Consultations on the World Bank Sanctions Regime

Paris, September 12, 2013. The B20 Coalition represents the interests of companies of all sizes and industries through policy coordination among the most representative private business federations of G20. As a multinational coalition that has been supporting growth and development agenda of multilateral institutions, we would like to contribute to the important stock-taking by the World Bank Group on its sanctions regime, and the overall effort to deter fraud and corruption.

We share the conviction that, in the wake of recent severe financial crisis, The World Bank Group and regional development banks offer an essential source of finance for the emerging and least- developed economies that are a major factor in restoring global demand. We anticipate and welcome an increase in the numbers of private businesses from around the world that will directly or indirectly become involved in World Bank-financed projects. Implemented according to the World Bank’s high standards of integrity, these projects will deliver essential public and private goods while elevating the standards of governance and rule of law in the borrowing countries.

Given the growing impact of World Bank funding, we congratulate the Bank with the thoroughness of its approach to stakeholder consultation. We also note that such reviews of the sanctions regime set the rules for a long period of time, and therefore merit a broader consultation with business. While it is in our interest and that of the ultimate beneficiaries of Bank’s projects at the point of delivery, to encourage more companies to participate in Bank-financed projects, we would like to maintain a high standard of safeguards and due process that would protect the less experienced businesses from mistakes or from pressure or coercion under the guise of investigation and debarment proceedings.

Since your Discussion Brief notes that the allegations are beginning to emerge outside the procurement context, we should expect that some businesses will find themselves unprepared for dealing with the Bank’s procedures, particularly those initiated by local authorities in the countries where rule of law and due process remain challenging issues. We therefore urge you to extend the period of consultation for another 6 months and use the time to educate a wider business audience of the impending changes in the sanctions regime. The B20 Coalition and our national members would be ready to help disseminate the relevant information, including to SMEs. We urge you to make the full report available to the public soonest to enable a more productive consultation.

Note that earlier this year, in the process of B20 discussions of anti-corruption best practices, many companies from around the world came together to review relevant G20 agenda. We all agreed that the standards promulgated my MDBs in this regard are extraordinarily important and should be used as templates in all major markets. Until that happens, increased reliance on country systems may discourage companies from offering their best goods and services, which will degrade the capacity to deliver real impact.

We support the idea of further study of the quality controls across the sanctions system. We urge you to include, to the extent practicable, criteria that directly relate to the ultimate delivery of goods and services to the intended beneficiaries of the projects. As the representatives of the business community, we note that the Discussion Brief expresses concern over the low numbers of corruption

and collusion cases. This appears to rest on assumptions of underreporting without acknowledging the possibility of improved integrity in the business community. We hope that further consultations will focus on the quality of the process rather than numerical goals that may or may not be statistically meaningful.

We also suggest that you allocate more time and broaden the scope of consultation on the threshold for temporary suspension of companies. Such measures as early temporary suspension can have very damaging and potentially irreversible consequences for companies who are invested in their global reputation without affording an opportunity to due process. Without prejudging the outcome of the consultation process, we wish to point out that this area of reform requires a very detailed discussion with businesses of different sizes and coming from diverse legal and business traditions.

The B20 Coalition stands ready to participate in your consultation in the firm belief that results- oriented reforms will bring additional private sector resources to the projects financed through the World Bank Group.

B20 Coalition members

AIGroup, Australia – BDI, Germany – BUSA, South Africa – BUSINESSEUROPE, Europe – Canadian Chamber of Commerce, Canada – CEOE, Spain – CII, India – CNI, Brazil – Confindustria, Italy – Coparmex, Mexico - FKI, Korea – MEDEF, France – TÜSİAD, Turkey – UIA, Argentina – U.S.Chamber of Commerce, United States