As the financier of development projects around the globe, the World Bank has been a leader in the effort to eradicate poverty through lending.
It also has caused concern with the American defense bar i about corruption investigations that aren’t required to follow any nation’s rules of criminal procedure or recognize the American concept of due process.
“We care about where our shareholders’ money goes, and they cannot go to those who don’t adhere or demonstrate a commitment to the highest level of integrity,” said Stephen Zimmermann, Director of Operations for the Integrity Vice Presidency at the World Bank.
Speaking at the American Conference Institute’s FCPA conference in New York City, he told the audience about the World Bank’s privileges and immunities when conducting administrative investigations into allegations of fraud and corruption.
Created in 2001, and given vice-presidency status in 2008, the Integrity Vice Presidency (INT) investigates fraudulent, corrupt, collusive, coercive, or obstructive practices occurring on World Bank-related projects.
Faced with evidence of errant conduct by an individual or entity that touches World Bank money, the INT makes reports recommending punitive action.
“As an international organization, the Bank is not legally obligated to follow national laws when conducting its investigations to enforce its own policies and rules,” Zimmermann said. “Rather, we seek to comply with our own anti-corruption policies and procedures.”
“We’re owned by our 188 member countries, and we don’t follow any particular jurisdiction’s rules in enforcing ours, although we often work in coordination with national authorities as they bring their own enforcement actions,” he said.
The cross-border ollaboration includes sharing evidence. And it’s common for the U.S. DOJ to require companies who enter into deferred prosecution agreements to cooperate with the World Bank.
U.S. laywers have expressed confidence in Zimmermann, a former assistant U.S. Attorney. But some are wary of the World Bank’s investigative procedures.
“How do we know we’re getting all of the evidence — including exculpatory evidence — when the World Bank shares the results of its investigations?” said Timothy Dickinson, partner at Paul Hastings LLP. “And why should they decide what gets labeled ‘exculpatory’?”
Dickinson questioned the fairness of the mandatory cross-debarment requirement that prevents companies from receiving funds from any of the other four regional development banks after being sanctioned by one.
“Each of them has its own investigative and enforcement procedures, and that sets up an unfair system until it’s completely harmonized,” he said.
Dickinson said he’s also “concerned about [attorney-client] privilege issues and how information is shared.”
With many different national rules out there — that don’t always yield the same results — how these issues are navigated to protect the rights of the defense will be important to watch,” he said.
“On the positive side,” Dickinson said, “Steve Zimmermann has designed an INT with a high degree of professionalism, and some of these issues and questions may be addressed over time.”
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.