FISCAL YEAR 2017 THE WORLD BANK GROUP Annual Update Integrity Vice Presidency As a public institution, the World Bank Group strives to ensure that development resources reach their intended beneficia- ries. The Integrity Vice Presidency (INT) is an independent unit within the World Bank Group that investigates and pursues sanctions related to allegations of fraud and corruption in Bank Group-financed activities. INT supports the main business units of the World Bank Group and exter- nal stakeholders, mitigating fraud and cor- ruption risks through sharing investigative findings, preventive advice, and promoting integrity compliance. We help client coun- tries through the joint investigations and forensic reviews we conduct, the investi- gative findings we refer to their authorities, and by sharing our insights with relevant ministries to help bolster their business systems and administration. INT supports The World Bank Group the WBG’s global leadership in ensuring Fiscal Year 2017 integrity and fighting corruption remains a development priority. We also work with the private sector and NGOs through our Integrity Compliance Office to institute in- tegrity compliance programs. Where the Annual Update World Bank’s own staff may be implicated in misconduct related to serious fraud and corruption, we similarly investigate and act upon those allegations, using the lessons Integrity Vice Presidency learned to help further strengthen internal controls. INT reports on its activities on a quarterly basis to the Audit Committee of the World Bank Group. www.worldbank.org/integrity This report covers the period from July 1, 2016 to June 30, 2017. [INT] Design, Erika and Don Wheeler From World Bank Group President Jim Yong Kim 5 Highlights from Fiscal Year 2017 6 Our Impact 8 Our Performance 22 Investigative Data 23 External Investigations 23 Sanctions 28 Compliance 29 Negotiated Resolution Agreements 30 Preventive Services 31 Internal Investigations 32 Budget and Staffing 36 Appendix 37 Entities Debarred in FY17 38 Other Sanctions Imposed in FY17 41 Cross-Debarments Honored by the World Bank Group in FY17 41 Vendors Debarred in FY17 43 FISCAL YEAR 2017 Referrals Made in FY17 44 Update on Referrals Made in FY16 46 Entities Released from World Bank Group Sanctions in FY17 48 THE WORLD BANK GROUP Table of Contents From World Bank Group President Jim Yong Kim The World Bank Group has long been a champion of the anti-corruption agenda. Corruption is tantamount to stealing from the poor, and anti-corruption efforts are critical for sustainable development. Fighting corruption is a global issue that resonates with citizens around the world. During my first months at the World Bank Group, I invited Bono – rock star, activist and co-founder of ONE – to join me for a discussion about ending poverty. Near the end of our conversation, he called corruption “the biggest killer of them all,” making headlines and reverberating with people from all walks of life. As our first Vice President of Integrity, Leonard McCarthy broadened the World Bank Group’s anti- corruption agenda. During his nine years of service in that role, the World Bank Group has continued to push the envelope, developing concrete mechanisms that have enhanced the integrity of our operations, and supporting our client countries and development partners in their own efforts to tackle corruption. We strengthened our sanctions system, making debarment with conditional release our default sanc- tion; established an Integrity Compliance Office; and signed a landmark cross-debarment agreement with four other development banks. These initiatives mean that debarred firms and individuals must develop or strengthen integrity compliance programs before they can work with the World Bank Group again, and we provide them with detailed guidance on how to do so. It also means that the impact of World Bank Group sanctions is more widespread, as other multilateral development banks recognize those actions. We also began using settlements to expeditiously deal with companies that admit wrongdoing, and to date have signed 96 Negotiated Resolution Agreements. While enforcement has been a key part of our efforts, we are focusing on prevention, knowing that it is FISCAL YEAR 2017 far more effective than dealing with issues after the fact. In 2013, we began tracking the amount of funds safeguarded from fraud and corruption as a result of due diligence and other early warning systems; as of this fiscal year, that amount is $769 million spread over 137 contracts. Information related to projects affected by ongoing or recently-completed investigations feeds into the World Bank Group’s operational risk management system. Jim Yong Kim We enhanced the capacity of our counterparts in client countries and other international institutions by launching the World Bank Group’s International Corruption Hunters Alliance (ICHA), which brings together THE WORLD BANK GROUP senior representatives from 130 countries. We formalized information sharing and joint activities with a range of similar counterparts through 55 cooperation agreements. And we helped national authorities and other anti-corruption bodies stay apprised of relevant fraud and corruption risks by making 456 referrals in 101 countries. The following report details the World Bank Group’s ongoing commitment to fighting fraud and corruption, which is an integral part of our efforts to end extreme poverty and boost shared prosperity. With Leonard’s departure over the summer, I am pleased that Pascale Dubois will serve as our next Vice President of Integ- rity. For more than a decade, Pascale has played a leading role in the World Bank’s anti-corruption efforts, serving most recently as Chief Suspension and Debarment Officer. I am confident that under Pascale’s leadership, the Integrity Vice Presidency will build on Leonard’s many achievements and continue to keep the World Bank Group at the forefront of global efforts to battle corruption. THE WORLD BANK GROUP 4 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 5 Hightlights from Fiscal Year 2017 highlight highlight highlight highlight highlight highlight The Scope of Our Protecting Funds Deterring Misconduct Upholding the World Bank Helping Rehabilitate Maintaining a Culture of Investigations through Due Diligence through Sanctions and Group’s Right to Protect Companies through Integrity Integrity at the and Early Temporary Settlements Projects from Compliance Programs World Bank Group Suspension Corruption and Fraud We reviewed and opened 179 Alert government staff As a result of thorough Sanctions are imposed after The Integrity Compliance Office Maintaining a culture of integrity preliminary inquiries related to implementing WBG-funded projects investigations, the World Bank adjudication in the WBG’s two- (ICO) lifted the debarment of 13 among its nearly 16,000 staff is fraud and corruption in World Bank as well as the WBG’s own due Group sanctioned 60 entities tier sanctions system. The World companies after they implemented essential to the World Bank Group’s Group-financed activities; 51 were diligence systems routinely detect and individuals in FY17. We also Bank Suspension and Debarment suitable compliance programs credibility. To support these efforts, selected for full investigations. wrongdoing prior to awarding honored 84 cross-debarments Officer (SDO) (or equivalent officer and fulfilled other conditions of in FY17 INT pursued 54 cases Investigators closed 52 a contract. These efforts led from other development banks. for IFC or MIGA) reviews all cases their sanction, reflecting a growing related to fraud and corruption investigations, of which 65% were to approximately $119 million INT entered into 26 Negotiated submitted by INT, determining emphasis on compliance among allegations implicating World Bank substantiated. Of the 63 external spread across 33 contracts being Resolution Agreements (NRAs) whether there is sufficient evidence World Bank Group business partners Group staff or vendors, 34 of which cases under investigation at the end safeguarded through a lack of with 29 Respondents. Of these, and, if so, recommending an and the private sector in general. were new cases opened during the of FY17, 31 involved allegations of award to a party having engaged 22 NRAs with 25 Respondents appropriate sanction. Companies To date, a total of 51 entities have year. INT substantiated misconduct corruption. The findings of the 52 in alleged sanctionable conduct, became effective in FY17 and the and individuals who want to contest similarly been reinstated. The ICO in 6 staff cases. The Human Final Investigation Reports issued cancelling of tendering processes remaining NRAs became effective the ruling against them by the SDO works to strengthen anti-corruption Resources Vice President affirmed in FY17 related to 68 IBRD projects or the identification of ineligible at the beginning of FY18. NRAs can may appeal to the WBG Sanctions initiatives in companies of all sizes INT’s findings in nine of ten cases, and IFC investments, and included expenses for which the Bank expedite the outcome of an ongoing Board, an independent body of including state-owned enterprises. and imposed disciplinary measures. the review of 166 contracts and sought reimbursement. In several investigation, prompt companies 7 members who are external to At the end of FY17, the ICO was INT also cleared two staff of alleged agreements, totaling approximately instances the timely investigation to self-report issues, and in some the WBG, which will decide de actively engaged with 50 companies misconduct based on its findings US$818 million. by INT also evidenced issues instances provide for restitution. novo on the merits of the case. debarred by the World Bank that there was no merit in the FISCAL YEAR 2017 warranting that the affected During FY17 INT worked on seven Two important Sanctions Board Group to assist them in developing allegations. contracts be canceled or fraudulent investigations that originated from decisions rendered in FY17 sent a compliance programs. expenditures reimbursed. disclosures made under NRAs. strong message about the WBG’s right to protect its projects from highlight In four instances, the WBG used fraud and corruption. In Decision Early Temporary Suspension (ETS) Nos. 92 and 93, two firms received to quickly safeguard funds at risk, 14-year debarments for multiple Enabling the World Bank preventing companies from being instances of misconduct including Group to Support Critical awarded new contracts while corruption, with their attempts Projects Exposed to investigations into their activities to impede INT’s investigations Higher Risks THE WORLD BANK GROUP were ongoing. Prior review considered as an aggravating factor contracts worth $15 million had in one case and as a separate Helping WBG staff who work on been awarded to three of these obstructive practice in the other. projects stay attuned to risks companies while investigations arising from investigations and were pending, highlighting the forensic audits is critical to value of the ETS mechanism for ensuring high-risk operations, reducing risk in other projects. In in particular, are able to deliver addition, negotiations with large results. In FY17, INT’s Preventive international companies led them Services Unit (PSU) identified 93 to voluntary refrain from bidding in projects in the pipeline, where 17 tenders totaling approximately ongoing or recently completed $21 million, further protecting investigations had evidenced contracts from malfeasance. misconduct in the same sector as the proposed operation. PSU alerted task teams so that the risks could be addressed through strengthened project design or supervision. The PSU also provided tailored training for 2,108 persons, covering general anti-corruption awareness, fraud and corruption risk assessments, and detecting indicators of corruption or fraud. THE WORLD BANK GROUP 6 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 7 Our Impact Proactive Investigations