN AMERICA & CARIBBEAN 10 MIDDLE EAST &

NORTH AFRICA 5

AFRICA 24

EUROPE & CENTRAL ASIA 14

EAST ASIA PACIFIC 15

SOUTH ASIA 16

IFC 5


New Cases Opened by Sector, FY09–FY13

SECTOR FY09 FY10 FY11 FY12 FY13

Agricultural & Rural 10 23 7 13 12

Economic Policy 1 0 0 0 0

Education 13 24 0 2 3

Energy & Mining 8 11 3 8 7

Environment 8 4 2 3 0

Financial & Private Sector Development 3 9 6 2 1

Global Information/ Communications Technology

2 1 0 1 0

Health, Nutrition & Population 30 26 10 14 17

No Sector 5 10 3 1 5

Public Sector Governance 10 7 8 4 9

Social Development 0 8 1 0 0

Social Protection 4 5 2 2 0

Transport 27 38 14 14 20

Urban Development 5 10 5 3 0

Water 12 18 12 13 15

TOTAL 138 194 73 81 89

TRANSPORT 20HEALTH, NUTRITION & POPULATION 17WATER 15AGRICULTURE & RURAL 12PUBLIC SECTOR GOVERNANCE 9ENERGY & MINING 7NO SECTOR 5EDUCATION 3FINANCIAL & PRIVATE SECTOR DEVELOPMENT 1

New Cases Opened by Sector, FY13


Of the external cases still under investigation at the end of FY13, most involved allegations of fraud and corruption

Type of Allegation FY09 FY10 FY11 FY12 FY13

Coercion 1 3 0 0 0

Collusion 42 60 67 12 10

Corruption 26 28 48 40 41*

Fraud 38 41 97 27 35

*Of the 41 cases under investigation for corruption: 18 have elements of fraud; 2 have elements of collusion; 6 have elements of both fraud and collusion.

See www.worldbank.org/sanctions for legal definitions of the sanctionable practices: fraud, corruption, coercion, collusion, and obstruction.

External investigations performance indicators, FY09–FY13FY09 FY10 FY11 FY12 FY13

Preliminary Inquiries Opened 444 441 460 512 449

Investigations Opened 138 194 73 81 89

FIRs Finalized 35 47 46 48 52

Investigations Closed 153 238 83 90 86

Cases Substantiated 39 42 38 47 58

Cases Unsubstantiated 32 57 32 29 28

Cases Unfounded 15 18 8 6 0

Cases Referred/ Not investigated 67 121 5 8 —

Referrals to countries/MDBs 9 32 40 46 42

Final Investigation ReportsWhen INT substantiates a case, it produces a Final Investigation Report (FIR). FIRs are sent to regional management for comment before being finalized and provided to the President. In some cases, INT will produce an FIR, even if there is not sufficient evidence to substantiate a complaint; for example, if INT believes that the investiga-tion unearthed important lessons that should be shared with colleagues in the Bank Group and with client governments of the World Bank.

Since FY10, INT has been tracking case turnaround time, striving to ensure that the maximum time between opening a case and submitting the FIR to the President of the World Bank is, as was recommended by the Volcker Panel in 2007, no more than 12 to 18 months, depending on the complexity of cases. Of the 86 investigations closed in FY13, 35% were closed within 12 months and 70% were closed in less than 18 months. The median duration of all investigations completed in FY13 was 16 months. In addition, by the end of FY13, INT had no investigations open longer than 18 months (compared to 35 at the end of FY11 and 11 at the end of FY12).

FIRs also form the basis for two other INT outputs: referral reports, which INT sends to relevant national authorities if evidence indicates that the laws of a Bank Group

http://www.worldbank.org/sanctions


member country may have been violated (see page 35 for list of referrals made to national authorities in FY13); and redacted reports, which are provided to the Bank Group’s Board of Executive Directors for information and, after the completion of all related sanctions proceedings, made publicly available.

Statement of Accusations and Evidence When INT finds sufficient evidence to substantiate that a sanctionable practice oc-curred, it also prepares a Statement of Accusations and Evidence (SAE and previously called a Proposed Notice of Sanctions Proceedings). The SAE is presented for review to the relevant Bank Group’s Suspension and Debarment Officer (SDO).

