Publishing Decisions About Misconduct an Important Step
June 4, 2012

The World Bank’s decision to publish decisions about firms’ misconduct is a game-changer in the global fight against corruption. This will enhance confidence in the Bank’s review process, put violators under the spotlight, and hopefully deter corrupt practices.

Jessica Evans, senior international financial institutions advocate

(Washington, DC) – The World Bank took an important step to fight corruption on May 30, 2012, by publishing decisions to sanction companies for misconduct, Human Rights Watch said today. The World Bank should adopt a similar approach to its lending in countries with poor human rights records, Human Rights Watch said.

“The World Bank’s decision to publish decisions about firms’ misconduct is a game-changer in the global fight against corruption,” said Jessica Evans, senior international financial institutions advocate at Human Rights Watch. “This will enhance confidence in the Bank’s review process, put violators under the spotlight, and hopefully deter corrupt practices.”

The World Bank published seven “Sanctions Board” decisions in which nine companies and one individual were sanctioned for fraud or corruption in their dealings with the Bank. As a result, they cannot participate in Bank Group-financed operations for between six months and five years. The World Bank Group’s Sanctions Board is an administrative tribunal that decides contested sanctions cases. The World Bank reports that it has sanctioned more than 530 firms and individuals for fraud, corruption, and collusion since 1999. Before May 30, the decisions were not made public.

A transparent approach to combating corruption should encourage greater revenue, budget, and spending transparency across all parts of government in countries where the World Bank works, Human Rights Watch said.

In particular, the World Bank should start demanding far more transparency from governments such as Burma, where an abusive military has controlled much of the government’s revenue and is actively involved in business activities through conglomerates it controls and where military funds are not subject to adequate disclosure or scrutiny. Historically, the World Bank has interpreted its non-political mandate as restricting it from scrutinizing military revenue or expenditure.

The World Bank should work to ensure greater transparency so that a country’s own resources, as well as World Bank investments, benefit the people, Human Rights Watch said. In many countries, particularly where the military has a role in business or otherwise accesses funds outside the official budget, this cannot be achieved without scrutiny of military accounts.

“In military-controlled countries like Burma, the Bank can’t hope for better development without first insisting that the military disclose what it is doing with public funds,” Evans said. “Any push for transparency that stops short of the military would be a failure.”

The World Bank’s global transparency agenda should include:

  • Actively engaging with local populations and a broad range of civil society, and publishing and translating its assessments.
  • Publishing all documents ahead of consideration by the board of directors, as well as comprehensive board minutes.
  • Pressing for revenue and budget transparency and meaningful anti-corruption measures in its dialogues with governments.
  • Extending analysis and recommendations addressing fiscal transparency and accountability to all military accounts and funding sources, including any military-controlled businesses or state-owned enterprises that finance military activities.