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Public Procurement and Debarring: the World Bank : Policy Briefing

"The debarment of any company applies as well to any firm which owns the majority of the capital of that company and to any firm of which the company owns a majority of the capital"

In 1998 the World Bank put in place new procedures for debarring contractors from future Bank-financed contracts if it were found that the contractors committed fraud or corruption in the procurement or execution of Bank-financed contracts.

A 1998 Operational Memorandum laid out the administrative procedures to be followed by the Bank in handling allegations of fraud and corruption, included the formal establishment of a Sanctions Committee to review the findings of investigations and, where the evidence shows fraud or corruption, debar firms from being awarded Bank-financed contracts.

"The position of Secretary to the Sanctions Committee is filled by the Legal Adviser, Procurement and Consultant Services. A Sanctions Committee proceeding is initiated when the Secretary receives the investigation report from the Oversight Committee and - with the prior concurrence of the Sanctions Committee - a Notice of Debarment Proceedings is sent to the firm or individual against whom allegations have been made. This Notice of Debarment Proceedings gives formal notice of the investigation and provides the firm or individual with the opportunity to respond in writing as well as, if desired, in an oral presentation to the Sanctions Committee. If, after considering all the evidence, the Committee finds that the evidence is reasonably sufficient to determine that the firm or individual has engaged in corrupt or fraudulent practices, the Sanctions Committee recommends to the President that the firm or individual be declared ineligible to be awarded a Bank-financed contract, either for a stated time period or permanently. After a waiting period of not less than two weeks, the President makes an administrative decision based on the Sanctions Committee's recommendation. The declaration of ineligibility extends to any firm which owns the majority of the capital of a debarred firm and to any firm of which a debarred firm or individual owns the majority of the capital. See the World Bank Listing of Ineligible Firms for a list of firms and individuals against whom sanctions have been imposed (

On September 28, 2004, the World Bank announced the debarment of 10 individuals and 26 firms for fraudulent and corrupt practices in relation to the World Bank-financed "Book and Reading Development Project" (BRDP) in Indonesia. These firms and individuals will be ineligible to receive any new World Bank-financed contracts for the periods of their debarments. The World Bank also announced the issuance of four letters of reprimand in connection with the same project.

World Bank Country Director Andrew Steer welcomed the ruling, saying that, "the funds we lend must go to help the people of Indonesia reduce poverty. In this case, getting textbooks into the hands of Indonesian school children was an urgent need and donors responded to meet that need. The World Bank has worked closely with the Government of Indonesia to uncover and correct the diversion of funds from this project through corrupt practices."

Following an investigation by the World Bank's Department of Institutional Integrity (INT), the World Bank declared misprocurement and requested the Government of Indonesia to repay $10,000,000 from the disbursed proceeds of the loan and to prepare and implement an acceptable action plan to improve the procurement process in the education sector.

The period of debarment varied between two years, for those individuals and firms which participated in the scheme but not as principal organizers, to 15 years for those individuals and firms which played a central role in the scheme and were its primary beneficiaries through the size and/or number of contracts they won under the project. One firm and three individuals received public letters of reprimand from the World Bank, but remain eligible for World Bank-financed contracts.

In July 2004 the World Bank sanctioned Acres International, one of Canada's leading construction management and engineering consultancies, following its conviction for corrupt activities in the Bank-financed Lesotho Highlands Water Project. Acres has been declared ineligible to receive any World Bank contracts for the next three years.

In July 2001, the World Bank announced sanctions against three companies, as well as one individual, for violating the Bank's prohibitions against fraudulent and corrupt practices. The sanctions arose out of the findings of a Bank investigation of the Uzbekistan Cotton Sub-Sector Improvement Project.

The Bank declared Surendra Singh as well as Eastern Trading Ltd., Gap International, and Scan Distribution Pte. Ltd., all corporations owned or controlled by Mr. Singh, permanently ineligible to participate in Bank-financed projects. Eastern Trading Ltd. is based in the United Arab Emirates, Gap International is based in India, and Scan Distribution Pte. Ltd. is based in Singapore.

In ordering the debarments and reprimands, World Bank President James D. Wolfensohn acted on the recommendation of the Bank's Sanctions Committee, which found that the sanctioned firms and Mr. Singh had engaged in corrupt practices as defined in the Bank's Procurement Guidelines and Consultant Guidelines.

These actions are part of the World Bank's broad anticorruption efforts initiated by President James Wolfensohn in 1996. More information on the World Bank's overall anticorruption policies and activities can be found at

The following lists all references contained in our database that are relevant to this briefing
World Bank Web Site [7/6/2001] 'World Bank Sanctions Three Companies, One Individual For Corrupt Practices' by World Bank: [Source ID = 5727]

Business Day/All Africa Global Media via COMTEX [6/28/2001] 'World Bank to Black-List Corrupt Companies' by Bonile Ngqiyaza: [Source ID = 5831]

Financial Times [5/24/2002] 'Weak approach to combating corruption' by Ryan Hoover: [Source ID = 6691]

Bretton Woods Project [1/1/2003] 'Indonesian experience casts doubts on Bank anti-corruption efforts' by Bretton Woods Project: [Source ID = 7611]