Sanctions System and Results, FY09–FY13

FY09 FY10 FY11 FY12 FY13

Sanctions Cases Submitted to OSD by INT∞

39 43 27 25 33

Sanctions Cases (NoSPs or NoTSs) Issued by OSD to Respondents*

10 29 33 33 25

Negotiated Resolution Agree-ments Submitted to OSD by INT^

N/A N/A 11 16 8

Firms and Individuals Temporarily Suspended by OSD

32 51 55 60 41

Firms and Individuals Sanctioned 13 45 34 84 47

∞ Office of Suspension and Debarment (OSD) formerly the Office of Evaluation and Suspension (OES).

* NoSPs: Notices of Sanctions Procedures; and, NoTS: Notices of Temporary Suspension.

^ Negotiated Resolution Agreements (Settlements) were first put into effect in FY11.

SanctionsThe decision whether a firm or individual has more likely than not engaged in a sanctionable practice and, if so, what sanction should be imposed, is determined through a two-tier process involving four officers that oversee suspension and debar-ment decisions and the Sanctions Board. These officers and the Sanctions Board are independent of INT. The relevant officers review the case brought by INT to deter-mine whether there is sufficient evidence to support the accusations against the respondent and, if so, recommend an appropriate sanction via a Notice of Sanctions Proceedings (NoSP) and temporarily suspend the respondent. Under the sanctions procedures, when a respondent fails to contest the accusations against it within 90 days, the sanction recommended by the officer becomes final. If the respondent con-tests the recommended sanction, the Sanctions Board will consider the case, which may include a hearing. (See page 14 for list of entities debarred in FY13.)

Negotiated Resolution AgreementsFirms or individuals may explore the option of settling through a Negotiated Reso-lution Agreement (NRA). Resolving a case through an NRA can save considerable resources, while also providing certainty of result for both the Bank and the party un-der investigation. At the same time, settlements must be handled with discretion and


transparency. INT is responsible for the drafting, negotiation and execution of NRAs. The agreements are, however, subject to review by the World Bank’s General Coun-sel. Moreover, the relevant SDO is charged with reviewing settlement agreements to verify that (i) the respondent entered into the agreement freely and fully informed of its terms, and free of duress, and (ii) the terms of the agreement are broadly consis-tent with the Sanctioning Guidelines.

Internal Investigations

In addition to investigating allegations of fraud and corruption involving Bank Group staff and corporate vendors, INT mainstreams lessons learned through training and other activities to promote the reporting, detection and prevention of fraud and corruption within the Bank Group’s corporate arena and participates in outreach programs as a member of the Bank’s Internal Justice System.

The Internal investigations cycleInternal investigations focuses on three types of allegations: (i) operational fraud and corruption (which includes allegations against staff relating to Bank Group operations, such as abuse of position for personal gain, misuse of Bank Group funds or trust funds, fraud, corruption, collusion, and attendant conflicts of interest; (ii) corporate fraud and corruption (which includes allegations against staff involving abuse of position for personal gain, misuse of Bank Group funds or trust funds, em-bezzlement, fraud, corruption, collusion and attendant conflicts of interest; and (iii) fraud, corruption, collusion, coercion or obstruction (the five sanctionable practices) by corporate vendors.

Upon receipt of a complaint, INT follows a consistent three-stage process: (i) intake and evaluation; (ii) preliminary inquiry; and (iii) investigation.

i. Intake and evaluation to assess whether complaints warrant further review as alleged misconduct under Staff Rule 8.01;

ii. Preliminary inquiry to establish whether there is reasonably sufficient evi-dence to initiate a full investigation and thus serve the accused staff mem-ber with formal notice of allegations and an opportunity to respond; and

iii. Full investigation to establish the complete facts and circumstances of the matter, including the collection and assessment of evidence that is both inculpatory and exculpatory.

If the investigation establishes sufficient evidence to a “clear and convincing” stan-dard of proof, INT prepares a final report of investigation, inclusive of all supporting evidence, and provides it to the subject staff member for comment.

Thereafter INT finalizes the report, incorporating the staff member’s comments and any INT rebuttal to those comments, and submits the report to the Bank’s Vice Presi-dent for Human Resources (VPHR) for decision.


The VPHR then decides, on the basis of the investigative findings, whether miscon-duct occurred and what disciplinary measures to impose, if any, up to and including termination.

A staff member has the right to appeal the VPHR’s disciplinary decision to the World Bank’s Administrative Tribunal whose judgments are binding on the World Bank Group.

