by Pascale Hélène Dubois, Kathleen May Peters, and Roberta Berzero
If we were playing “Two Truths and a Lie,” we would say the following: (a) settlement agreements are used in a variety of jurisdictions as an alternative to litigation; (b) settlement agreements can offer parties the opportunity to save time and resources while securing a predictable outcome; (c) there is a book that will tell you everything you need to know about settlements in bribery cases. The last, of course, is the lie. But only until Spring 2020.
What do settlements within the World Bank Group Sanctions System look like? Why do entities and individuals choose to enter into settlements with the Bank Group? How do settlements support the Bank Group’s mission to further development impact and contribute to safeguarding donor funds in the projects it finances worldwide? These and other questions will be addressed by the chapter “Settlements Within the World Bank Group Sanctions System” to be published in spring 2020 in the forthcoming book from Edward Elgar Publishing, “NEGOTIATED SETTLEMENTS IN BRIBERY CASES – A Principled Approach,” edited by Tina Søreide, Norwegian School of Economics (NHH), Norway and Abiola Makinwa, The Hague University of Applied Sciences, the Netherlands.
The chapter, authored by Pascale Hélène Dubois, Vice President, World Bank Group Integrity Vice Presidency; Kathleen May Peters, Senior Legal Officer, World Bank Group Integrity Vice Presidency; and Roberta Berzero, Litigation Specialist, World Bank Group Integrity Vice Presidency, will discuss the use of settlements in the Bank Group’s Sanctions System since the implementation of a formalized settlement framework in 2010. Starting with an overview of the history and process of the settlement framework, the chapter will highlight the key aspects of the WBG’s framework, which has improved the efficiency of settlements. Settlements, in appropriate cases, have become assets for the Bank Group’s investigative arm, the Integrity Vice Presidency (INT). The chapter will also address countervailing considerations that may be at play for the Bank Group and for the entities seeking to enter into settlements. The chapter will consider settlements in the broader context of INT’s mission to advance development impact, and safeguard donor funds. Finally, the chapter will conclude with a comparative analysis on the use of settlement mechanisms by multilateral and regional development banks.
INT is an independent unit within the Bank Group. INT’s mandate is to conduct impartial, administrative investigations into allegations of sanctionable practices—fraud, corruption, collusion, coercion or obstruction—affecting Bank Group financing. Through INT’s investigations, and resultant administrative sanctions proceedings, the Bank Group seeks to determine whether its funds have been used for their intended purposes, in keeping with fiduciary duties laid out in the institution’s Articles of Agreement.
The Bank Group’s Sanctions System is administrative in nature and operational in character. Its jurisdiction is rooted in the institution’s Procurement (PDF: 685 KB), Consultant (PDF: 642 KB), and Anticorruption Guidelines (PDF: 195 KB) as incorporated into financing agreements with borrower countries, Procurement Regulations (PDF: 2.83 MB), and project bidding documents. The Sanctions System’s jurisdiction, in addition to the procedures it undertakes and the standards it applies, are administrative in nature. Its function is to uphold the institution’s fiduciary duty to member countries by ensuring that the funds they have entrusted to the Bank Group are used for their intended purpose, and not siphoned away by unethical actors. To this end, excluding firms and individuals that engage in sanctionable practices from participating in Bank Group-financed projects is the practical purpose of the WBG Sanctions System.
The Bank Group, as an institution with a development mandate, is also committed to rule of law principles—the Sanctions System is structured to ensure transparency, due process, and predictability for accused firms or individuals, known as “respondents” in system documents. The institution’s sanctions procedures are public, accessible, and applied consistently. Respondents are given notice and the opportunity to challenge the evidence against them. INT and respondents make their cases within an independent and impartial two-tier review system, composed of the Office of Suspension and Debarment (OSD) and the Sanctions Board. OSD issues determinations and the Sanctions Board issues reasoned, published decisions.
The settlement process is an efficient alternative to sanctions proceedings that adheres to the Bank Group’s rule-of-law values. Settlements offer a faster, more predictable resolution than litigation and adjudication and are conducted within a similar structure and with similar safeguards to sanctions proceedings. Settlements include public, accessible, and consistently applied procedures. Sanctions are based on clearly delineated aggravating and mitigating factors, in keeping with past precedent. Review by OSD and the Bank Group’s Legal Vice Presidency ensure the settlements’ fairness and voluntariness, and that the results are published.
The settlement framework, as incorporated into the Bank Group’s Sanctions System, is both practical and principled. It provides an efficient mechanism, with procedural checks for fairness and transparency, to reach a predictable, effective outcome—an agreed-upon sanction. Debarment with conditional release is the baseline sanction, and it comes with compliance and cooperation obligations. Such a negotiated result translates the respondents’ engagement and cooperation into meaningful change: integrity compliance programs that decrease the probability of future misconduct. Experience has shown that this change has a broader impact: as business norms shift to cleaner, more sustainable practices, partners and competitors will undergo changes and invest more in compliance efforts, thereby growing the compliance community and advancing the Bank Group’s development mission.
The book will be published in the spring of 2020, enjoy the reading!
Pascale Hélène Dubois is Vice President, Kathleen May Peters is Senior Legal Officer, and Roberta Berzero is Litigation Specialist at World Bank Group Integrity Vice Presidency.
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