Help Address Integrity Issues That Might Otherwise Not Get Reported Most of our investigations arise because someone has noticed something they suspect—or know—doesn’t seem quite right in a project that has received funding from the WBG. Concerned citizens, WBG staff, contrac- tors or other bidders, government staff working on projects, and NGOs have all reported to INT reliable information about integrity issues affect- ing WBG-funded activities. Their information continues to be critical to strengthening the WBG’s risk management mechanisms. However, in fragile environments plagued by violence and conflict, choos- ing to report integrity concerns may be a life-threatening decision. In at least one country where INT has conducted investigations, recent legislation criminalizes communications between citizens and international organiza- tions. In this context, ensuring funds are used with the utmost responsi- bility and transparency becomes even more important, and yet uncovering issues remains challenging. INT has therefore developed more proactive means for ascertaining integ- rity risks in WBG-financed projects. Reviewing procurement documentation can uncover integrity red flags in the process. For example, in one instance this fiscal year, investigators selected a $20 million contract to review based on patterns they had noted in other cases. The review pointed to the use of undisclosed agents, which is often an indicator of a corrupt arrangement FISCAL YEAR 2017 and may be accompanied by a cover-up using fake documents (and contrac- tors). With added security concerns that hinder the ability to investigate in the field, targeted and proactive document review can do much to protect funds and projects. A proactive approach to identifying and addressing in- tegrity issues could be augmented by greater cooperation with national law enforcement and anti-corruption authorities; this is an area INT is expanding upon. (See page 16 for more on how integrated fiduciary reviews, carried out in partnership with the Governance Global Practice, have helped establish THE WORLD BANK GROUP early warning systems that facilitate projects meeting their objectives.) To respond quickly in an increasingly volatile world and to encour- age greater ownership among its clients, the WBG’s business model has necessarily shifted. These changes include a greater reliance on country (as opposed to WBG) systems and institutions; programmatic (as opposed to project-based) approaches that finance high volumes of low-value transac- tions across large geographical regions and remote locations; and procure- ment reforms that raise the WBG’s oversight ceilings. Proactive investiga- tions help ensure that, as the WBG business model shifts, its anti-corruption mechanisms adapt in tandem. ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 9 AUDIT COMMITTEE OVERSIGHT OF WORLD BANK GROUP POLICIES, PROCEDURES, AND PRACTICES Established in 1994, the Audit Committee is appointed by the WBG Boards of Executive Directors for the primary purpose of assisting the Boards in overseeing the WBG’s finances, accounting, risk management, internal controls and institu- tional integrity, including, among other things, the adequacy and effectiveness of financial, accounting and administrative policies and internal controls and the mechanisms to deter, prevent, and penalize fraud and corruption in WBG oper- Case Study: The Challenges of ations and corporate procurement; and institutional arrangements and processes for risk management across WBG Market Expansion and Supervising institutions. This fiscal year the Audit Committee focused its advice and oversight on our collaboration with Operational Satellite Offices staff and the identification and notification of systemic risks identified through investigations. In recent years, our investigations and audits have uncovered increasingly complex schemes for perpetrating corruption and fraud across regions and sectors. Technology Cooperation with and Support from National Law Enforcement and globalization have facilitated the complexity and pervasiveness Authorities Make the Difference of such schemes. As companies also continue to look for opportunities to expand their business in new markets, it behooves those working in de- The impact of WBG sanctions on companies has increased over time. velopment to stay alert to how fraud and corruption schemes are evolving. Thanks to the cross-debarment agreement among multilateral development There are excellent opportunities for growth and boosting shared pros- banks, companies may face additional loss of business opportunities if they perity when countries open to more investments. There are also some are declared ineligible by the WBG. Being sanctioned can hurt a company’s specific integrity issues that development partners should bear in mind; our reputation. In addition, the WBG’s cooperation with other multilateral in- investigators have observed two trends in their recent work. First, employ- stitutions and the referrals it makes to national law enforcement authori- ers in headquarters often prefer not to know too many details of how their ties have contributed to companies and individuals facing investigations by satellite offices operate, making it easier to blame a “rogue employee” in the both civil and criminal authorities and serious fines in their home countries. event something goes wrong. Second, corrupt relationships can form among While the growing impact of sanctions has deterred some companies foreign-based companies entering a new market and well-connected former from engaging in fraud or corruption in development projects, it has also government employees. FISCAL YEAR 2017 meant that other companies are employing more tactics to contest possi- In its Decision No. 92, the Sanctions Board debarred a consulting firm for ble sanctions. This past fiscal year, rulings in the WBG sanctions system 14 years and its Managing Director for three-and-a-half years. The Santions have further upheld the WBG’s efforts to protect its funds from corruption Board found that, in projects in Vietnam and Indonesia, the company paid and fraud. multiple bribes to government officials through its Regional Manager in In its Decision No. 93, the Sanctions Board debarred a supplier for exchange for winning and implementing its contracts. The Sanctions Board 14 years, rendering them ineligible to bid on WBG-financed projects during also found that the company engaged in multiple instances of fraud, that time. The debarment also includes, as a condition for release, the re- including the submission of fraudulent invoices. The firm and its Managing quirement for the company to adopt and implement an effective integrity Director claimed that they made the mistake of trusting the Regional Man- THE WORLD BANK GROUP compliance program in a manner satisfactory to the WBG. The lengthy ager and that she had acted on her own. The Sanctions Board noted that debarment reflects the company’s role in perpetrating five incidences of “an employer could be found liable for the acts of its employees under the corruption to secure WBG-funded contracts in Romania, and its obstruction doctrine of respondeat superior, considering in particular whether the of the WBG’s subsequent investigation and audit. The affected health proj- employees acted within the course and scope of their employment, and were ect sought to increase access and quality of services such as maternity and motivated, at least in part, by the intent of serving their employer.” newborn care and rural primary health care. The World Bank Group has referred the findings of the investigation to It is worth noting that INT has been successful in conducting investiga- relevant national authorities and development institutions for their review. tions parallel to law enforcement and other authorities. In a number of investigations, including this one, these efforts have yielded documentary evidence of corruption and fraud that WBG investigators could not have oth- erwise obtained. However, in most cases the cooperating authorities were from the countries where the companies under investigation were incorpo- rated. Cooperation with local authorities in countries where projects are being implemented remains more challenging. THE WORLD BANK GROUP 10 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 11 Sanctions Can Help Beyond Sanctions: Additional Solutions for Tackling Corruption and Break Up Cartels and Fraud in Projects Promote Competition Recently, INT has noticed an uptick in corruption allegations involving proj- Corruption is contagious; once it takes ect officials in certain fragile and conflict-affected countries. The increase root, cartels can gain a foothold, stifling fair in allegations is likely the result of an array of factors, including heightened and open competition. Over a four-year period, awareness among WBG partners about how to report issues. The potentially one of our investigative teams completed more than affected projects are at the very heart of the WBG’s mission: ensuring the a dozen cases involving WBG-financed health projects most vulnerable people have the support and opportunities they need. By that had striking similarities. The collective findings of these 2030, the share of global poor living in fragile and conflict-affected situa- investigations pointed to a pattern of corruption, collusion and tions is projected to reach 46%, up from 17% today. fraud by foreign suppliers or local agents and government officials. As mentioned earlier, imposing sanctions such as debarment can deter Across the projects, the misconduct showed a similar pattern. other companies and individuals from engaging in corruption or fraud; they Portions of unusually high commissions that foreign suppliers or manufac- also demonstrate that the WBG will hold accountable those who perpetrate turers had paid to local agents were used, with or without the knowledge of such misconduct. In cases involving project officials, however, the WBG usu- the supplier or manufacturer, as bribes. Most of the local agents hired by ally does not have jurisdiction to seek sanctions unless the official’s contract foreign companies were politically connected and, in one case, had direct is financed by the WBG. INT, and the WBG as a whole, have therefore worked ties to a high-level government official. In an effort to hide the miscon- to broaden the scope of interventions that can detect and mitigate integrity duct, bidders did not disclose in their bids and contracts that they planned risks, with the ultimate goal of helping projects deliver results. to use agents, or they falsely disclosed only a lower commission than the One successful approach has been to form dedicated teams of financial actual agreed-upon amount. In addition, foreign bidders worked with their risk specialists to conduct an in-depth forensic review of projects that pose local agents and other third parties to fraudulently exaggerate their financial the greatest risk of corruption. These teams pull together WBG experts in fo- and technical capacities to meet tender requirements. Tender specifications rensic auditing, investigations, financial management, and procurement who FISCAL YEAR 2017 and bid evaluation processes were also manipulated to secure the contract can pinpoint weaknesses in project design, possible ineligible expenditures award for the foreign supplier. and misprocurement, and indicators of fraud and corruption. The results of Over time, fair competition was eliminated, giving way to tender monop- the review also provide the WBG a comprehensive picture of risks, and are olies that favored bribe-paying bidders. Bidders who were equally or more useful for developing corporate-wide processes for tightening controls and qualified, but who refused to pay either bribes or inflated commissions to mitigating risks in similar projects. agents, stopped participating in tenders that they knew were decided in INT will investigate the indicators of fraud or corruption