If INT believes that the information it obtains during the course of a staff misconduct investigation indicates that the laws of a member country may have been violated, INT may refer the alleged violation(s) to local or national authorities for law enforce-ment purposes.

Conversely, during the course of a preliminary inquiry or full investigation, INT may establish sufficient evidence to show that the allegations are unfounded, thus clear-ing the staff member of any wrongdoing. This is an equally important outcome for both the World Bank Group and staff.

Internal Investigations Case PortfolioIn FY13, INT dealt with a total of 133 complaints: nine were carried over from the latter part of the FY12 and 124 complaints were received during FY13, of which 33 were opened as new cases and underwent a preliminary inquiry. Of the remaining 100 complaints, 77 were not pursued as they either did not relate to the World Bank Group or lacked specificity or sufficient supporting information to warrant further review. Twelve complaints involved issues not within INT’s investigative mandate and were referred to other appropriate venues within the Bank. Eleven complaints were carried over to FY14 pending receipt of further information and continued evalua-tion.

In FY13, INT dealt with a total of 61 cases, 28 of which were carried over from the prior fiscal year and the 33 cases that were opened as new cases during FY13. Of the 28 cases carried over, 27, or about 99%, were completed and closed in FY13. Of the total 61 cases, 32 were staff preliminary inquiries, five were full investigations, three were combined vendor and staff cases and 21 were active vendor cases.

As a result of this work, INT substantiated 20 cases, of which four involved staff and 16 involved vendors.

During the course of its preliminary inquiries, INT also established sufficient evidence to show that allegations against nine staff members were unfounded, thus clearing them of any wrongdoing (an equally important outcome for both the Bank and its staff).

In all, 39 cases were closed in FY13: 20 involving corporate matters (four staff cases and 16 vendor cases) and 19 cases relating to operations.


FY13 VPHR Disciplinary Outcomes Following INT Investigations DecisionsBased on substantiated cases, in FY13, eight staff were terminated and/or perma-nently barred from rehire and restricted from access to Bank facilities.

i. receipt of bribes in excess of $500,000 by a short-term consultant (STC), tainting at least 17 projects in three regions;

ii. fraud, corruption, abuse of position, misuse of Bank funds and conflicts of inter-est by a task team leader (TTL) involving Bank-financed projects;

iii. willful misrepresentations and collusion by a staff consultant in order to circum-vent the Bank Group’s corporate procurement rules

iv. fraud, corruption, collusion, abuse of position, misappropriation of Bank funds and conflicts of interest by a senior project manager involving 60 corporate pro-curement contracts and multiple vendors spanning four regions over a 10-year period;

v. corrupt practices vis à vis soliciting from a third party a percentage of that party’s consultancy earnings in exchange for having helped the third party obtain consul-tancy contracts unrelated to the Bank;

vi. false and fraudulent payment claims by a STC;vii. embezzlement of approximately $12,000 in Bank funds through manipulation of

accounting transactions; viii. embezzlement of approximately $10,000 in Bank funds through manipulation of

accounting transactions.

FY13 OutcomesIn FY13, INT substantiated 20 cases in total, 4 of these were staff cases and 16 were vendor cases.

Staff Case Highlightsi. Misuse of Bank Funds and Steering of Contracts by STC and TTL. STC acted in

concert with a now-terminated TTL, engaging in fraud, corruption, abuse of position, misuse of Bank funds and conflicts of interest involving Bank-financed projects. The case is pending decision by the VPHR.

ii. Solicitation of Project Funds for Personal Expenses by STC. A former STC engaged in misconduct by improperly soliciting and receiving approximately $18,000 from a country’s the project implementing agency for personal expenses. The STC has been conditionally barred from rehire indefinitely.

Vendor Case HighlightsINT substantiated 16 corporate vendor cases which were submitted to the Bank’s General Services Department for decisions on sanctions and are pending decision.

1. Fraud, Corruption and Collusion by Nine Bank Vendors: Fraud, corruption, collusion, and/or conflicts of interest by nine vendors with a now-terminated se-nior project manager involving 60 corporate procurement contracts spanning four regions over a 10-year period.


2. Fraudulent and Collusive Practices by Two Vendors: Fraud, corruption, collu-sion and conflicts of interest by two vendors, acting in concert with an STC and a now-terminated TTL involving a Bank-financed project.

3. Ineligible Vendor Engages in Collusive Practice to Procure Bank Business: Willful misrepresentations and collusion by vendor with some of its former sub-contractors who became Bank consultants to procure Bank work for the vendor after the vendor had been declared ineligible as a corporate vendor.

