How serious can The World Bank’s sanctions process really be? After all, the Bank’s investigators lack many of the powers that national authorities often take for granted. The powers to subpoena documents and search premises are just two examples. It is true that Bank investigators might have contractual audit rights. But what happens if the company under investigation happens to have lost the specific files that investigators wish to review?
Given these realities, does a company or individual under the microscope at the World Bank really need to worry?
Yes, for many reasons. Chief among them is the fact that The World Bank coordinates with national authorities. It does so often, and sometimes closely. When discussing this coordination, the Director of Operations at the Bank’s Integrity Vice Presidency, Steve Zimmerman, recently stated, “we look for ways to leverage our resources.”
Consider the following:
Sharing Evidence. Not only does the Bank share its findings with national authorities after it sanctions a company or individual, it is common for the Bank to share the findings of an investigation that has not produced enough evidence to establish a sanctionable practice. The referral might include tips, allegations, and evidence that indicate corruption, fraud, or collusion. Based on this information, the national authority can take further steps, using its sovereign powers to compel addition information and build a successful case.
For example, in the case of the Canadian engineering firm SNC-Lavalin, the Bank had uncovered credible information that the company would soon make improper payments to Bangladeshi authorities to obtain a contract related to the Padma bridge project. Since the matter was not yet ripe for the Bank to take its own action, it shared the information with the Royal Canadian Mounted Police who proceeded to raid the company’s offices. Canada has now charged two company officials under the Corruption of Foreign Public Officials Act.
Evidence is shared in the other direction too. If a national authority like the U.S. Department of Justice of UK Serious Fraud Office obtains information of wrongdoing related to a World Bank financed project, it might very well share it with the Bank. The World Bank has based several successful sanctions on such evidence.
Joint Operations. It is not uncommon for World Bank investigators to engage in joint operations with national authorities. Perhaps a national authority will interview a witness and invite the World Bank investigator to sit in, assist, and use any evidence obtained. World Bank staff might also serve as expert witnesses in governments’ cases.
Conditioning Further Support. It is certainly true that many governments might choose not to do anything when provided with evidence of corruption. The Bank can sometimes exercise unique leverage in these situations. The Padma bridge project is illustrative. After the Bank provided information to the Bangladeshi Government, the country opened and then quickly closed a case. The Bank sent more information and Bangladesh re-opened the case. Then the Bank suspended the $1.2 billion loan for the bridge and made any continued support contingent on a thorough investigation into wrongdoing. The Bank even put together a committee of experts to monitor Bangladesh’s progress and report back on whether the investigation was full, fair, complete, and adequate. Bangladesh is now investigating the matter.
Coordination with national authorities takes on additional relevance when one considers that, in most complex bribery schemes, activity is usually not confined to just one country. There are usually several countries with which to cooperate and encourage action. For example, bribes might be paid in one country, funds might be parked in another, and evidence might be found in yet a third. The multinational company paying the bribe might be based in a fourth. Goods at issue could be sourced from a fifth. A consultant from yet another country might be implicated. All of a sudden, the Bank has six countries to approach.
Each implicated country might have a different interest in taking up the matter. Maybe one already has a file on the wrongdoer and is looking for the final piece of evidence to bring a case. Another might wish to seize assets within its borders related to the matter. Another could have a political motivation to proceed against a certain industry that has not yet been targeted and that is known for wrongdoing. Many countries might still have no interest in getting involved whatsoever.
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About the Author
Matteson Ellis is founder and principal of Matteson Ellis Law PLLC, a law firm focusing on U.S. Foreign Corrupt Practices Act (FCPA) compliance and enforcement. He has extensive experience in a broad range of international anti-corruption areas. Before forming Matteson Ellis Law, he worked on FCPA and anti-corruption matters in the Washington, D.C., offices of Miller & Chevalier Chartered, Coudert Brothers LLP and The World Bank.
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Matteson Ellis serves as Special Counsel to the FCPA and International Anti-Corruption practice group of Miller & Chevalier Chartered in Washington, DC. He is also founder and principal of Matteson Ellis Law PLLC, a law firm focusing on FCPA compliance and enforcement. He has extensive experience in a broad range of international anti-corruption areas. Previously, he worked with the anti-corruption and anti-fraud investigations and sanctions proceedings unit at The World Bank. Mr. Ellis has helped build compliance programs associated with some of the largest FCPA settlements to date; performed internal investigations in more than 20 countries throughout the Americas, Asia, Europe and Africa considered “high corruption risk” by international monitoring organizations; investigated fraud and corruption and supported administrative sanctions and debarment proceedings for The World Bank and The Inter-American Development Bank; and is fluent in Spanish and Portuguese. Mr. Ellis focuses particularly on the Americas, having spent several years in the region working for a Fortune 50 multinational corporation and a government ethics watchdog group. He regularly speaks on corruption matters throughout the region and is editor of the FCPAméricas Blog. He has worked with every facet of FCPA enforcement and compliance, including legal analysis, internal investigations, third party due diligence, transactional due diligence, anti-corruption policy drafting, compliance training, compliance audits, corruption risk assessments, voluntary disclosures to the U.S. government and resolutions with the U.S. government. He has conducted anti-corruption enforcement and compliance work in the following sectors: agriculture, construction, defense, energy/oil and gas, engineering, financial services, medical devices, mining, pharmaceuticals, gaming, roads/infrastructure and technology. Mr. Ellis received his law degree, cum laude, from Georgetown University Law Center, his masters in foreign affairs from Georgetown’s School of Foreign Service, and his B.A. from Dartmouth College. He co-founded and serves as chairman of the board of The School for Ethics and Global Leadership in Washington, D.C. He is a member of the District of Columbia, Texas, New York, and New Jersey bar associations. Mr. Ellis is also author of The FCPA in Latin America: Common Corruption Risks and Effective Compliance Strategies for the Region.