identified advance. In these situations, sanctions such as those imposed by the WBG during the review to help ensure that those within INT’s jurisdiction can help break up cartel behavior and reintroduce fair competition. In one are held accountable through sanctions and that those outside THE WORLD BANK GROUP notable instance, the WBG’s debarment of a firm helped break up a monop- of INT’s jurisdiction can be referred to national authorities for oly that had been in place for more than a decade. investigation and possible prosecution. Liaising with nation- al law enforcement authorities during an investigation is critical to addressing the demand-side of corruption. However, across regions, uptake of referrals remains mixed. INT will therefore continue to work to sup- port and encourage action by relevant author- ities. When the WBG debars companies for corruption, and countries investigate and prosecute implicated government of- ficials, this sends the strongest message that corruption will not be tolerated. THE WORLD BANK GROUP 12 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 13 The WBG has been able to adapt this approach to address a range of Helping Community- nuanced issues and risks. Given its fiduciary responsibility to donors, for Driven Development example, INT quickly mobilized a team to assess the need for an in-depth Projects Deliver forensic review of a project financed by a multi-donor trust fund in light of widespread allegations of misconduct on the part of project staff and grant Community-driven development proj- recipients. The allegations included travel fraud, forged accounting and ects (CDD) are designed to provide poor financial records, and the steering of grants by project staff in exchange men and women access to information, appro- for kickbacks. The ensuing review identified close to US$2 million in ineli- priate capacity, clear and transparent rules, and gible expenditures; approximately US$250,000 in misprocurement; signifi- financial support so that they can identify their commu- cant control weaknesses; and indicators of fraud, corruption, and collusion. nity’s priorities. Citizens address local problems by work- More importantly, the review generated recommendations for tightening ing in partnership with local governments and other supportive controls and mitigating risk in similarly designed ongoing projects. institutions to build small-scale infrastructure and deliver basic ser- vices. This type of project design necessitates having small contracts A Changing Legal Context for Negotiating Settlements spread out across many entities, making financial supervision harder. In relation to one CDD project, INT and the task team began receiving al- The WBG negotiated its first settlement in 2009 with Siemens AG, paving legations that project staff in a number of different project implementation the way for 96 Negotiated Resolution Agreements (NRAs) since then. NRAs units were embezzling project funds and steering contracts to companies can expedite the outcome of an ongoing investigation, prompt companies owned by project staff and to favored bidders in exchange for kickbacks. to self-report issues, and sometimes also provide a form of restitution. For A forensic review was undertaken by the WBG task team with outside con- example, in its settlement with the WBG, Siemens committed $100 million sultants and the technical support of INT. The initial review identified mil- to support anti-corruption efforts around the world. Because companies lions of dollars in ineligible and potentially ineligible expenditures, as well that sign NRAs also agree to fully cooperate with the WBG, they often serve as substantial indicators of fraud, corruption and collusion. as a source of invaluable information about what is happening in the mar- INT conducted a follow-up investigation which, in a large sample size FISCAL YEAR 2017 kets where they operate. of contracts, identified significant evidence and/or indicators of fraud in While NRAs have provided the WBG another mechanism for addressing connection with contract award, collusion between companies and between corruption and fraud affecting its projects, leveraging NRAs has proven project officials and companies, the steering of contracts to companies in more challenging in countries where the notion of negotiated resolution which project officials had a financial interest, and the steering of contracts is unfamiliar or was incorporated recently into the legal tradition. On a to companies in exchange for kickbacks. In light of the relatively small value positive note, any action that the WBG is able to take in responding to al- of the contracts at issue and the widespread nature of the problem, INT’s legations, undertaking investigations, and ultimately imposing sanctions, objective was not to seek sanctions against a large number of entities or helps demonstrate accountability to citizens. The changing legal context individuals. Instead, the goal was to identify and hold accountable the most THE WORLD BANK GROUP for negotiations could have a further positive impact on future settlement egregious actors; identify the schemes used to defraud the project; and pro- agreements. vide the most pertinent information to task teams to mitigate future risks in follow-on projects of a similar nature. Creating the Right Environment for Future Projects INT’s cooperation and coordination with WBG task teams has not only helped keep projects on track, but also led to the implementation of integ- rity risk mitigation measures that will improve the overall environment for future projects. Closely reviewing procurement, financial management and technical aspects of Bid Evaluation Reports led one team to detect fraud and possible collusion during the first round of bidding for US$6 million worth of tenders that were part of a larger US$28 million infrastructure project. Alerting INT to these issues led to an investigation which also uncovered a corruption scheme involving the mayor. Through targeted procurement trainings with government staff and local construction firms, the task team was able to attract more qualified bidders in subsequent rounds of bidding. THE WORLD BANK GROUP 14 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 15 MONEY HIDDEN IN PLAIN SIGHT Although one recent World Bank Group investigation undertaken in parallel with na- tional law enforcement authorities hinged on the discovery of a car trunk filled with Forensic Audits Link Investigative cash, most cases involve more complicated methods of siphoning money from projects Findings and Risk Management and moving it among corrupt parties. Forensic audits and investigations undertak- en this fiscal year routinely encountered strong indicators of corruption in commonly used contracting practices. While not every instance of contracts which include these Unlike traditional audits, forensic audits are investigative practices is a red flag, knowing how they can be manipulated is an important step to in nature. Forensic audits identify, quantify and evidence sus- mitigating future risks. pected fraudulent or corrupt transactions, and can also identify ineligible expenditures. In order to maximize the impact of investiga- tions into the use of WBG funds, INT leverages its forensic services unit to exercise the WBG’s audit and inspection rights. In fiscal 2017, the foren- Back-to-back contracts sic services unit conducted a total of 13 audits involving 19 entities and 31 A well-established contractor submits a bid with the hidden intention of sub-contract- contracts valued at more than $518 million. ing the entire contract to another contractor who would not have otherwise qualified The value of forensic audits goes beyond gathering evidence for inves- to bid. The well-established contractor earns a profit and the unqualified contractor tigations. They are also a tool that can be used to strengthen the WBG’s gains business. This sub-contracting arrangement often results in unnecessary price fiduciary monitoring, oversight, and risk identification, particularly in riskier increases, delays, and sub-standard work. Other non-financial impacts of back-to- projects, and especially as they uncover many of the same issues that arise back contracts have also included sub-contractors that do not employ proper health in INT’s investigations. When these audits are done early and throughout and safety practices for their workers, or other sub-standard practices in order to cut the project cycle, they are a cost-effective method for remediating control costs. gaps and can also have a deterrent effect. FISCAL YEAR 2017 In one such review completed this fiscal year, a team leader working on a global environmental project contacted INT’s preventive services unit after a supervisory visit raised concerns about the implementing agent. Although Agents or consultants the concerns raised did not amount to specific fraud or corruption allega- When an agent or consultant is involved in a corrupt arrangement, they often receive tions, they pointed to potential fiduciary issues. INT assisted the team by ap- payments that are done on more favorable terms compared to other vendors, receive plying forensic methodology to a targeted review looking into two-and-a-half unusually high overall commission rates, and no evidence exists of the value added years of project expenditures (US$39 million), financial management and or services they provided. Often times, payments to agents are concealed through procurement practices, and the fraud and corruption risk and control frame- fraudulent invoices. THE WORLD BANK GROUP work. The WBG was able to identify areas of inconsistencies between certain legal agreements and accounting practices employed by the implementing agent, identify ineligible expenditures, quantify the impact on donors and recommend a course of action for remediation. These actions helped the Advance payments task team draft an action plan to address the issues identified in advance of The proceeds of advance payments which are intended to pay, for example, for equip- the project receiving $15 million in additional financing. ment needed to start a large infrastructure project, can instead be misused as bribes, or for other expenditures that do not directly benefit the project. This is often times accompanied by the submission of fraudulent documentation as to how the payment was used to the project implementation unit (PIU) and the WBG to conceal the true use of the advance. Forensic audits of company records not only have identified schemes in the context of the WBG-funded contract as discussed above, but also reflect other symptoms of a more systemic culture lacking integrity, such as direct payments to PIU officials (or their families and friends), the purchase of gifts or travel, and facilitation payments for the clearance of goods through customs. THE WORLD BANK GROUP 16 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 17 Could Paying More Attention to Fraudulent Documents be the Integrity Risk Management is a Business Enabler Key to Stemming Illicit Financial Flows? Just-in-time advice helps projects deliver results on time The proceeds of corruption most often enter the tangled web of illicit Every year, the INT’s preventive services unit (PSU) provides integrity advice financial flows where it becomes nearly impossible to trace, recover and to nearly a hundred task teams. The support is tailored to the specific chal- repatriate them. The scope of the problem is mind boggling. In one attempt lenges. Over the last year, the work has included: developing options for to quantify impacts, Global Financial Integrity (GFI) analyzed data filed by safeguarding a project from a senior official with fiduciary responsibility for governments with the IMF and estimated that nearly a trillion dollars a year handling WBG funds and who engaged in misconduct; ensuring several irri- in illicit financial flows moves from poorer countries into richer ones. gation systems are brought up to