4. Vendor Submits Fraudulent Invoices: Fraudulent claims for reimbursement, including by submitting a falsified, inflated invoice by a vendor.

Internal Investigations Cases, FY13

Operation-al (Staff)

Corporate (Staff)

Vendor Staff and Vendor

Total

Carried over from FY12 11 2 15 0 28

Opened 21 4 5 3 33

Total 32 6 20 3 61

Closed 17 4 18 0 39

Substantiated 3 1 16 0 20

Unsubstantiated 5 1 2 0 8

Unfounded 8 1 0 0 9

Referred 1 1 0 0 2

Ending caseload 15 2 2 3 22

Overview of internal investigation outcomes, FY11–FY13

FY11 FY12 FY13

Cases

Substantiated 6 12 20

Unsubstantiated 11 10 8

Unfounded 11 25 9

Referred1 7 4 2

Closed 35 51 39

Referred/2Not investigated 39 57 30

1 Following a preliminary inquiry, these cases were deemed to involve issues more suitably ad-

dressed by other venues within the WBG for intervention (e.g., EBC). 2 Complaints that involved issues not within INT’s investigative mandate that were referred to

other appropriate venues within the WBG for intervention.

Turn Around TimeINT aims to complete internal staff cases within nine months (270 days)3. In FY13, the average turnaround time for the 39 cases closed was 338 days (about 11.2 months), whereas in FY12, the average turnaround time for the 51 cases closed was 261 days (about nine months), and in FY11 the average turnaround time for the 35 cases closed was 331 days, or approximately 11 months.


Whistleblowing During FY13, a total of 139 staff (e.g., regular staff, former staff, extended- and short-term consultants and temporaries) made protected (whistleblower) disclosures to INT. We are grateful to those staff members who have forwarded concerns of suspected misconduct that may threaten the operations or governance of the World Bank Group to the Integrity Vice Presidency, and we appreciate the assistance pro-vided by many staff members in the resulting investigations.

Lessons Learned Memos and Case StudiesIn FY13, INT launched four knowledge and learning products which were aimed at assisting the institution in reducing the risk of misconduct recurrences and ensuring more timely detection of potential control weaknesses and abuses.

5. Fraud and Corruption in Corporate Procurement. Based on substantiation of repeated acts of fraud, corruption, collusion and abuse of position, involving a Bank staff and multiple vendors, INT issued a learning product to strengthen corporate procurement processes and introduce additional checks and balances to prevent opportunities for misconduct in the future.

6. Embezzlement of Bank Funds by an Accounting Assistant. INT issued a case study to strengthen internal controls over accounting transactions after INT substantiated that an accounting assistant in a country office embezzled approxi-mately $12,000 in Bank Group funds and concealed the embezzlement through repeated manipulation of accounting transactions in the Bank’s SAP system.

7. Embezzlement of Bank Funds by a Resource Management Assistant. Fol-lowing the issuance of the preceding case study, INT was seized with a similar case of alleged embezzlement. INT subsequently substantiated that a resource management assistant in a country office embezzled approximately US$10,000 through fraudulent entries in the Bank’s SAP system. As a result, INT issued a learning product to further strengthen internal controls and prevent the opportu-nities for embezzlement in corporate expense transactions.

8. Negligence Can Lead to Allegations of Corruption. Due to the conflicts of interest issues and heightened reputational risk, INT disseminated a case study regarding allegations that a Bank staff member received a significant amount in corrupt payments from companies which benefitted from Bank funds. While these allegations were found to be without merit, the staff member’s failure to conduct basic due diligence contributed to the state of affairs, creating heightened reputa-tional risks for the Bank.

3 The nine month period spans from the initial receipt of the complaint through submission of a litigation quality Final Report of Investigation to the VPHR. Turnaround time is impacted by a combination of eight variables, including: (i) ratio of cases to investigator; (ii) complex-ity of the cases; (iii) multiple allegations per case; (iv) whether mission travel is required; (v) the number and duration of extensions in time granted to a subject staff member in which to respond in writing to the allegations notice and/or to the draft final report; (vi) delayed availability of subjects or witnesses due to operational mission travel; (vii) whether there are parties external to the Bank whose cooperation cannot be mandated; and (viii) an inherently unpredictable, allegation-driven environment where all staff cases must be reviewed and pursued to a logical resolution.


