Sanctions Help World Bank Fight Financial Crime

The World Bank’s commitment to debarment against companies involved in World Bank-funded projects who commit financial crime remains strong, according to latest figures. When firms or individuals are found to have engaged in fraudulent, corrupt, collusive, coercive or obstructive practices, the World Bank Group may impose a sanction such as debarment.  Debarred entities are then ineligible to be awarded a World Bank Group-financed contract, either permanently of for designated period of time. 

 The World Bank’s OSD (Office of Suspension and Debarment) latest report shows that in the two fiscal years ending in June 2015, the bank debarred or sanctioned 144 firms or individuals. Although neither year matched the record 83 sanctions or debarments implemented in 2012, cumulatively 2014 and 2015 represent more than a third of the total number of debarments and sanctions over the last eight years (368).

 The World Bank continued to temporarily suspend firms and individuals in 2014 and 2015. These two years account for 120 of the 359 temporary suspensions issued between 2008 and 2015. While the figures demonstrate the scale of effort in recent years, the OSD’s report also reveals some of the most effective parts of its strategy in the fight against financial crime.

 Using Data Analytics to Fight Corruption

 The report suggests that using technology to study company data is fast becoming a central part of a strong compliance strategy. The World Bank says good data collection can help identify patterns which reveal where there are inefficiencies or even corruption.

 The recent 14th Global Fraud Survey by EY supports the bank’s position. It notes that where employees of a company are reluctant to raise concerns about financial crime, the data held by the company can be “the key to identifying instances of potential impropriety.” The UK’s Financial Conduct Authority’s 2016/17 business plan also commits the FCA to encouraging “the use of technology to reduce compliance costs”. Thanks to growing use of technology, companies who have committed financial crime are less likely to escape the notice of potential business partners or enforcement regulators.

 Cross-debarment Strengthens Power of Sanctions

 The report shows that the World Bank’s enforcement powers carry a greater threat because of the policy of “cross debarment”, first started in 2010. In most cases, debarment or sanctions by the World Bank will automatically be implemented by a number of other multilateral development banks. These comprise the Inter-American Development Bank, the European Bank for Reconstruction and Development, the African Development Bank, and the European Investment Bank.

 Pascale Helene Dubois, Chief Suspension and Debarment Officer at the World Bank, says the bank’s sanctions regime is part of “a larger international movement.”  This policy mirrors the strategy of ‘mutual assistance’ by regulators in different countries, who are increasingly willing to share evidence about companies accused of financial crime and work together on investigations.

 The trend is clear: If a company or individual commits financial crime in another jurisdiction cooperation across regulators and agencies makes enforcement action more likely.

 Compliance Leads to Rewards

 During the fiscal year ending June 2015, the World Bank Group committed $60 billion in loans, grants, equity investments and guarantees to projects that promote growth and fight poverty. Companies that have been sanctioned and debarred are no longer eligible to apply for these contracts.

 Earlier this month, the World Bank announced the debarment of six companies that overstated their HFC emissions in order to show their potential to curb pollution and thereby qualify for World Bank funding. These companies have now lost their right to bid for World Bank-financed contracts over the next year, which represents a significant loss of potential income.

 So a company should not think of compliance simply as a way to avoid being fined or criticized in the media. Compliance can also help a business to grow. A report by MLex last month showed how Siemens built a culture of compliance which is now recognized as a positive growth enabler within the business.

 Any company or contractor engaged in World Bank projects or considering bidding should strengthen their anti-bribery and corruption guidelines to make sure they do not lose out. Those that ignore their compliance responsibilities risk facing the bank’s increasingly tough sanctions regime.

 3 Ways to Apply This Information Now

1. Check out other blog posts on the topic of managing anti-bribery and corruption compliance effectively.
2. Request a free trial of Lexis Diligence® to see how this tool can improve visibility into risk.
3. Share this blog on LinkedIn to keep the dialogue going with your colleagues and contacts. 

VA Gov Grants Felons Right to Vote

Virginia Gov. Terry McAuliffe (D) issued an executive order last month that will allow more than 200,000 convicted felons to run for public office and to vote in the swing state in the November presidential election. The governor said restoring felons’ rights to vote and run for office would help restore democracy in a state with a long history of denying African‑Americans from fully participating in the process.

 

“This is the essence of our democracy and any effort to dilute that fundamental principle diminishes it, folks, for all of us,” he said on the steps of the state Capitol.