specifications before the last payment to Despite the enormity and complexity of stemming illicit financial flows, a the contractors; developing a checklist to detect and prevent pervasive fraud large part of the solution could lie in tackling one simpler component of the and substandard quality in a rural road project, conveying the Bank’s zero problem. Raymond Baker, President of GFI, has argued that manipulating tolerance towards corruption to officials working in a PIU with significant the pricings of imports and exports through mis-invoicing is probably the corruption risks; instituting controls over soft expenditures such as study source of the largest share of illicit financial flows. The fraudulent activity tours; and assisting management and the project task team in distilling the that facilitates trade mis-invoicing is similar to the fraudulent activity that lessons learned and charting the course forward in a contract with millions WBG investigations into corruption routinely encounter. of dollars in suspected bribes. Drawing upon these commonalities to assess what deterrent and enforce- ment mechanisms could be most effective, the WBG and GFI hosted a panel Channeling information from investigations to project operations discussion in November 2016. Executives from the IMF, U.S. Government, prevents future problems Global Witness, the Carnegie Endowment for International Peace, and Trans- parency International brought a well-rounded perspective to the discussion. The impact of fraud and corruption on a project can be significant Frank Vogl, co-founder of Transparency International and the Partnership as prices become inflated to cover bribe payments; the work is often for Transparency Fund, further underscored the scope of the problem, not- substandard reducing the economic life span of the asset, and delays FISCAL YEAR 2017 ing “If we don’t deal with illicit financial flows, we will see more because pile up. The Bank’s investigations provide a unique opportunity to ad- illicit finance is the lifeblood of terrorist networks.” He also touched upon dress vulnerabilities. In FY17, the PSU made recommendations in 20 the limits of current methods, such as fines, that are meant to deter illicit Final Investigation Reports on steps management can take to reduce financial flows. “Fines are the cost of doing business. Banks need to under- integrity risks and remediate the substantiated misconduct. The recom- stand they could risk losing their licenses.” mendations aimed to encourage the client to take appropriate administra- The WBG’s Governance Global Practice, led by Deborah Wetzel, continues tive action in light of the misconduct, strengthen preventive measures, and to push for greater transparency as a global public good. Wetzel stated, enhance detection controls. “The use of information and technology is changing the game for us, and THE WORLD BANK GROUP our ability to look at information, whether it’s tax evasion, whether it’s trans- fer pricing, whether it’s issues related to monitoring extractive industries. There has been a big push for openness and transparency that has helped us advance in a more systemic way.” Sarah Chayes, author and senior fellow in Carnegie’s Democracy and Rule of Law program, urged the audience not to see technology as a panacea, saying, “A ‘paperless’ government doesn’t mean we can avoid having to take difficult political decisions.” She pointed to a cultural shift that has complicated the fight against corruption. “We have begun to exalt the amassing of money above just about every other social or other cultural ideal.” The event was part of INT and the WBG’s ongoing efforts to convene import- ant anti-corruption stakeholders to advance thought leadership on emerging key issues shaping the field. To learn more, see http://www.gfintegrity.org/ event/amplifying-integrity-in-the-fight-against-systemic-illegality/. THE WORLD BANK GROUP 18 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 19 The Positive Ripple Effect of Integrity Compliance To lend more momentum to these efforts, the ICO is piloting a mentorship program that pairs sanctioned entities with entities that have already imple- mented compliance programs to the satisfaction of the ICO and therefore INT’s Integrity Compliance Office (ICO) is an important partner for entities have met their compliance conditions for release from WBG sanction. Sever- who have been sanctioned by the WBG but are committed to rehabilitating al companies have already been paired and early feedback is promising, in- their business practices and putting in place effective integrity compliance dicating that both mentor and mentee companies have found the experience programs. Moreover, creating a pool of companies that operate with high mutually beneficial. In addition, both mentor and mentee companies believe integrity standards provides the WBG with partners who are committed to participating in such a program may help to improve their competitive ad- development done right. This fiscal year, the ICO worked closely with 50 vantage as a business partner. Larger companies have also noted the initia- sanctioned entities, thirteen of whom were removed from the WBG’s list of tive helps cultivate better downstream business partners; ultimately having ineligible entities. In total, 51 entities sanctioned with compliance condi- a pre-vetted pool of business partners can help reduce the time and money tions have been reinstated since the ICO was established in 2010. spent undertaking their own due diligence and monitoring efforts. Promoting compliance in companies of all sizes Long-term payoff—companies reap the benefits of their compliance programs Given the WBG’s global presence across a range of regions and sectors, the ICO aims to engage with companies of all sizes and to help them devel- The ICO also is pleased to report that it has maintained relationships with op integrity compliance programs that best fit their particular risks and several entities that have been released from WBG sanction following satis- business profiles. For example, a small local company may choose to have faction of their compliance conditions. It is through precisely these types physical drop boxes to receive complaints rather than a telephone hotline, of ongoing relationships and continuing dialogues that the ICO hopes to which may not allow sufficient anonymity given the limited number of spread the word about the evident benefits of doing business with integrity. employees, or an electronic reporting system, which may be too complex One of the ICO’s most positive interactions in that respect involves a for- or costly to maintain. The ICO is also sensitive to how cultural context can merly sanctioned entity that informed the ICO of its post-sanction selection shape ideas about corporate compliance and ethics. For example, rather FISCAL YEAR 2017 as a business partner for a major multinational corporation. In performing than prohibiting all gifts in a region where the non-acknowledgment of its due diligence review of prospective partners, the multinational was im- certain holidays may be considered culturally inappropriate, some compa- pressed by the integrity compliance program that the formerly sanctioned nies may elect more robust internal controls around gift-giving practices. entity had put in place. To that end, replacing individual cash gifts (which previously may have been the norm) with food baskets to be shared among an entire organi- zation, together with internal approval and recording requirements, may serve as an effective, realistic compromise. THE WORLD BANK GROUP Peer-to-peer learning—companies mentor one another on compliance programs Companies are also taking the initiative to support collective action and promote greater buy-in across the private sector. Some sanctioned entities have reported to the ICO that their existing business partners have served as useful resources. In that regard, smaller companies have successful- ly reached out to their upstream, larger multinational business partners for guidance on integrity compliance programs. Similarly, several enti- ties who have satisfied the conditions for their release from WBG sanction have reached out to downstream suppliers and industry peers to assist them in enhancing their own internal controls. THE WORLD BANK GROUP 20 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 21 Our Performance Investigative Data INT groups its investigations into two categories, external and internal in- vestigations. External investigations look into allegations of five types of misconduct: fraud, corruption, 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/sanc- tions.) Evidence of misconduct by government officials is generally referred to national authorities for action. Internal investigations assess allegations of significant fraud and corrup- tion involving Bank Group staff occurring in Bank Group-financed projects or supported activities (i.e., operational fraud and corruption) or affecting the Bank Group administrative budgets (i.e., corporate fraud and corrup- tion). 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 debarment proceedings and in some cases operational cross-debarments. (See www.go.worldbank.org/ C3YIALVBF0.) External Investigations Complaint intake FISCAL YEAR 2017 INT receives complaints from all over the world and from many sources. Of the preliminary inquiries opened in FY17, 34% of complaints received came from World Bank Group staff1 and 66% of complaints were from non-Bank sources, including contractors or other bidders, concerned citi- zens, government officials, employees of NGOs, and other multilateral de- velopment banks. INT routinely conducts outreach to all groups in an effort to increase overall awareness and reporting of complaints. THE WORLD BANK GROUP INT screens the complaints it receives to ensure they pertain to one or more sanctionable practices 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 investigation, INT analyzes the seriousness of the allegations, the credibility of the complaint, and the presence of corrob- orating evidence, among other factors in its case selection guidelines. INT also considers aspects such as the amount of project and contract funds involved, the quality of the information or evidence, the potential develop- ment 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 activities is not converted to a full investigation, INT works with operational staff or other interlocutors to address the issues raised. In FY17, INT reviewed and opened 179 preliminary inquiries, with 51 matters selected for full investigation. These investigations covered 55 projects in 33 countries. 1 The 34% of Bank staff include staff who have, of their own initiative, reported an issue, as well as staff who have forwarded complaints they receive from other parties. ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 23 Investigation of cases New Cases Opened by Sector, FY13-FY14* Through investigations, INT ascertains whether firms and/or individuals Sector FY13 FY14 have engaged in one of the Bank Group’s five sanctionable practices. If INT Agricultural and Rural 12 5 finds sufficient evidence to conclude that it is more likely than not that the Economic Policy 0 0 alleged conduct, or other sanctionable conduct, occurred, then the matter is deemed substantiated. The allegation is considered unsubstantiated if there Education 3 2 was insufficient evidence to prove or disprove it, and unfounded if INT con- Energy & Mining 7 4 cludes that the alleged sanctionable conduct did not occur. INT continues Environment 0 0 to refine its selection process for matters going to full investigation and Financial and Private Sector Development 1 3 has devoted additional resources to more thorough preliminary screening of allegations before commencing a full investigation. INT’s substantiation Global Information/Communications Technology 0 0 rate in FY17 was 65%. Health, Nutrition and Population 17 9 No Sector 5 1 New Cases Opened by Region, FY17 Public Sector Governance 9 4 Europe & Central Asia 8 East Asia Pacific 16 Social Development 0 0 Social Protection 0 0 Transport 20 7 Urban Development 0 0 Water 15 5 Total 89 40 FISCAL YEAR 2017 IFC 1 New Cases Opened by Global Practice, FY15-17* Sector FY15 FY16 FY17 Agriculture 6 4 2 Education 4 2 7 8 8 THE WORLD BANK GROUP Africa South Asia Energy & Extractives 14 7 6 Environment & Natural Resources 5 3 0 Finance & Markets 1 1 0 Latin America & Caribbean 7 Middle East & North Africa 3 Governance 5 2 0 Health, Nutrition & Population 15 10 3 New Cases Opened by Region, FY13-FY17 Macroeconomics & Fiscal Management 0 0 1 No Sector (IFC) 5 1 1 Region FY13 FY14 FY15 FY16 FY17 Poverty 1 0 0 Africa 24 8 25 14 8 Social Protection & Labor 3 0 1 East Asia Pacific 15 13 20 10 16 Europe & Central Asia 14 9 11 15 8 Social, Urban, Rural & Resilience 11 6 7 Latin America & Caribbean 10 3 8 7 7 Trade & Competitiveness 2 2 0 Middle East & North Africa 5 1 4 6 3 Transport & ICT 15 16 12 South Asia 16 5 26 11 8 Water 12 10 11 IFC 5 1 5 1 1 Total 99 64 51 Grand Total 89 40 99 64 51 *As part of the new World Bank Group Strategy introduced in FY14, thematic Global Practices (GPs) were instituted, replacing sectors, to better serve clients and manage multidimensional problems by promoting the flow of knowledge across sectors, regions and the World Bank Group. THE WORLD BANK GROUP 24 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 25 Active Cases by Allegation, FY13-17 External Investigations Performance Indicators, FY13-FY17 Of the 63 cases under investigation at the end of FY17, 31 involved allegations of corruption. FY13 FY14 FY15 FY16 FY17 Preliminary Inquiries Opened 449 355 323 279 179 Type of Allegation FY13 FY14 FY15 FY16 FY17* Investigations Opened 89 40 99 64 51 Coercion 0 1 1 0 0 FIRs Issued 52 43 37 35 52* Collusion 10 7 10 8 22 Investigations Closed 86 55 81 87 52 Corruption 41 41 65 48 31 Cases Substantiated 58 34 60 54 34 Fraud 35 22 13 9 47 Cases Unsubstantiated 28 19 19 32 17 *In FY17, INT changed the manner in which it presents its active cases by allegation. The FY17 data reflect the fact that each active case can have multiple types of allegation. In prior fiscal years, all Cases Unfounded 0 2 2 1 1 active cases involving corruption allegations were categorized as corruption, with an explanatory note that some of these cases also involved allegations of collusion or fraud. Referrals to countries/MDBs 42 49 50 62 47 *The 52 FIRs issued in FY17 reported findings with respect to 55 closed investigations. Final Investigation Reports When INT substantiates a case, it produces a Final Investigation Report (FIR) which is provided to the President. In limited cases, INT will produce an FIR even if there is not sufficient evidence to substantiate a complaint; for example, if INT believes that the investigation unearthed important lessons that should be shared with colleagues in the Bank Group and with client governments of the World Bank Group. Since FY10, INT has been tracking case turnaround time, striving to ensure FISCAL YEAR 2017 that cases are closed within 12 to 18 months, depending on the complexity of cases, as was recommended by the Volcker Panel in 2007. INT considers a case closed once the draft FIR has been submitted to the relevant operation- al staff in the World Bank Group for comments. Of the 52 investigations closed in FY17, 46% were closed within 12 months and 65% were closed in less than 18 months. The average duration of all investigations completed in FY17 was 15 months. By the end of FY17, INT had 20 investigations open longer than 18 months. THE WORLD BANK GROUP 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 member country may have been violated (see page 44 for a list of referrals made to national authorities in FY17), 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. THE WORLD BANK GROUP 26 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 27 Sanctions Compliance When INT believes that it has sufficient evidence to substantiate that a To further encourage corporate governance and elevate integrity standards sanctionable practice occurred, it commences the sanctions process by pre- of private sector entities active in development, the World Bank Group’s paring a Statement of Accusations and Evidence (SAE). For matters involving default sanction became debarment with conditional release as of Sep- IBRD/IDA operations, the SAE is presented to the IBRD/IDA Suspension and tember 2010. Under such sanction, debarred entities must meet specified Debarment Officer (SDO) for review and issuance to the affected parties. conditions, such as the establishment and implementation of an effective in- (For matters involving IFC, MIGA or IBRD/IDA Guarantees & Carbon Finance, tegrity compliance program, before they may be released from sanction and the SAE is presented to the Evaluation and Suspension Officer (EO) for the therefore again become eligible to participate in World Bank Group-funded relevant institution.) projects. While there is no guarantee that entities that have met such con- The decision as to whether there is sufficient evidence to sanction a firm ditions and have been released from sanction following a determination by or individual and, if so, what sanction should be imposed is made through a the World Bank Group’s Integrity Compliance Office (ICO) are risk-free, the two-tier adjudicative process involving the SDO and the World Bank Group policies and procedures they put in place and their top management’s stated Sanctions Board. These adjudicators are independent of INT. At the first commitment to promote integrity all yield a positive influence. Such actions level of review, the SDO reviews the case brought by INT to determine wheth- not only improve internal controls and risk assessment processes, but also er INT has submitted sufficient evidence to support its findings and, if so, send a clear message to external partners. The ICO also discusses compli- the SDO recommends an appropriate sanction via a Notice of Sanctions ance conditions with entities that are in Negotiated Resolution Agreement Proceedings (NoSP) and temporarily suspends the respondent. Under the (NRA) negotiations with the World Bank Group, thereby helping to inform sanctions procedures, when a respondent fails to contest the accusations compliance conditions up-front in the process. The World Bank Group In- against it within 90 days, the sanction recommended by the SDO becomes tegrity Compliance Guidelines (pdf) can be found at www.worldbank.org/ final. If the respondent contests the recommended sanction, the Sanctions integrity. Board will consider the case, which may include a hearing. (See page 38 for In FY17 the ICO contacted and advised 47 sanctioned parties of the gen- the list of entities debarred in FY17.) eral requirements and procedures for meeting their respective conditions FISCAL YEAR 2017 for release from sanction. At the end of FY17 the ICO was actively engaged with 50 entities. Such engagement typically involves the ICO conducting a Sanctions System and Results, FY13-FY17 baseline evaluation of corporate compliance program-related materials pre- sented by the party, as well as the party’s implementation of such materials, FY13 FY14 FY15 FY16 FY17 with the ICO offering recommendations for revision and/or enhancement as Sanctions Cases Submitted appropriate. Regarding such engagements, during FY17 the ICO also moni- 33 45 35 46 25 tored the corporate compliance programs of numerous sanctioned entities, Sanctions Cases (NoSPs or NoTSs*) Issued including through the review of matters such as periodic status reports, THE WORLD BANK GROUP program revisions, implementation activities, and remedial action taken in 25 46 39 40 19 response to the sanctioned misconduct (and any other misconduct subse- Negotiated Resolution Agreements Submitted quently detected). 8 6 11 18 26^ In FY17, the ICO determined that in 13 cases the sanctioned parties had Firms and Individuals Temporarily Suspended satisfied their respective compliance and/or other conditions for release as 41 70 54 48 22 set out in the relevant Sanctions Board decision, SDO determination, or NRA. Firms and Individuals Sanctioned During the period FY12-16, the ICO released 38 entities following the sat- 47 71 73 59 60 isfaction of their respective conditions for such release, bringing the total * NoTS: Notices of Temporary Suspension. number of such released entities to 51 as at the end of FY17. In addition, ^ In FY17 INT entered into 26 NRAs with 29 Respondents. Of these, 22 NRAs with 25 Respondents the period of sanction for one entity that was debarred with the possibility became effective in FY17 and the remaining four NRAs with four Respondents became effective at the beginning of FY18. of early release expired by its terms in FY17. In several cases, the ICO has maintained a positive ongoing relationship with released parties. THE WORLD BANK GROUP 28 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 29 Compliance data, FY17 Preventive Services The Preventive Services Unit (PSU), working in partnership with operation- Entities sanctioned with conditional release (as at end of FY 17): 2892 al teams and client countries, turns the unique knowledge gained from INT Entities actively engaged with the Integrity Compliance Office (as at end of FY 17): 50 investigations into practical measures that can deter or stop corruption in WBG-financed projects. The PSU’s work is concentrated in the following areas: Notifications to newly debarred entities (total FY17): 47 Entities whose sanctions were continued (conditions for release not met) (total FY17): 51 1. Assistance in identifying and disclosing integrity risks on pipeline proj- ects. In FY17, the PSU identified 93 projects in the pipeline, where ongoing Total entities whose sanctions were continued to date: 157 or recently completed investigations had evidenced misconduct in the same Entities released from sanction (total FY17): 13 sector as the proposed operation (so-called Volcker Trigger projects). PSU distilled the specific risks; alerted task teams so that the risks could be ad- Total entities released from sanction to date: 51 dressed through strengthened project design or supervision; and advised Entities whose sanctions of debarment with conditional release were converted to a sanction of conditional the teams on appropriate disclosure language to the World Bank’s Board of non-debarment (Total FY17): 0 Executive Directors. Entities whose sanction of debarment with the possibility of early release expired (Total FY17): 1 2. Support to project task teams managing projects with integrity issues. 