Budget and StaffingINT experienced a slight decrease in its FY13 budget. Staffing levels increased by approximately 3% to 97, of whom 56% are female and 44% are male. Thirty-two percent of staff represent Part II countries and 6% represent Nationalities of Focus.

INT continues to manage its resources judiciously and cost-effectively within tight budget constraints, in an effort to maximize value, impact, and results in support of the Bank’s goals to end extreme poverty and boost shared prosperity. INT has been able to achieve a strengthened workforce through the development of a more flex-ible staffing program (e.g. secondments and other institutionally-managed programs) to fill staffing gaps and broaden its skills base.

Budget and Staffing Levels FY09–FY13

FY09 FY10 FY11 FY12 FY13

Budget (in $ mil, incl. Reimbursables) $18.8 $18.7 $20.4 $20.6 $20.4

Staffing1

Staff grades GE+ 43 67 70 67 67

Staff grades GA–GD 20 21 19 17 19

Total Staff 63 88 89 84 86

1 In addition to the 86 term and open-ended staff, INT employed 11 extended term consultants/temporaries in order to augment its capacity while retaining staffing flexibility in an uncertain budget environment.

Entities Debarred in FY13 Entity Name/Individual Country Grounds for Sanction Length of Debarment

1. A Pontual – Motores E Máquinas Ltda

Brazil Fraudulent Practice of Collusion 1999 Procurement Guidelines

3 years

2. Al Thuhat Company, General Contracting And Trade (Al Thuhat)

Iraq Fraudulent Practices2004 Procurement Guidelines

3 years

3. Arinc Incorporated (and 31 affiliates)

United States Fraudulent Practices1999 Procurement Guidelines

2 years, 9 months

4. B.V.S. Construction Limited

Uganda Fraudulent Practices2006 Procurement Guidelines

4 years

5. Cecep New Hope & Tarlroad (Beijing) Environmental Technology Co., Ltd

China Fraudulent Practices2006 Procurement Guidelines

5 years

6. Cenedi, Central De Negocios Diversos

Guatemala Fraudulent Practices1999 Procurement Guidelines

4 years

7. Cennet Inşaat Ith. Ihr. Tur. Gida San. Ve Tic. Ltd. Şti

Turkey Fraudulent Practices2006 Procurement Guidelines

3 years

8. Compeq – Comércio Produtos E Equipamentos Ltda

Brazil Fraudulent Practice of Collusion1999 Procurement Guidelines

3 years

9. Construtora Ramos E França Ltda

Brazil Fraudulent Practices1999 Procurement Guidelines

4 years

10. Contact Euro LLC Ukraine Fraudulent Practices2004 Procurement Guidelines

4 years

11. Contech Devices Pvt. Ltd. India Fraudulent Practices2004 Procurement Guidelines

1 year

12. Energoprojekt-Niskogradnja A.D. (and 2 affiliates)

Serbia Fraudulent Practices1999 Procurement Guidelines

2 years, 6 months

13. Entreprise Générale De Construction Ando

Madagascar Fraudulent Practices1999 Procurement Guidelines

3 years

14. Frannan International Ltd.

United Kingdom

Fraudulent Practices2006 Consultant Guidelines

1 year, 6 months

15. GHD Pty Ltd. Australia Fraudulent Practices2004 Consultant Guidelines

1 year

16. GHD Indonesian Operating Centre

Australia Fraudulent Practices2004 Consultant Guidelines

1 year

17. J.M. Comércio De Equipamentos Ltda (Currently D/B/A Pick Up Car Auto Peças)


2 years

18. L’entreprise Générale De Construction Safidy

Madagascar Fraudulent Practices1999 and 2004 Procurement

Guidelines

3 years

19. Larsen & Toubro Limited India Fraudulent Practices2004 Procurement Guidelines

6 months


20. M/S Wijekamal Engineering Pvt. Ltd.

Sri Lanka Fraudulent Practices2004 Procurement Guidelines

2 years

21. Mg Mind LLC Bosnia and Herzegovina

