Combatting fraud and corruption in international development. The global impact of the multilateral development banks’ sanctions regimes

Author:John Coogan, Elizabeth Lin Forder, Jelena Madir, Norbert Seiler, Clare Wee
Position:Legal Department, International Finance Corporation, Washington, DC, USA; Sanctions Board, World Bank Group, Washington, DC, USA; Office of General Counsel, European Bank for Reconstruction and Development, London, UK; Office of General Counsel, European Bank for Reconstruction and Development, London, UK; Office of Anticorruption and Integrity...
Pages:228-241
SUMMARY

Purpose - This paper aims to analyse sanctions regimes of multilateral development banks and to examine some of the topical issues surrounding sanctioning practices of these institutions. Under the Agreement for Mutual Enforcement of Debarment Decisions (the “Mutual Enforcement Agreement”), sanctions covering the sanctionable practices that are imposed and made publicly available by any participating MDB may be enforced by other participating MDBs. This dramatically amplifies the impact of debarment decisions taken by any one of the participating MDBs, while affirming the MDBs’ commitment to combating the sanctionable practices. Consequently, companies will need to invigorate their... (see full summary)

 
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Combatting fraud and corruption
in international development
The global impact of the multilateral
development banks’ sanctions regimes
John Coogan
Legal Department, International Finance Corporation, Washington,
District of Columbia, USA
Elizabeth Lin Forder
Sanctions Board, World Bank Group, Washington,
District of Columbia, USA
Jelena Madir and Norbert Seiler
Ofce of General Counsel,
European Bank for Reconstruction and Development, London, UK, and
Clare Wee
Ofce of Anticorruption and Integrity, Asian Development Bank,
Manila, Philippines
Abstract
Purpose – This paper aims to analyse sanctions regimes of multilateral development banks and to
examine some of the topical issues surrounding sanctioning practices of these institutions. Under the
Agreement for Mutual Enforcement of Debarment Decisions (the “Mutual Enforcement Agreement”),
sanctions covering the sanctionable practices that are imposed and made publicly available by any
participating MDB may be enforced by other participating MDBs. This dramatically amplies the
impact of debarment decisions taken by any one of the participating MDBs, while afrming the MDBs’
commitment to combating the sanctionable practices. Consequently, companies will need to invigorate
their procedures with a view to managing their risks not only in relation to national legislation, but also
in relation to the MDBs’ sanctioning frameworks, which have much broader geographic scope than that
of national legislation. This paper rst provides an overview of the tenets established by the Mutual
Enforcement Agreement. Further, as all MDBs maintain their own sanctions mechanisms, the paper
analyses individual sanctions regimes of the WBG, EBRD and ADB. The paper then describes the types
of sanctions that may be imposed by MDBs and examines some of the challenging issues surrounding
the banks’ sanctions practices.
Design/methodology/approach – This paper draws on the experience of senior lawyers who were
intimately involved in the set-up of the sanctions regimes at the World Bank, the International Finance
Corporation, the EBRD and the ADB and are currently involved in the work of sanctions boards at their
respective institutions.
Findings – Companies and individuals dealing with MDBs should be aware of the fact that, as a result
of the Mutual Enforcement Agreement, the prole of MDBs’ fraud and corruption cases has been raised
signicantly and could result in global sanctions for prohibited practices in a single country.
Consequently, a company engaging in a prohibited practice in its business dealings with one MDB
might nd itself unable to obtain nancing from the four other MDBs participating in the Mutual
The current issue and full text archive of this journal is available on Emerald Insight at:
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JFC
22,2
228
Journalof Financial Crime
Vol.22 No. 2, 2015
pp.228-241
©Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-10-2014-0045

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