2 In instances where different entities within a corporate family have been separately sanctioned, the ICO treats such entities as a single Through 24 advisory engagements in support of high-integrity-risk opera- entity for portfolio counting purposes, including with respect to engagements, notifications, releases (except where different entities within a corporate family are released at different times per their respective sanctions), etc. tions and regarding 36 projects supported by PSU where integrity risks have been flagged to Operations, the PSU alerted task teams to actual or suspect- ed fraud and corruption in their projects. In several cases the PSU conduct- Negotiated Resolution Agreements ed further assessments of the risks based on the project design, related complaints received and, in a few cases, through open source due diligence. All firms or individuals under investigation are given the option of settling a In many cases, the PSU supported the task teams in developing practical risk FISCAL YEAR 2017 matter through a Negotiated Resolution Agreement (NRA) in lieu of litigating mitigation measures, taking into account operational and INT experiences. through the sanctions process. Resolving a case through an NRA can save considerable resources, while also providing certainty of result for both the 3. Recommended preventive and remedial actions following INT investi- Bank and the party under investigation. At the same time, settlements must gations. During the fiscal year, in 20 FIRs the PSU made recommendations be handled with discretion and transparency. INT is responsible for the to Operations with the purpose of preventing the substantiated fraud and drafting, negotiation and execution of NRAs. The agreements are, however, corruption schemes from reoccurring or to prompt remedial action. Increas- subject to review by the World Bank’s General Counsel. Moreover, the SDO ingly, the recommendations are tabled in agreement with Operations or already taken due to the early collaboration between the PSU and the project THE WORLD BANK GROUP or relevant EO is charged with reviewing settlement agreements to verify that (i) the respondent entered into the agreement freely and fully informed task teams. of its terms, and free of duress, and (ii) the terms of the agreement are broadly consistent with the Sanctioning Guidelines. In FY17 INT entered 4. Integrity Risk Reviews for Global Practice Groups and Regions. The PSU into 26 NRAs with 29 Respondents. Of these, 22 NRAs with 25 Respon- undertakes Integrity Risk Reviews for Global Practices Groups (GPs) and Re- dents became effective in FY17 and the remaining four NRAs with four gions at their request, e.g., to inform newly appointed Directors about integ- Respondents became effective at the beginning of FY18. rity risks in their portfolio, support the development of the Bank’s country strategies, or as an input into the country dialogue. 5. Training of WBG staff, clients, and private companies. The PSU provided tailored training for 2,108 persons, covering general anti-corruption aware- ness, fraud and corruption risk assessments, and detecting indicators of corruption or fraud. The PSU provides regular training for new WBG staff as well as Advisors and Senior Advisors to the Board of Executive Direc- tors. The recent year’s focus on red flags is beginning to bear fruit in other ways. In one case, training and the use of INT’s due diligence tool helped a task team prevent the award of two contracts to a cartel. The contracts were valued at US$19 million. Due to the early intervention, an additional six contracts valued at US$13 million were safeguarded from misconduct. THE WORLD BANK GROUP 30 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 31 Preventive Services-related results FY17 Outcomes “Volcker Trigger” projects incorporating INT risk information: 93 projects During FY17, the internal investigations unit pursued 54 cases, of which 67 percent related to Bank Group operations and 33 percent involved corporate Support to, and advisory engagements with, operational task teams with projects with integrity issues: 60 instances matters. Recommendations and/or support with remedial action to risks identified in FIRs: 20 PSU recommendations Staff Cases Integrity Risk Reviews for Global Practices and Regions: 3 Persons trained in integrity risk management: 2,108 WBG and client country staff INT pursued nine active Staff Rule 8.01 investigations involving Bank Group staff in FY17 and substantiated misconduct allegations in five of these cas- es; the remaining four 8.01 investigations are ongoing. Two staff members were cleared of alleged misconduct in two unrelated cases based on findings Internal Investigations that there was no merit to the allegations. Further, INT closed nine staff To maintain its credibility in the global anti-corruption arena, the integrity cases as unsubstantiated due to insufficient evidence to substantiate or of the World Bank Group’s own operations is of the utmost importance. refute the misconduct as alleged. In addition to investigating allegations of fraud and corruption involving Bank Group staff and corporate vendors, INT mainstreams lessons learned HRDVP Decisions on Staff Cases through case studies, training, and other activities and participates in outreach programs as a member of the Bank’s Internal Justice System to In FY17, the Vice President for Human Resources (HRDVP) made decisions promote the reporting, detection, and prevention of fraud and corruption based on INT’s investigations in 10 staff cases3 concerning issues of abuse of within the Bank Group’s corporate arena. position, misuse of Bank Group funds, corruption, fraud, collusion, obstruc- tion, conflicts of interest, and attendant violations of Bank Group rules. The The Internal Investigations cycle HRDVP affirmed INT’s findings in nine of the 10 cases, and imposed disci- FISCAL YEAR 2017 plinary measures ranging from a letter of reprimand, to a reduction in future Examples of allegations against staff within INT’s investigative mandate pay and promotion ineligibility, to temporary and permanent bars to rehire. include abuse of position for personal gain, misuse of Bank Group funds or trust funds, embezzlement, fraud, corruption, and collusion, involving CASE NO. 1.The HRDVP affirmed the findings of corruption and collusion by either Bank Group operations or administrative budgets, and attendant con- a former STC in a fragile state, permanently barring the STC from future flicts of interest or lesser included acts of misconduct. Bank Group employment. The STC agreed to act as an agent for a company INT is also responsible for investigating allegations against Bank Group receiving and bidding on Bank-financed contracts to facilitate over US$10,000 corporate vendors involving fraud, corruption, collusion, coercion, or in bribes to government officials. The STC received close to US$48,000 for, THE WORLD BANK GROUP obstructive practices in support of “vendor eligibility reviews,” leading to among other things, services and expenses related to facilitating the bribes. corporate debarment proceedings. Upon receipt of a complaint, INT follows a consistent three-stage process: CASE NOS. 2-4. A former STC and two TTLs steered WBG-financed and (i) intake and evaluation; (ii) preliminary inquiry; and (iii) investigation. donor-funded contracts to three preferred firms: two of which the STC If the investigation establishes sufficient evidence to a “clear and convinc- owns and one that was a shell company. INT’s involvement enabled the WBG ing” standard of proof, INT prepares a final report of investigation, inclusive to safeguard US$1.5 million in donor funds through the cancellation of a of all supporting evidence, and provides it to the implicated staff member planned contract award for which the TTL, with whom the STC colluded, for comment. was about to issue the no-objection. The HRDVP barred the former STC from Thereafter INT finalizes the report, incorporating the staff member’s com- future Bank Group employment for five years. In the case of one of the im- ments and any INT rebuttal to those comments, and submits the report to plicated TTLs, the HRDVP found that the TTL had engaged in inappropriate the Bank’s Vice President for Human Resources (HRDVP) for decision. communications with the STC, but that those actions did not rise to the level A staff member has the right to appeal the HRDVP’s disciplinary decision of misconduct. In the case of the second TTL, the HRDVP found that the to the World Bank’s Administrative Tribunal, whose judgments are binding TTL violated Staff Rules and imposed the loss of one year of Salary Review on the World Bank Group. Increase (for the fiscal year in which the misconduct occurred) as a remedy. During the course of a preliminary inquiry or full investigation, INT may 3 Five of these decisions are based on cases substantiated and closed in FY16. establish sufficient evidence to show that the allegations are unfounded, thus clearing the staff member of any wrongdoing. This is an equally import- ant outcome for both the World Bank Group and staff member. THE WORLD BANK GROUP 32 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 33 CASE NOS. 5-8. In relation to two projects a TTL, a former STC, a former STT, Overview of internal investigation outcomes, FY13-FY17 and a Program Assistant used fraudulent invoices and TORs. The HRDVP imposed a temporary (two-year) bar from future Bank Group employment FY13 FY14 FY15 FY16 FY17 for the STC and STT, a salary reduction of US$10,000 and temporary (three- Cases year) ineligibility for promotion for the TTL, and a one-year written repri- Substantiated 20 9 7 7 10 mand for the Program Assistant. Unsubstantiated 8 16 12 7 10 Unfounded 9 6 10 9 2 CASE NO 9. By serving simultaneously as a WBG STC and project consultant Referred4 2 2 2 2 2 Closed 39 33 31 25 24 on the same project, and while also receiving other consultancy contracts Referred5/Not investigated 30 33 39 27 47 for other projects in the same country, an STC’s conflict of interest affected at least US$750,000 in consultancy contracts. The HRDVP barred the former STC from Bank Group employment for three years. Turnaround Time CASE NO. 10. An STC leaked confidential procurement information to several bidders under a WBG-financed project, and disclosed confidential procure- INT aims to complete internal staff cases within nine months (270 days). ment information to three firms in which the STC held personal and finan- In FY17 the average turnaround time for the 19 closed staff cases was 9.48 cial interests. The HRDVP permanently barred the former STC from future months (288 days).6 In FY16 the average turnaround time for the 22 closed Bank Group employment. staff cases was 8.9 months (267 days). This is comparable to FY15, (278 days for 27 cases) and FY14, (211 days for 26 cases), and a steady improve- Outcomes of Vendor Cases ment since FY13 (367 days for 21 cases). In FY17, the internal unit closed five corporate vendor cases, four of which Protected Disclosures were substantiated and one of which was unsubstantiated. Two of the sub- During FY17, a total of 108 WBG staff (i.e., regular staff, former staff, FISCAL YEAR 2017 stantiated cases were submitted to the Director of Strategy, Performance and Administration (SPADR) for corporate debarment decisions. The other extended- and short-term consultants, and temporaries) made protected dis- two cases were referred and handled by relevant management, Corporate closures to INT, including those who were whistleblowers.7 We are grateful Procurement, and the Office of Ethics and Business Conduct (EBC). to those staff members who have forwarded to INT concerns of suspected misconduct that may threaten the operations or governance of the World Bank Group, and we appreciate the assistance and cooperation provided by Internal Investigations Cases, FY17 many WBG staff members in the resulting investigations. 4 Following a preliminary inquiry, these cases were deemed to involve issues more suitably ad- THE WORLD BANK GROUP Staff Vendor Total dressed by other venues within the WBG for intervention (e.g., EBC). Carried over from FY16 16 4 20 5 Complaints that involved issues not within INT’s investigative mandate that were referred to other Opened 25 9 34 appropriate venues within the WBG for intervention. 6 The nine-month period spans from the initial receipt of the complaint through submission of a Total 41 13 54 litigation-quality final report of Investigation to the HRDVP. Turnaround time is impacted by a com- Closed 19 5 24 bination of seven variables, including: (i) investigator to case ratio; (ii) complexity of the cases; (iii) Substantiated 6 4 10 single/multiple allegations per case; (iv) whether mission travel is required; (v) whether the subject Unsubstantiated 9 1 10 staff member has requested extensions in which to respond in writing to the allegations notice and/ Unfounded 2 0 2 or to the draft final report; (vi) delayed availability of subjects or witnesses beyond INT’s control; and Referred 2 0 2 (vii) whether there are parties external to the WBG whose cooperation cannot be mandated. 