Steptoe represents clients from around the world in investigations and sanctions proceedings involving allegations of misconduct in projects financed by International Financial Institutions (IFIs), principally the World Bank. The IFIs (also known as multilateral development banks or MDBs), such as the World Bank and the regional development banks (African, Asian, and Inter-American Development Banks, and the European Bank for Reconstruction and Development) have established standards of conduct and sanctions mechanisms for contractors and consultants who engage in specified types of misconduct – especially fraud or corruption – on projects wholly or partly financed by these institutions.
The most common sanction has been debarment – a loss of eligibility to participate in projects financed by these institutions, often coupled with conditions for reinstatement. Sanctions are typically made public and other institutions may suspend or debar a company based on a World Bank or other MDB sanction, sometimes automatically. The impact of a sanction can therefore be quite severe.
Steptoe has extensive experience with the sanctioning regimes of the World Bank and other MDBs. One of our partners previously served as head of one of the IFI investigative offices and helped design some of the sanctions procedures currently in place in these institutions. We have successfully represented firms from around the world going back to the earliest days of the sanctions system, in audits, investigations, settlements, Show Cause letter responses, sanctions proceedings, post-sanction remediation efforts, and collateral proceedings and issues. We have also represented clients before national authorities to whom the MDBs have made a referral.
How We Can Help
- Conduct internal investigations of possible misconduct on IFI-financed projects.
- Represent consultants and contractors in audits and investigations being conducted by the World Bank’s Integrity Vice-Presidency (INT) and other IFIs as well as regional authorities such as the EU’s European Anti-Fraud Office (OLAF).
- Represent respondents in sanctions proceedings, including hearings before the World Bank’s Sanctions Board and other similar bodies.
- Represent IFI senior management personnel in investigations involving ethical codes of conduct.
- Assist with voluntary disclosure issues, including the World Bank’s Voluntary Disclosure Program (VDP)
- Assist with negotiated resolution agreements and other settlements.
- Assist with the resolution of integrity issues involving project financing by IFC and other private-sector arms of IFIs.
- Deal with World Bank and other IFI referrals to national authorities, including issues of information-sharing among authorities and representation in concurrent World Bank and national investigations and proceedings
- Advise on mitigating risks of cross-debarment under the Cross-Debarment Agreement and other collateral consequences.
- Advise on the privileges and immunities of the IFIs.
- Post-sanction representation and assistance, including representation before the World Bank’s Integrity Compliance Office (ICO).
- Represented an international development consulting firm in sanctions proceedings initiated by the World Bank’s INT, which investigated and charged the firm with corruption in connection with a World Bank-funded project. We conducted investigation and argued case to World Bank Sanctions Board, which dismissed case and terminated sanctions proceedings. This is a significant and rare victory, as the Sanctions Board has terminated proceedings against respondents in only four other cases since 2012.
- Represented a manufacturer of key pharmaceuticals for the developing world in a World Bank investigation and potential sanctions proceedings arising out of a project in another South Asian country. We have defended the company in sanctions proceedings and appeared for a hearing before the World Bank Sanctions Board. As a result, the client got an three-month debarment period (well below the cross-debarment threshold) with no conditions on reinstatement.
- Represented a North American software company in the successful negotiation of a settlement of allegations of misconduct involving projects in multiple countries arising from an audit and show cause letter.
- Represented a US-based consulting engineering firm in connection with its World Bank sanctions proceedings, achieving a result from the first level of sanctions review that was acceptable to the client, which was managing significant potential collateral consequence risks. We subsequently represented the client in its dealings with the World Bank ICO. As a result, the ICO determined that the Company had met the conditions for reinstatement, and the company was reinstated.
- Represented an international consulting and engineering firm in several ongoing matters involving the World Bank. We negotiated the first settlement reached by the World Bank in a direct procurement case, resulting in a 3-year period of ineligibility for a subsidiary of the group’s companies, arising out of a project in China. Subsequently, we represented the group companies in sanctions proceedings, culminating in a decision of the Sanctions Board dismissing the case against the parent and imposing limited sanctions on two affiliates.
- Advised a South Asian pharmaceutical company on successor liability issues in connection with sanctions proceedings.
- Represented an international accounting firm in connection with allegations of fraud in a project in Latin America before the World Bank Sanctions Board.
News & Publications
ABA Litigation Corporate Counsel
December 8, 2016
By: William L. Drake