Collusive Practices2004 Procurement Guidelines

4 years

22. Mr. Erick Rodolfo González Chávez

Guatemala Fraudulent Practices1999 Procurement Guidelines

4 years

23. Mr. Ivo Gomes Da Silva Brazil Fraudulent Practice of Collusion1999 Procurement Guidelines

4 years

24. Mr. Jayaram Reddy Uganda Fraudulent Practices2006 Procurement Guidelines

4 years

25. Mr. José Magno Da Silva Garrido


2 years

26. Mr. Marcelo Campêlo Brazil Fraudulent Practice of Collusion1999 Procurement Guidelines

3 years

27. Mr. Mladen Milanović Bosnia and Herzegovina


4 years

28. Mr. Mousa Mahdi Makawi

Iraq Fraudulent Practices2004 Procurement Guidelines

3 years

29. Mr. Trivun Milanović Bosnia and Herzegovina


4 years

30. Mr. Vakhidjan Ergashev Kyrgyz Republic Fraudulent PracticesProcurement Guidelines

4 years

31. Mrkonjićputevi JSC Bosnia and Herzegovina


4 years

32. Ms. Victoria Slisarenko Ukraine Fraudulent Practices2004 Procurement Guidelines

4 years

33. Novo Horizonte Const. E Cons. E Comercio Ltda


4 years

34. OAO Dustlik Kyrgyz Republic Fraudulent PracticesProcurement Guidelines

4 years

35. Oxford University Press East Africa Limited

Kenya Fraudulent and Corrupt Practices

1999 and 2004 Procurement Guidelines

3 years

36. Oxford University Press Tanzania Limited

Tanzania Fraudulent and Corrupt Practices

1999 and 2004 Procurement Guidelines

3 years

37. Pt Citra Gading Asritama Indonesia Fraudulent PracticesProcurement Guidelines

2 years

38. Pt Global Hutama Desain (Pt GHD)

Indonesia Fraudulent Practices2004 Consultant Guidelines

1 year

39. Scientific Energy And Env. Mgt Systems (SEEMS)

Nigeria Fraudulent Practices2006 Consultant Guidelines

2 years

40. Silva Matos Const. E Cons. E Comercio Ltda


4 years

Entities Debarred in FY13 (continued)

Entity Name/Individual Country Grounds for Sanction Length of Debarment


41. SNC-Lavalin Inc. (and 196 affiliates)**

Canada Fraudulent and Corrupt Practices

2006 Consult. Guidelines;Corrupt Practices

1997 Procurement Guidelines

10 years

42. Suprematech Solutions Inc.

United States Fraudulent Practices2006 Procurement Guidelines

2 years

43. Victory Construction Company Ltd.(and 3 affiliates)

Kenya Fraudulent Practices2006 Procurement Guidelines

1 year, 9 months

44. Yavuzer Inşaat Makine Ve Malzemeleri Sanayi Ve Ticaret Ltd. Şti

Turkey Fraudulent Practices2006 Procurement Guidelines

2 years

** SNC-Lavalin Inc. is a subsidiary of SNC-Lavalin Group. The remainder of the SNC-Lavalin Group (including 88 af-filiates) has been conditionally non-debarred for the same period of time.

Other Sanctions Imposed in FY13 Company/Individual Country Sanction Imposed Grounds

1. Oxford University Press United Kingdom

Conditional Non-debarment Fraudulent and Corrupt Practices

2. MVV decon GmbH Germany Conditional Non-debarment Fraudulent Practices

3. Research Periodicals & Book Services Inc. (RPBS)

United States Conditional Non-debarment Fraudulent Practices

This list includes the minimum period of debarment to be served, but does not include theconditions for the release of debarments if such conditions exist. For entities cross-debarred,there are no conditions for release. However, most World Bank Group debarments contain suchconditions. See http://www.worldbank.org/debarr for complete list of currently debarred entitiesand conditions.

Entity Name/Individual Country Grounds for Sanction Length of Debarment

http://www.worldbank.org/debarr


Cross-Debarments Honored by the World Bank in FY13 Company/Individual Country Grounds for Debarment Length of Debarment