7 Staff Rule 8.02: Protections and Procedures for Reporting Misconduct (Whistleblowing) “applies Ending caseload 22 8 30 to reports of suspected misconduct that may threaten the operations or governance of the Bank Group…[and sets out] protections that apply whether the subject of the allegations is a staff member or any other person or entity inside or outside the Bank Group.” THE WORLD BANK GROUP 34 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 35 Investigations by the Office of Ethics and Business Conduct Appendix INT investigates forms of misconduct relating to fraud or corruption under Staff Rule 8.01, while the Office of Ethics and Busi- ness Conduct (EBC) focuses on workplace grievances (e.g., harassment and retaliation) and other violations of Staff Rules or Bank Group policies (misuse or abuse of travel funds, staff benefits and allowances, petty cash or WBG physical property) under Staff Rule 3.00. Last fiscal year, the World Bank Group reviewed and fully harmonized its investigative standards and procedures concerning staff rights, obligations and procedural safeguards. This will substantially contribute to a consistent application of standards applicable to all staff investigations, ensure transparency of process and further raise awareness of World Bank Group staff regarding their rights and responsibilities. Budget and Staffing Staffing composition in FY17 has remained relatively constant with 58% female and 42% male. 7.4% of staff represent Nationalities of Focus and 34.6% of staff represent Part II countries. Budget and Staffing Levels FY13-FY17 FY13 FY14 FY15 FY16 FY17 Budget (in US$ mil, incl. Reimbursables) $20.4 $19.8 $18.6 $18.6 $18.8 Staffing Staff grades GE+ 67 70 70 70 72 Staff grades GA-GD 19 17 17 13 9 Total Staff 86 87 87 83 81 THE WORLD BANK GROUP 36 ENTITIES DEBARRED IN FY17 ENTITIES DEBARRED IN FY17, continued Length of Length of Entity Name/Individual Country Grounds for Sanction Debarment Entity Name/Individual Country Grounds for Sanction Debarment 1 Consia Consultants Aps * Denmark Fraudulent and Corrupt Practices 14 years 22 Desarrollo Con Ingeniería Contratistas Peru Fraudulent Practices 3 years, 2004, 2006, 2010 Consultant Guidelines Generales S.A. (Disa-Cgsa) 2010 Procurement Guidelines 4 months 2 Dutchmed B.V. Netherlands Corrupt and Obstructive Practices 14 years 23 Astra Biopharmaceuticals Limited Bangladesh Corrupt Practices 3 years 2004, 2010 Procurement Guidelines 2006 Procurement Guidelines 3 Ms. Lloly Yana De Jesus Philippines Fraudulent and Collusive Practices 9 years 24 Golden Hall Cambodia Fraudulent Practices 3 years 2006 & 2010 Consultant Guidelines 2010 Procurement Guidelines 4 Quvasoy Mukammal Tamir Llc Uzbekistan Fraudulent, Coercive and Collusive Practices 7 years, 25 Mr. Pewee Flomo Liberia Fraudulent Practices 3 years 2011 Procurement Guidelines 11 months 2010 Consultant Guidelines 5 Innogy Solutions, Inc. Philippines Fraudulent and Collusive Practices 7 years, 26 Mr. Jaime Salazar Espinoza Peru Fraudulent Practices 2 years, 2006 & 2011 Consultant Guidelines 7 months 2010 Procurement Guidelines 8 months 6 Constructora Arteaga S.R.L. Bolivia Fraudulent and Collusive Practices 7 years, 27 Ingenieros Civiles Asociados S.A. Bolivia Collusive Practices 2 years (Conarte S.R.L.) 2010 Procurement Guidelines 4 months 2010 Procurement Guidelines 7 An Hoa Limited Company Vietnam Fraudulent Practices 5 years 28 Jiangxi Hengjian Road And China Fraudulent Practice 2 years 2010 Procurement Guidelines Bridge Engineering Co., Ltd. 2006 Procurement Guidelines 8 Apq S.A.C. Peru Fraudulent Practices 5 years 29 Karl Storz Gmbh & Co. Kg Germany Corrupt Practices 2 years 2010 Procurement Guidelines 2004 Procurement Guidelines 9 Berkman International, Inc. Philippines Fraudulent and Corrupt Practices 5 years FISCAL YEAR 2017 30 Mr. Larry Rafael Sequeira Mendoza Nicaragua Collusive and Fraudulent Pracitces 2 years 2004 and 2006 Consultant Guidelines 2006 Procurement Guidelines 10 Mr. Ngo Dung Toan Vietnam Fraudulent Practices 5 years 31 Sequeira Ingenieros, S.A. – Sequinsa Nicaragua Collusive and Fraudulent Pracitces 2 years 2010 Procurement Guidelines 2006 Procurement Guidelines 11 Mr. Alexandre Antonio Pareja Quintanilla Peru Fraudulent Practices 5 years 32 Tehnoplus Medical S.R.L. Romania Corrupt Practice 2 years 2010 Procurement Guidelines 2004 Procurement Guidelines 12 Atcon Engineering & Industry Egypt, Arab Corrupt Practices 4 years 33 Zarcus Contsruction Nigeria Ltd Nigeria Fraudulent Practice 2 years Republic of 2004 Procurement Guidelines 1999 Procurement Guidelines THE WORLD BANK GROUP 13 Best Scan Solutions Limited Nigeria Corrupt Practices 4 years 34 Center For Environmental Stuidies Philippines Fraudulent Practice 1 year, 2006 Consultant Guidelines And Management, Inc. (CESM) 2006 Consultant Guidelines 6 months 14 Mr. Amr Ibrahim El Aroussi Egypt, Arab Corrupt Practices 4 years 35 Honeyomar Ventures Ltd. Nigeria Fraudulent Practice 1 year, Republic of 2004 Procurement Guidelines 1999 Procurement Guidelines 6 months 15 Mr. Arman Tuktin Kazakhstan Corrupt Practices 4 years 36 Inter Alliance Llc Kyrgyz Republic Fraudulent Practice 1 year, 2004 Procurement Guidelines 2011 Procurement Guidelines 6 months 16 Mr. Iyke Ambrose Nigeria Corrupt Practices 4 years 37 Lao-Asie Consultant Group Lao People’s Corrupt Practices 1 year, 2006 Consultant Guidelines Democratic 2006 Consultant Guidelines 6 months 17 Oregon Pacific International Co. Ltd. Tonga Fraudulent Practices 4 years Republic 2011 Procurement Guidelines 38 M/S. Famy Care Limited India Fraudulent Practices 1 year, 18 Too Distrilab Kazakhstan Corrupt Practices 4 years 2004 & 2006 Procurement Guidelines 6 months 2004 Procurement Guidelines 39 Mr. Hammed Mutiu Olalekan Nigeria Fraudulent Practice 1 year, 19 Ltb Leitungsbau Gmbh Germany Fraudulent Practices 3 years, 1999 Procurement Guidelines 6 months 2011 Procurement Guidelines 6 months 40 Mr. Pedro César Lazo Montejo Peru Fraudulent Practice 1 year, 20 Mr. Erling Rask Denmark Fraudulent Practices 3 years, 2010 Procurement Guidelines 6 months 2004 Consultant Guidelines 6 months 41 Centro Productivo De Diseño S.A. Argentina Fraudulent Practice 1 year, 21 Mr. Roland Kolitsch Germany Fraudulent Practices 3 years, 1999 Procurement Guidelines 5 months 2011 Procurement Guidelines 6 months 42 Mr. Pablo Maximiliano Kantt Argentina Fraudulent Practice 1 year, 1999 Procurement Guidelines 5 months THE WORLD BANK GROUP 38 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 39 ENTITIES DEBARRED IN FY17, continued OTHER SANCTIONS IMPOSED IN FY17 Length of Entity Name/Individual Country Sanction Imposed Grounds Entity Name/Individual Country Grounds for Sanction Debarment 1. CDM Smith United States Conditionally Non-Debarred Fraudulent Practice 43 Zanotta Sudamericana S.A. Argentina Fraudulent Practice 1 year, In addition, one entity received a Private Letter of Reprimand for engaging in fraudulent practices. 1999 Procurement Guidelines 5 months 44 Eske S.A.C. Peru Fraudulent Practice 1 year, 2004 Procurement Guidelines 4 months CROSS-DEBARMENTS HONORED BY THE WORLD BANK GROUP IN FY17 45 Fichtner Gmbh & Co. KG Germany Corrupt Practices 1 year, 2002 Consultant Guidelines 3 months 46 Hunan Shaping Construction Co., Ltd. China Fraudulent Practice 1 year, Length of (A/K/A Sunpeak Construction) 2011 Procurement Guidelines 3 months Entity Name/Individual Country Grounds For Debarment Debarment 47 Sfc Umwelttechnik Gmbh Austria Fraudulent Practices 1 year, 1 Florencia M. Silvestre Philippines Cross Debarment: ADB Permanent 2010 Procurement Guidelines & Consult 3 months 2 Rafael “Ace” Fresnoza Lim Philippines Cross-Debarment: ADB Permanent Guidelines 3 Cellucian Limited St. Lucia Cross-Debarment: IDB 11 years 48 Tianjin Huashui Tap Water China Fraudulent practice 1 year, Construction Co., Ltd. 3 months 4 George C. Benson United States Cross-Debarment: IDB 11 years 2011 Procurement Guidelines 5 Regional Communications Limited St. Lucia Cross-Debarment: IDB 11 years 49 Xl Management Services Limited Nigeria Fraudulent Practice 1 year, 6 Abel Khemraj Rai Guyana Cross-Debarment: IDB 8 years 1999 Guidelines 3 months 7 Janet Cecilia Castillo Diaz Peru Cross Debarment: IDB 8 years 50 Zhengtai Group Co., Ltd. China Fraudulent Practice 1 year, 8 LPF Trading Philippines Cross Debarment: ADB 8 years FISCAL YEAR 2017 2011 Procurement Guidelines 3 months 9 Ms. Angelita “Cielo” Banal De Leon Philippines Cross Debarment: ADB 8 years 51 Minh Anh Construction Jsc Vietnam Fraudulent Practices 1 year, 10 Ms. Lorena “Leng” Dela Paz Flores Philippines Cross Debarment: ADB 8 years 2010 Procurement Guidelines 2 months 11 One-Chem Industrial Sales Philippines Philippines Cross Debarment: ADB 8 years 52 Geoambiente Sensoriamento Brazil Fraudulent Practice 1 year, 12 Sidrai Enterprises Guyana Cross-Debarment: IDB 8 years Remoto Ltda. Reg.# 00.033.757/0001-81 2011 Consultant Guidelines 1 month 13 Andres Jaramillo Jaimes Mexico Cross-Debarment: IDB 7 years 53 Feedback Infra Pvt. Ltd. ** India Fraudulent Practice 1 year 2004 Consultant Guidelines 14 Blanca Estela Garcia Rodriguez Mexico Cross-Debarment: IDB 7 years THE WORLD BANK GROUP 54 Ideal Medical Products Engineering France Corrupt Pracitces 1 year 15 Brenda Ponciano Mendoza Mexico Cross-Debarment: IDB 7 years 2004 Procurement Guidelines 16 Edwin K. Mackoon Trinidad and Tobago Cross Debarment: IDB 7 years 55 Sunlabob Renewable Energy Co. Ltd. Lao People’s Fraudulent Practice 6 months 17 Elmer Chavez Fuentes Peru Cross Debarment: IDB 7 years (Reg. No. 010010821) Democratic 2011 Procurement Guidelines 18 Gabriel Cruz Cervantes Mexico Cross-Debarment: IDB 7 years Republic 19 Global Scientific S.A. De C.V. Mexico Cross-Debarment: IDB 7 years 56 Ac Boilers S.P.A** Italy Fraudulent Practice 9 months 20 Jesus Escorza Escorza Mexico Cross-Debarment: IDB 7 years 2004 Procurement Guidelines 21 Johana Yasmin Contreras Garcia Mexico Cross-Debarment: IDB 7 years 57 China Railway 20 Bureau Group Co.** China Fraudulent Practice 6 months 22 Jose David Escorza Escorza Mexico Cross-Debarment: IDB 7 years 2011 Procurement Guidelines 23 Jose Fino Morales Mexico Cross-Debarment: IDB 7 years 58 Initec Energia S.A.** Spain Fraudulent Practices 5 months 24 Jose Rogelio Lira Pineda Mexico Cross-Debarment: IDB 7 years 2004 & 2006 Procurement Guidelines *This entity was sanctioned in two sanctions cases. 25 Macotro S.A. De C.V. Mexico Cross-Debarment: IDB 7 years ** After the debarment period, this entity will be listed as conditionally non-debarred until conditions for release have been met, pursuant to a 26 Manuel Vazquez Hernandez Mexico Cross-Debarment: IDB 7 years settlement agreement. 