Down to Earth [12/27/2002] 'The World Bank's Anti-corruption Strategy and Institutional Integrity Department: Effective in Combating Corruption?' by Down to Earth: [Source ID = 7612]

 [] '' : [Source ID = 7754]

Multinational Monitor [8/1/2002] 'The Dormant Power of the Purse The Failure of the Government to Use its Purchasing Power to Promote Corporate Compliance with the Law' by Seth Morris: [Source ID = 7828]

Radio National (accessed web site 11/03/2003) [7/15/2001] 'Doing Business Overseas: Ethical Dilemmas' by Nicole Johnston: [Source ID = 7841]

Global Corruption Report [11/27/2002] 'Global Corruption Report: Western Europe' by V�ronique Pujas: [Source ID = 7860]

Business Report [3/21/2004] 'Crooked company snubs Lesotho' by Wiseman Khuzwayo: [Source ID = 8768]

Odious Debts [3/23/2004] 'Activists Prod World Bank on Canadian Corruption Case' by Emad Mekay: [Source ID = 8774]

Sunday Times, Zambia [4/11/2004] 'Stop bribing poor nations, judges demand' by Carmel Rickard: [Source ID = 8815]

Globe and Mail [4/13/2004] 'German firm faces possible blacklisting: World Bank ponders sanctions against Lahmeyer in Lesotho corruption case' by JOHN SAUNDERS: [Source ID = 8817]

Washington Post [5/13/2004] 'World Bank Corruption May Top $100B Says Senator' by Carol Giacomo: [Source ID = 8932]

Reuters alert [5/12/2004] 'World Bank defends anti-corruption strategy' : [Source ID = 8933]

U.S Senate Committee On Foreign Relations [5/13/2004] 'Combating Corruption in the Multilateral Development Banks' : [Source ID = 8935]

The Washington Post [7/4/2003] 'World Bank Focused on Fighting Corruption; Graft and Bribery, Once Tolerated, Punished by Blacklisting' by Jonathan Finer: [Source ID = 9044]

IPS-Inter Press Service [3/23/2004] 'WORLD BANK PRESSED ON CANADIAN CORRUPTION CASE' by Emad Mekay: [Source ID = 9048]

Odious Debts [5/25/2004] 'Statement by Patricia Adams to the US Senate Committee on Foreign Relations by Patricia Adams, Executive Director, Probe International' by Patricia Adams: [Source ID = 9076]


Business Line [6/22/2004] ''PROJECT'ING CORRUPTION IN MULTILATERAL BANKS' : [Source ID = 9241]

M2 PRESSWIRE [4/13/2004] 'World Bank statement on Lesotho Court of Appeals ruling' :,,contentMDK:20191132~menuPK:356035~pagePK:141137~piPK:141127~theSitePK:356029,00.html [Source ID = 9242]

World Markets Analysis [4/13/2004] 'World Bank Comes Under Pressure to Impose Sanctions on Firms Found Guilty of Bribery in Lesotho Water Project' by Gus Selassie:,,contentMDK:20191132~menuPK:356035~pagePK:141137~piPK:141127~theSitePK:356029,00.html [Source ID = 9243]

The Guardian [4/16/2004] 'World Bank corruption inquiry may blacklist firm' by David Pallister:,3604,1169970,00.html [Source ID = 9244]

Canadian Press Newswire [3/15/2004] 'Engineering firm Acres faces possible World Bank sanction over Lesotho woes' by John Saunders:,3604,1169970,00.html [Source ID = 9245]

M2 PRESSWIRE [1/16/2003] 'World Bank debars two firms and one individual' :,,contentMDK:20086527~menuPK:356529~pagePK:141137~piPK:141127~theSitePK:356509,00.html [Source ID = 9247]

Reuters [7/23/2004] 'World Bank bars Canada's Acres for corruption' : [Source ID = 9403]

CIOB [7/27/2004] 'World Bank gives Acres three-year debarment as company sells out to Canadian partner' : [Source ID = 11698]

Laksamana.Net [9/29/2004] 'Bank Blacklists Corrupt Book Project Partners' : [Source ID = 12257]

The Gazette [3/18/2004] 'Montreal firm barred from World Bank deals' by MARK KENNEDY: [Source ID = 12698]

M2 PRESSWIRE [4/15/1999] 'World bank debars firm for misrepresenting prior experience' : [Source ID = 12699]

M2 PRESSWIRE [10/29/1999] 'World Bank debars five firms - two indefinitely, three for five years' : [Source ID = 12701]

M2 PRESSWIRE [7/5/2004] 'World Bank debars two companies due to corruption and fraud' : [Source ID = 12705]

Associated Press Worldstream [12/6/2000] 'Three World Bank employees fired for accepting kickbacks' : [Source ID = 12706]

Associated Press Worldstream [12/6/2000] 'World Bank sacks three in kickback scheme' : [Source ID = 12707]

Associated Press Worldstream [11/24/2004] 'Officials consider ways to intensify fight against corruption in EU' : [Source ID = 12729]

Financial Times [7/21/2004] 'World Bank to face fresh pressure to stamp out graft' : [Source ID = 12790]


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UNICORN is financed by the Foundation Open Society Institute