1. Hao Zhiyong China Cross-debarment, ADB Permanent

2. Mr. Zakir Hossain Bangladesh Cross-debarment, ADB 6 years

3. M/S Zakir Enterprise Bangladesh Cross-debarment, ADB 6 years

4. Saadullah Khan & Brothers Engineering and Construction (SKB)

Pakistan Cross-debarment, ADB 5 years

5. NEM Construction (Pvt) Ltd.

Sri Lanka Cross-debarment, ADB 1 year

6. Constructorae Inversiones López

El Salvador Cross-debarment, IADB 13 years

7. Herbert Ernesto López Gallardo


8. Aida Lorena Juárez de Pineda


9. Amaya Corleto S.A. DE C.V.


10. Sergio Armando Ayala Lazo


11. Carlos Alejandro Del Valle Mazariegos

Guatemala Cross-debarment, IADB 6 years

12. Construcciones Arquitec-tónicas Construsarq


13. Argomedica Guatemala Cross-debarment, IADB 5 years

14. Cristobal Gauto Portillo Paraguay Cross-debarment, IADB 5 years

15. German Durand Paraguay Cross-debarment, IADB 5 years

16. German Durand Arquitectura y Construccion

Paraguay Cross-debarment, IADB 5 years

17. Luis Antonio Argueta López


18. Maderon Furniture or Maderon Muebles

Paraguay Cross-debarment, IADB 5 years

19. Yolanda Barreto Paraguay Cross-debarment, IADB 5 years

20. Ana Patricia Espinoza Rojas De Salala


21. Aper’s Guatemala Cross-debarment, IADB 4 years

22. Conservi Guatemala Cross-debarment, IADB 4 years

23. Martín Fernando Pacay Lopez


24. Marco Aurelio Molina Alarcón


25. Rolando Bellido Aedo Peru Cross-debarment, IADB 3 years

26. Christian Hugo López Cornejo

Peru Cross-debarment, IADB 2 years


Referrals Made in FY13* Date of Referral Referral Nature of Project Description Status Recipient Misconduct

1. July 9, 2012 Tanzania Fraudulent and

Corrupt Practices

Water Sector Project

Investigation has been launched by the Tanzanian Prevention

and Combating of Corruption Bureau.

2. July 13, 2012 Switzerland Corrupt Practices

Power Rehabilitation

Project

The prosecuting authorities informed INT

that they have ceded jurisdiction to the French

authorities.

3. July 20, 2012 France Corrupt Practices


Project

Closed as the facts predate the change in French law that would

make it actionable.

4. July 20, 2012 Rwanda Corrupt Practices

Rwanda: Human Resource

Development Project

Investigation underway by the Rwandan

Ombudsman. INT is engaged with the

Ombudsman’s office and expects a report about the outcome of their

investigation.

5. July 27, 2012 Finland Fraudulent and

Corrupt Practices

Energy Project After conducting their preliminary investigation,

authorities have determined that there

is insufficient basis for a criminal investigation.

6. August 8, 2012 UK, SFO Corrupt Practices


Project

The matter is being considered by the Serious

Fraud Office.

7. September 28, 2012

Iraq Fraudulent Practices

School Construction Project

Government has taken administrative sanctions

action against the entities which resulted in domestic debarments and monetary

payments.

8. November 8, 2012 UK, SFO Corrupt Practices

Bridge Project Closed as the authorities concluded that there was

insufficient evidence.

9. November 29, 2012

Sweden Corrupt Practices

Urban Infrastructure

Project

Swift reaction from authorities resulted

intwo convictions. One individual was sentenced

to 100 hours of community service. The second individual was

released in consideration of time served after spending nearly four months in custody.


10. January 24, 2013 Rwanda Fraudulent and

Corrupt Practices

Human Resource Development

Project

Investigation underway by the Rwandan

Ombudsman. INT is engaged with the

Ombudsman’s office and expects a report about the outcome of their

investigation.

11. January 29, 2013 Sierra Leone Fraudulent and

Corrupt Practices

Extractive Industries Technical Assistance

Project

Investigation underway by the Anti-Corruption

Commission.

12. February 27, 2013 Samoa Corrupt Practices

Health Project Authorities informed INT of its intention to carry out an investigation.

13. February 27, 2013 Singapore Corrupt Practices

Bridge Project Authorities have indicated that the

referral does not contain sufficient information upon which to base

criminal action.

14. March 11, 2013 South Korea Fraudulent and

Corrupt Practices

Governance Assistance Project

The criminal investigation is in its

initial stages.

15. April 16, 2013 Bangladesh Fraudulent Practices

Health, Nutrition and Population

Program

INT has no information of any action taken.

16. April 24, 2013 Uganda Fraudulent Practices

Road Development INT is liaising with the Minister of Finance and the Director of Public

Prosecutions about their handling of this matter.

17. May 14, 2013 Bulgaria Corruption Registration and Cadastre Project

Recent referral.

18. June 26, 2013 Mauritania Corrupt Practices

Irrigated Agriculture

Recent referral.