27 Mario Ricard Dell Trinidad and Tobago Cross Debarment: IDB 7 years 28 Proconssa, S.A. Peru Cross Debarment: IDB 7 years 29 Ramon Escorza Escorza Mexico Cross-Debarment: IDB 7 years 30 Rebeca Ponciano Mendoza Mexico Cross-Debarment: IDB 7 years 31 Ryoho Tech De Mexico S.A. De C.V. Mexico Cross-Debarment: IDB 7 years THE WORLD BANK GROUP 40 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 41 CROSS-DEBARMENTS HONORED BY THE WORLD BANK GROUP IN FY17, continued CROSS-DEBARMENTS HONORED BY THE WORLD BANK GROUP IN FY17, continued Length of Length of Entity Name/Individual Country Grounds For Debarment Debarment Entity Name/Individual Country Grounds For Debarment Debarment 32 Scimed Servcies Limited Trinidad and Tobago Cross Debarment: IDB 7 years 69 Juan Pablo Arconada Garcia Spain Cross-Debarment: IDB 3 years 33 Tecniaisla, S.R.L. Peru Cross Debarment: IDB 7 years 70 Mr. Goran Percevic Serbia Cross-Debarment: EBRD 3 years 34 Western Scientific Company Limited Trinidad and Tobago Cross Debarment: IDB 7 years 71 Mr. Radoslav Veselinovic Serbia Cross-Debarment: EBRD 3 years 35 Barkley Management Group, LLC United States Cross Debarment: ADB 6 years 72 Robert Bob Smith Bahamas, The Cross Debarment: IDB 3 years 36 Carlos Alejandro Del Valle Mazariegos (Del Valle) Guatemala Cross-Debarment: IDB 6 years 73 Ron Jaisari Guyana Cross-Debarment: IDB 3 years 37 Chestnut Street Group LLC United States Cross Debarment: ADB 6 years 74 Semih Sagocak Azerbaijan Cross-Debarment: ADB 3 years 38 Chestnut Street Holding and Management United States Cross Debarment: ADB 6 years 75 Siddhartha Rai Guyana Cross-Debarment: IDB 3 years Group, LLC 76 Sidrai Radiators Works Guyana Cross-Debarment: IDB 3 years 39 Construcciones Arquitectonicas Construsarq Guatemala Cross-Debarment: IDB 6 years 77 Sunaula Khimti Pvt. Construction Ltd. Nepal Cross-Debarment: ADB 3 years (Construsarq) (Aka M/S Sunaula Khimti) 40 David Roldan Berenguel Peru Cross Debarment: IDB 6 years 78 Supersea Marine Limited Bahamas, The Cross Debarment: IDB 3 years 41 International Project Development, LLC United States Cross Debarment: ADB 6 years 79 West Side Equipment Limited Bahamas, The Cross Debarment: IDB 3 years 42 Klnb Group, LLC United States Cross Debarment: ADB 6 years 80 A-La-Carte-Haiti Haiti Cross-Debarment: IDB 2 years 43 Mr. Keith H. Barkley United States Cross Debarment: ADB 6 years 81 Consultores Asociados Consa S.R.L. Bolivia Cross Debarment: IDB 2 years 44 Songhai Enterprise Consortium, LLC United States Cross Debarment: ADB 6 years 82 Edna Desulme Haiti Cross-Debarment: IDB 2 years 45 FISCAL YEAR 2017 Manual Roldan Leon Spain Cross-Debarment: IDB 5 years 83 Jose Manuel Ramirez Pacheco Bolivia Cross Debarment: IDB 2 years 46 Manuel Perez Bustamante Peru Cross Debarment: IDB 5 years 84 Ricard Antonio Castillo Leclair Nicaragua Cross-Debarment: IDB 18 months 47 Khujandrokh LLC Tajikistan Cross-Debarment: EBRD 4 years 48 Mekhrobi Khujand LLC Tajikistan Cross-Debarment: EBRD 4 years 49 Mr. Abduhakim Rakhimov Tajikistan Cross-Debarment: EBRD 4 years 50 Mr. Abdukhelil Boqiev Tajikistan Cross Debarment: EBRD 4 years VENDORS DEBARRED IN FY17 51 Mr. Davron Nabichonovich Sharipov Tajikistan Cross-Debarment: EBRD 4 years THE WORLD BANK GROUP 52 Mr. Dilshod Rahmatulloev Tajikistan Cross-Debarment: EBRD 4 years 53 Mr. Shuharat Ashurov Tajikistan Cross-Debarment: EBRD 4 years Length of 54 Ms. Zulaikho Rahmatulloeva Tajikistan Cross-Debarment: EBRD 4 years Entity Name/Individual Country Grounds For Debarment Debarment 55 PMK Sugd LLC Tajikistan Cross-Debarment: EBRD 4 years No vendors were debarred in FY17 56 Rokhi Vahdat LLC Tajikistan Cross Debarment: EBRD 4 years 57 Sugd-Techno-Servis Llc Tajikistan Cross-Debarment: EBRD 4 years 58 Zulhumor LLC Tajikistan Cross-Debarment: EBRD 4 years 59 Akin Project LLC Azerbaijan Cross-Debarment: ADB 3 years 60 David Pujol Maqueda Spain Cross-Debarment: IDB 3 years 61 Dharma Raj Bhandari Nepal Cross-Debarment: ADB 3 years 62 Eugene Smith, Jr. Bahamas, The Cross Debarment: IDB 3 years 63 Galeb Group, d.o.o. Serbia Cross-Debarment: EBRD 3 years 64 Galeb Metal Pack, d.o.o. Serbia Cross-Debarment: EBRD 3 years 65 Gou Xuejun China Cross-Debarment: ADB 3 years 66 Grupo Sotoval De Construccion Y Proyectos Spain Cross-Debarment: IDB 3 years 67 Interkomerc AD Serbia Cross-Debarment: EBRD 3 years 68 Interkomerc Energo D.O.O. Serbia Cross-Debarment: EBRD 3 years THE WORLD BANK GROUP 42 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 43 REFERRALS MADE IN FY17 REFERRALS MADE IN FY17, continued Date of Referral Nature of Date of Referral Nature of Referral Recipient Misconduct Project Description Status Referral Recipient Misconduct Project Description Status 1 Jul-11-2016 Slovenia Collusion & Corruption Electrical Power The matter is under 23 May-18-2017 Vietnam Corruption, Fraud & Poverty Reduction, The matter is under consideration by authorities. Obstruction Transportation, & Technical consideration by authorities. 2 Aug-4-2016 Sweden Fraud, Collusion, & Rail Transportation The matter is under Assistance Corruption consideration by authorities. 24 May-22-2017 Vietnam Fraud Infrastructure INT is unaware of any action 3 Oct-6-2016 Ukraine Fraud, Collusion, & Social Safety Net Modernization The matter is under by authorities Corruption consideration by authorities. 25 May-30-2017 India Fraud, Collusion, & Waste Water Treatment INT is unaware of any action 4 Oct-28-2016 Georgia Collusion & Obstruction Emergency Private Sector The matter is under Obstruction by authorities Development consideration by authorities. 26 May-31-2017 South Africa Fraud, Collusion, & Transportation INT is unaware of any action 5 Dec-5-2016 Philippines Corruption Pollution Control and Reduction The matter is under Corruption by authorities consideration by authorities. 27 May-31-2017 DRC Fraud, Collusion, & Transportation INT is unaware of any action 6 Dec-13-2016 Vietnam Fraud, Collusion, & Waste Water Treatment INT is unaware of any action Corruption by authorities Obstruction by authorities 28 May-31-2017 Austria Corruption, Fraud & Waste Water Treatment INT is unaware of any action 7 Jan-13-2017 EIB Corruption Social Safety Net Modernization INT is unaware of any action Obstruction by authorities by authorities 29 May-31-2017 Kenya Fraud & Collusion Water and Sanitation INT is unaware of any action 8 Jan-10-2017 Denmark Corruption & Collusion Agriculture INT is unaware of any action by authorities by authorities 30 Jun-16-2017 India Fraud & Collusion Waste Water Treatment INT is unaware of any action 9 Jan-13-2017 Republika Corruption Social Safety Net Modernization INT is unaware of any action by authorities Srpska by authorities 31 Jun-16-2017 Austria Fraud & Collusion Waste Water Treatment INT is unaware of any action FISCAL YEAR 2017 10 Feb-2-2017 Bolivia Corruption Agriculture INT is unaware of any action by authorities by authorities 32 Jun-23-2017 Nigeria Fraud Sanitation INT is unaware of any action 11 Feb-2-2017 Bolivia Collusion & Fraud Infrastructure INT is unaware of any action by authorities by authorities * Following a policy decision that INT adopted in FY13 to categorize the level of the referrals based on complexity, the lowest level referrals are not 12 Feb-3-2017 Bosnia and Corruption Social Safety Net Modernization INT is unaware of any action included in this chart. Herzegovina by authorities 13 Feb-7-2017 Lao PDR Corruption & Fraud Roads INT is unaware of any action by authorities THE WORLD BANK GROUP 14 Feb-21-2017 Nicaragua Fraud, Corruption, & Natural Disaster Recovery INT is unaware of any action Collusion by authorities 15 Feb-21-2017 United Kingdom Collusion Telecommunications INT is unaware of any action by authorities 16 Feb-21-2017 Kenya Collusion Telecommunications INT is unaware of any action by authorities 17 Feb-21-2017 Lebanon Collusion Telecommunications INT is unaware of any action by authorities 18 Mar-10-2017 Czech Republic Fraud Roads The matter is under consideration by authorities. 19 Apr-7-2017 Sweden Corruption & Fraud Roads INT is unaware of any action by authorities 20 Apr-12-2017 Tajikistan Corruption Education INT is unaware of any action by authorities 21 Apr-28-2017 Austria Corruption & Collusion Health Sector The matter is under consideration by authorities. 22 Apr-28-2017 Nepal Corruption Rural Transportation INT is unaware of any action by authorities THE WORLD BANK GROUP 44 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 45 UPDATE ON REFERRALS MADE IN FY16* UPDATE ON REFERRALS MADE IN FY16*, continued Date of Referral Nature of Date of Referral Nature of Referral Recipient Misconduct Project Description Status Referral Recipient Misconduct Project Description Status 1 Jul-27-2015 Bangladesh Corruption Health, Nutrition and INT is unaware of any action 20 Mar-21-2016 Iraq Fraud Emergency Private Sector INT is unaware of any action Population by authorities Development by authorities 2 Aug-11-2015 Indonesia Corruption, Fraud and Strategic Roads INT is unaware of any action 21 Mar-21-2016 Italy Fraud Emergency Private Sector INT is unaware of any action Obstructive Practices by authorities Development by authorities 3 Aug-18-2015 Banque de Fraud Hydropower Project INT is unaware of any action 22 Mar-23-2016 Bangladesh Corruption and Fraud Health Sector Development INT is unaware of any action Développement by authorities by authorities des Etats de 23 Mar-23-2016 India Corruption and Fraud Health Sector Development INT is unaware of any action l’Afrique Centrale by authorities (BDEAC) (Central 24 Mar-23-2016 Nigeria Corruption and Fraud Health Sector Development INT is unaware of any action Africa States by authorities Development Bank) 25 Mar-23-2016 Romania Corruption Health Sector Reform 2 Authorities have taken 4 Aug-20-2015 UK, Department Fraud Second Education Sector INT is unaware of any action administrative action. for International Development by authorities 26 Mar-30-2016 Morocco Corruption, Collusion Strengthening Authorities completed their Development (DfID) and Fraud Mico-Entrepreneurship for investigation, confirmed INT 5 Aug-24-2015 France Corruption and Fraud Urban Environment Planning INT is unaware of any action Disadvantaged Youths findings, and will pursue by authorities action. 6 Sep-1-2015 China Corruption and Fraud Urban Environment Planning INT is unaware of any action 27 Apr-12-2016 Denmark Corruption, Fraud and Strategic Roads Authorities have initiated by authorities Obstruction Infrastructure criminal investigation FISCAL YEAR 2017 7 Sep-23-2015 Mali Corruption and Fraud Hydroelectric Project INT is unaware of any action 28 Apr-14-2016 Bangladesh Corruption, Fraud and Health, Nutrition and INT is unaware of any action by authorities Obstruction Population Sector by authorities 8 Sep-23-2015 Mauritania Corruption and Fraud Hydroelectric Project INT is unaware of any action 29 Apr-14-2016 India Corruption, Fraud and Health, Nutrition and INT is unaware of any action by authorities Obstruction Population Sector by authorities 9 Sep-23-2015 Senegal Corruption and Fraud Hydroelectric Project INT is unaware of any action 30 Apr-25-2016 Netherlands Corruption Health Sector Reform 2 INT is unaware of any action by authorities by authorities 10 Sep-25-2015 Netherlands Corruption and Fraud Regional Fisheries Program INT is unaware of any action 31 Apr-25-2016 OLAF Corruption Health Sector Reform 2 Confirmed they were by authorities already aware of the THE WORLD BANK GROUP 11 Sep-25-2015 Sierra Leone Corruption Regional Fisheries Program Authorities took contents of the report. administrative action * Following a policy decision that INT adopted in FY13 to categorize the level of the referrals based on complexity, the lowest level referrals are not 12 Oct-14-2015 India Corruption Water Supply and Sanitation Authorities took included in this chart. administrative action 13 Nov-3-2015 Lao People’s Fraud Customs and Trade Authorities took Democratic administrative action Republic 14 Nov-17-2015 Vietnam Corruption, Fraud and Northern Mountains Poverty INT is unaware of any action Obstruction Reduction by authorities 15 Nov-24-2015 Sierra Leone Corruption and Fraud Youth Employment Support INT is unaware of any action by authorities 16 Jan-27-2016 Spain Corruption Rural Electricity Access INT is unaware of any action Expansion by authorities 17 Feb-1-2016 Ukraine Corruption Second Urban Infrastructure A referral was requested by authorities 18 Feb-18-2016 India Fraud Water Sector Improvement INT is unaware of any action by authorities 19 Mar-21-2016 Egypt Fraud Emergency Private Sector Authorities found they Development lacked jurisdiction THE WORLD BANK GROUP 46 ANNUAL UPDATE INTEGRITY VICE PRESIDENCY (INT) 47 ENTITIES RELEASED FROM WORLD BANK GROUP SANCTIONS IN FY17 Date of Entity Name Country Type of Entity Release 1 Alcatel-Lucent Trade International, A.G. Switzerland MNC Oct-22-2016 2 Iberdrola S.A. (Iberdrola) / Iberdrola Ingenieria y Construccion, Spain MNC Nov-26-2016 S.A.U. (Iberinco) 3 CAA Communications & Accessories Int. GmbH Germany SME Dec-29-201 4 Mrs. Jane Burda Germany INV Dec-29-2016 5 Mr. Zaur Mammadzade Azerbaijan INV Jan-18-2017 6 Ultra Computers Company Azerbaijan SME Jan-18-2017 7 Engineering and Planning Consultants Ltd. Bangladesh SME Jan-22-2017 8 Dr. Gunnar Demoulin / New Water Technology OG (NWT) Austria INV Feb-19-2017 9 Sweco International AB Sweden MNC Mar-27-2017 10 Mr. Zhu Hongfeng China INV May-24-2017 11 Yerenergo Closed Joint Stock Company Armenia SME Jun-01-2017 12 Artelia Eau & Environnement SAS France MNC Jun-29-2017 13 China Hunan Construction Engineering Group Corporation (CHCEGC) China MNC (SOE) Jun-29-2017 THE WORLD BANK GROUP 48