The World Bank's Enforcement Arm And Its Impact On Multinational Companies

This post provides a concise overview of the measures taken by the World Bank against corruption and how these measures affect multinational corporations.

It is difficult to overlook the sweeping proliferation of anti-corruption laws and cross-border enforcement efforts among governments worldwide. This trend continues to manifest itself not only among governments, but also intergovernmental bodies which share a parallel interest in taking action against corrupt conduct. International organisations such as the World Bank and its sister multilateral development banks (MDBs) continue to be at the forefront of investigating and preventing corruption and fraud in the projects they finance.

Established in 1944 as an international financial institution to facilitate reconstruction and development post-World War II, the World Bank has undergone significant changes over the years as it has sought to ameliorate the effects of poverty in low income countries. As part of its mission, the World Bank exercises its fiduciary duties to ensure that the more than US$ 64 bn in loans, grants, investments and guarantees are adequately safeguarded from corruption, fraud and collusion through its sanctions regime. The World Bank effectuates its sanctions regime by invoking audit rights reflected in its contracts, which then generally lead to investigations. These investigations are often far-reaching, protracted exercises that subject companies to burdensome demands for documentation, data and witness interviews, and often result in referrals to national authorities, and debarment actions against companies and individuals.

The World Bank's anti-corruption arm, the lntegrity Vice Presidency (IND), has been a prominent figure in international anti-corruption efforts for 20 years. During that time, the INT has not only grown in size and strength, but also honed its ability to identify and develop cases of improper conduct. The INT's substantiation rates have increased steadily over the past 11 years, from 9 percent in 2006 to 65 percent in 2017. Between 2007 and 2015, the World Bank had debarred more than 700 companies and individuals, according to its most recent Suspension and Debarment Report (2016).While the number of cases opened each year continues to fluctuate, the INT increased the number of debarments by 34 percent from 2015 to 2016, and is on pace for another increase in 2017. Despite the rise in prominence of the World Bank's anti-corruption efforts...

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