Thursday, February 5, 2009

The World Bank, government procurement and corruption

An interesting little incident that slipped under the radar last month (thanks to my colleague Yunpeng Fan for bringing it to my attention): the World Bank, as a result of an internal investigation by its Integrity Vice Presidency (INT) (responsible for investigating allegations of fraud and corruption in Bank-financed operations), found evidence of "collusive practices" (price-fixing) by seven firms - including four State-owned Chinese companies - and one individual in a major Bank-financed public roads project in the Philippines. As a result, the World Bank Sanctions Board has debarred those involved from participating in future Bank-supported projects for varying lengths of time. According to the Integrity Vice President Leonard McCarthy,

This is one of our most important and far-reaching cases, and it highlights the effectiveness of the World Bank’s investigative and sanctions process. As the World Bank Group continues to ramp up its anti-corruption work, INT will remain vigilant in investigating allegations and holding wrongdoers accountable.

It is also interesting to note, however, that both the Governments of both China and the Philippines have made allegations of procedural irregularities within the procedures followed by the World Bank (although these, it should be added, seem to be very vague assertions of "lack of evidence", "not responding to the parties involved", and "not allowing key players to participate in the inquiry") - demonstrating an awareness of the Bank not simply as the source of administrative law rules (here relating to public procurement), but also as an administrative body in its own right, whose activities should thus in principle be subject to requirements of due process. For those interested in going further, the Bank's sanctions procedures can be found here.

Both Governments have also, it seems, requested that the details of the Bank's investigation be handed over, in order that they might either challenge it or launch judicial proceedings of their own, where appropriate. At present, I'm uncertain as to whether the Bank has furnished this information - although I can see no real reason why it should refuse... Will update on this more if and when I hear anything.

1 comment:

Auto Accident Attorney Houston, Texas said...

Yeah, various nation's govts. are taking loan from World bank but the most of the money goes in corruption. World bank should take some steps to check it.