Anti-Corruption
In recent years, MIGA, like the other entities that comprise the World Bank Group, has made significant progress in establishing higher standards for sustainability and corporate governance in the projects it supports. Now, consistent with its sister organizations, MIGA has established anti-corruption and anti-fraud standards.
MIGA and the World Bank Group have identified corruption as among the greatest obstacles to economic and social development. Corruption and similar misconduct undermine development by distorting the rule of law and weakening the institutional foundation upon which economic growth depends. The harmful effects of corruption are especially severe on the poor, who are:
- hardest hit by economic decline
- most reliant on the provision of public services, and
- least capable of paying the extra costs associated with bribery, fraud, and the misappropriation of economic privileges
Corruption damages policies and programs that aim to reduce poverty, so attacking corruption is critical to the achievement of MIGA’s and the World Bank Group’s overarching mission of poverty reduction.
On October 15, 2006, MIGA began applying a new approach to combating fraud and corruption in connection with newly initiated investment guarantee projects. Specifically, the new procedures apply to guarantees for which MIGA received a Definitive Application after October 15, 2006.
This approach is part of a larger World Bank Group effort to combat fraud and corruption. In implementing the new procedures, MIGA is working with the World Bank Group’s Department of Institutional Integrity (INT), which is charged with investigating such allegations involving MIGA, World Bank and IFC projects, as well as allegations of staff misconduct. The enhanced emphasis on combating fraud and corruption does not change the high expectations MIGA has always held for its staff, clients and projects, including our due diligence and commitment to good corporate governance. The new program defines this approach even more clearly and adds sanctions as a visible deterrent, but it is consistent with the standards for behavior MIGA has long held for itself, its staff, its projects and its partners in development.
Combating Fraud and Corruption in MIGA-Supported Projects
In its selection of partners, and in its due diligence process for a particular investment, MIGA has always paid particular attention to the issue of fraud and corruption. This may involve:
- checks of involved parties against public databases
- an assessment of the client’s safeguards for dealing with fraud and corruption, and
- a review of the underlying contractual arrangements.
If there are allegations of fraud, corruption or related misconduct (coercive, collusive and obstructive practices) or a lack of transparency, MIGA’s review may involve more in-depth due diligence investigations. MIGA’s stance against these types of misconduct is also incorporated into the legal documentation governing its investment guarantees, so that such acts of fraud, corruption or other misconduct by a client may give MIGA the right to exclude or terminate guarantee coverage.
Additionally, allegations of such misconduct in MIGA investment projects for which MIGA has issued a guarantee will be subject to review and determination under the World Bank Group’s sanctions and debarment process. This process provides a fair, transparent and rational way to evaluate allegations of misconduct in any MIGA project.
Sanctions and Debarment
In summary, the sanctions and debarment process proceeds as follows:
- First, the World Bank’s Department of Institutional Integrity would conduct an in-depth investigation of any allegations of prohibited practices: corrupt, fraudulent, coercive, collusive or obstructive practices. Then, MIGA’s Evaluation Officer would have to concur in the results of the INT investigation.
- Next, the person or entity against which allegations have been made would have the right to appear before an independent World Bank Group sanctions board (the majority of whose members will be senior figures not associated with the World Bank Group) to present evidence and respond formally to those allegations.
- A final decision would be made by the sanctions board. Such decision may not be overruled by MIGA.
If, at the conclusion of this due process procedure, a person or entity is found to have engaged in a prohibited practice in connection with a MIGA project, that person or entity may be sanctioned.
There are a range of sanctions that may be imposed by the sanctions board, including:
- reprimand
- debarment (ineligibility to participate in World Bank Group financing for a stated period or indefinitely), and
- conditional non-debarment.
If a sanction is imposed, the sanctioned party or person’s name will be published on a World Bank website.
To find out more about sanctions and MIGA, visit MIGA Sanctions Definitions and Guidelines, MIGA Sanctions Procedures, Sanctions Board Statute, and Sanctions FAQs.
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