 

State laws disenfranchising felons prevent nearly 6 million Americans from voting nationwide, says the Washington, D.C.-based Sentencing Project. Those laws disproportionally affect African Americans, disenfranchising one in 13 on average nationwide, and one in five in Virginia, according to a recent Sentencing Project report.

 

Constitutional scholar A.E. *** Howard, who presided over the last rewrite of Virginia’s Constitution, in 1971, said McAuliffe had done away with one of the final vestiges of a previous constitutional convention that had been “committed to white supremacy.”

 

“The last ghost of the 1902 convention was buried today,” he said.

 

Republicans in the state, however, called McAuliffe’s order a political move intended to help the governor’s close friend, Democratic presidential front‑runner Hillary Clinton, win the election.

 

“I am stunned yet not at all surprised by the governor’s action,” said House Speaker William J. Howell (R). “This office has always been a stepping stone to a job in Hillary Clinton’s cabinet.”

 

Senate Republican Caucus Chairman Ryan T. McDougle took it a step further.

 

“Terry McAuliffe wants to ensure that convicted pedophiles, rapists, and domestic abusers can vote for Hillary Clinton,” he said.

 

Republicans are reportedly reviewing whether the governor exceeded his legal authority. They say a letter written in 2010 by a lawyer for then-Gov. Tim Kaine (D) rejected the idea that the governor could grant a blanket restoration of felon voting rights. But McAuliffe said, after consulting with legal experts, including Virginia AG Mark Herring, he is certain he has that power. (ASSOCIATED PRESS)

NC Voter ID Law Upheld

A federal judge has upheld a North Carolina voter ID law passed after the U.S. Supreme Court’s 2013 ruling in Shelby County v. Holder allowing states like North Carolina with a history of discrimination to make changes to their voting laws without obtaining federal approval first.

 

The National Association for the Advancement of Colored People and others had argued that the law disproportionately affects African-American and Hispanic voters, who are more likely to lack the forms of ID required by the law. But in his 485-page ruling U.S. District Judge Thomas Schroeder wrote that North Carolina had “provided legitimate state interests for its voter-ID requirement and electoral system.”

 

“In sum, plaintiffs have failed to show that any North Carolinian who wishes to vote faces anything other than the ‘usual burdens of voting,’” he wrote.

 

Governor Pat McCrory (R) issued a statement saying: “This ruling further affirms that requiring a photo ID in order to vote is not only commonsense, it's constitutional.”

 

But William Barber, president of North Carolina’s NAACP, said the “restrictive provisions” of the voter ID law were “an affront to democracy” and vowed to keep up the fight against “regressive and discriminatory voter suppression tactics.” (REUTERS)

 

Supreme Court Upholds AZ Remap

The U.S. Supreme Court unanimously voted last month to uphold the legislative district map drawn by an independent commission in Arizona in 2012. Republicans had challenged that map, alleging it placed more voters in GOP districts than in Democratic ones, giving Democratic voters more clout. But the justices ruled that states could create districts with slight variations in population in order to benefit minorities, even if those districts also benefited one party over the other.

 

“We have made clear that the Constitution, while insisting upon compliance with the principle of one person, one vote, does not demand mathematical perfection,” wrote Justice Stephen Breyer.

 

The decision marks the third in a row by the high court on political redistricting that favors Democrats over Republicans, since the court’s landmark decision in Shelby County v. Holder three years ago. (USA TODAY)

 

Politics In Brief - May 2 2016

ME Gov Vetoes Clean Election Fix

MAINE Gov. Paul LePage (R) vetoed a bill approved by the Legislature last month that would have pumped $500,000 into the state’s Clean Election Fund, enough to support the clean election candidates already running in the current election cycle. LePage said that fund was chronically underfunded because money for each election cycle was spent in the previous cycle, and the bill would have only made that problem half a million dollars worse. (ASSOCIATED PRESS, PORTLAND PRESS HERALD)

 

KS Voter Registrations on Hold

Two-thirds of the voter registration applications submitted in KANSAS during a three-week period in February have been placed on hold as a result of the state’s proof-of-citizenship requirements, according to a court filing by the American Civil Liberties Union. (LAWRENCE JOURNAL-WORLD)

 

DOJ Investigating CT Motor Voter Program

The U.S. Department of Justice is investigating CONNECTICUT’s “motor voter” program, allowing citizens to register to vote when they apply for a driver’s license. The DOJ has informed officials in the state that it has found evidence of “widespread noncompliance” with federal law. (HARTFORD COURANT)

 

-- Compiled by KOREY CLARK