19. June 28, 2013 People's Republic of

China

Fraudulent Practices

Gas Desulfurization Project

Recent referral.

* Following a policy decision that INT adopted in FY13 to categorize the level of the referrals of 1, 2 and 3 regarding Level of Complexity, the lowest level referrals (Level 1) are not included in this chart.

Referrals Made in FY13* (continued)

Date of Referral Referral Nature of Project Description Status Recipient Misconduct


Update on Referrals Made in FY12* Date of Referral Referral Nature of Project Description Status Recipient Misconduct

1. June 6, 2012 Timor-Leste Fraudulent and Corrupt

Practices

Health Sector INT has no information of any action taken.

2. May 16, 2012 Zambia Corrupt Practices

involving a Government

Official


INT is in contact with the authorities on this

matter.

3. April 4, 2012 Bangladesh Corrupt Practices

Construction Supervision

Investigation has been launched by the Anti-

corruption Commission. Some charges have

been brought but not against the most senior

government official implicated in the matter.

4. March 1, 2012 India Fraudulent and Corrupt

Practices

Highways Project Criminal investigation has been launched by the Central Bureau of

Investigations.

5. January 25, 2012 West Bank/Gaza

Fraudulent Practices

Emergency Services The government agent involved was removed

from his position of influ-ence on donor funds.

6. December 14, 2011 Cambodia Fraudulent and Corrupt

Practices

Water Supply and Sanitation

Following the referral, a new government has since been formed. INT

will be following up with the appropriate

authorities.

7. December 2, 2011 Singapore Fraudulent and Corrupt

Practices


A criminal investigation by the Corrupt Practices

Investigation Bureau concluded that the referral contained

insufficient evidence to warrant prosecution.

8. December 1, 2011 Vietnam Fraudulent and Corrupt

Practices


MARD has banned 3 public officials from participating in any

investment project for a period of 5 years. The company involved has

been debarred for 1 year.

9. November 14, 2011 Uganda Fraudulent and Corrupt

Practices

Private Sector Competitiveness

Project

INT is liaising with the Minister of Finance and the Director of Public

Prosecutions about their handling of this matter.

10. November 8, 2011 Australia Fraudulent Practices

Emergency Recov-ery Project

Matter has recently been forwarded to the

investigative authorities.


11. November 8, 2011 Bangladesh Fraudulent Practices

Emergency Recov-ery Project

INT has not received response to its inquiry regarding government

action.

13. October 4, 2011 Ethiopia Potential Misuse of

Bank Funds by a Public

Official

Development Capacity Building

INT is in contact with authorities on this

matter. is in contact with the authorities on this

matter.


Nigeria Corrupt practices

involving a public of-

ficial

Economic Reform and Governance

The matter is under consideration by the

national authorities. INT has provided additional information required.


Bangladesh Corrupt Practices

Bridge Construction Investigation closed based on insufficient

evidence.

16. August 31, 2011 Kenya Fraudulent and Corrupt Practices in Project Ex-penditures

Resource Management

Government of Kenya agreed to conduct an

expanded forensic audit of the project with

support from INT in 2012. To date, INT is unaware of any advances by the Kenyan authorities on

this matter.

17. August 29, 2011 Nigeria Fraudulent and Corrupt

Practices involving

Project Of-ficials

Health Services Investigation resulted in finding an additional

US$2 million of ineligible expenditures under the project. US$2.3

million was reimbursed to the Bank. Criminal

investigation underway against implicated

individuals.

18. August 4, 2011 Croatia Irregulari-ties in the Procure-

ment Process

Improvement of Coastal Waters

Investigation completed and finding made about possible criminal liability.

The authorities will be submitting the matter to the State Attorney General for a decision.

19. July 19, 2011 Russia Fraudulent Practices in

Procurement of the

Contract and Conflict of Interest involving a

Project Imple-mentation

Unit Member

Meteorological and Hydrological

Services

The matter was investigated further by the national authorities resulting in the removal

of a senior project management official.

Furthermore, an amount of US$ 95,000 was

recompensed to the Bank.

* Following a policy decision that INT adopted in FY13 to categorize the level of the referrals of 1, 2 and 3 regarding Level of Complexity, the lowest level referrals (Level 1) are not included in this chart.

Update on Referrals Made in FY12* (continued)

Date of Referral Referral Nature of Project Description Status Recipient Misconduct

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