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Smith and Mancini: European Investment Bank publishes updated debarment policy

The European Investment Bank recently published its updated Exclusion Policy. The Policy reflects the EIB’s ”zero tolerance” to fraud and corruption that’s set out in the Bank’s Anti-Fraud Policy.

In addition to the prohibited practices sanctioned by other international financial institutions such as fraud, corruption, collusion and coercion, EIB’s policy will also permit the Bank to exclude companies found to have engaged in money laundering and financing of terrorism.

The possibility to exclude entities, referred to as “debarment” by other international financial institutions, builds on existing EIB prevention and deterrence measures.

Originally approved in 2011, the revised policy is now publicly available, along with a list of current excluded entities and settlements already entered into by EIB, on a single dedicated webpage.

Scope – An exclusion proceeding may be commenced against any individual or entity (borrower, contractor, supplier etc.) found to have engaged in Prohibited Conduct in an EIB operation. This is consistent with the EIB’s Anti-Fraud Policy, covering all EIB activities, counterparts and other relevant entities.

Process – To ensure an independent process, an Exclusion Committee comprising both internal and external appointees with high-level legal, banking and procurement relevant backgrounds, will review material submitted by the Inspector General and Respondents, and issue a recommended sanction, with the final decision taken by the EIB Management Committee.

Synergies with other debarment systems – EIB’s exclusion framework builds on EU and the MDBs’ debarment systems by putting in place a consistent system of procedures, due process rights and types of exclusion/remedial measures. Proceedings are mainly intended to be started based on findings by the EIB’s independent Fraud Investigations Division, however the Policy also builds on potential overlaps with co-financers by allowing the Bank’s Inspector General to start proceedings on the basis of exclusion or debarment by either the EU or other international financial institutions.

Negotiated settlements – The Policy also contains provisions in Art XII enabling the EIB to enter into negotiated settlements — such settlements have been used successfully since 2013 and a list is available on the Bank’s webpage.

Publication – In line with the EU’s approach, the Exclusion Policy allows for publication of exclusion decisions on a case-by-case basis to enhance the deterrent effect of the decision.

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Duncan Smith is Deputy Head of Fraud Investigations at EIB, responsible for a range of policy, training, outreach, prevention and deterrence issues. After being called to the Bar, he spent 10 years prosecuting at the UK’s DTI and Serious Fraud Office. He joined World Bank’s Investigation Unit as Team Leader then policy/debarment adviser, moving to EIB in 2007. He’s co-author of the IFI Task Force’s Uniform Framework Agreement (2006) that harmonized the definitions of fraud and corruption across the multilateral development banks.

Sabrina Mancini is an Investigator at EIB’s Fraud Investigations Division with ten years’ experience in compliance and investigations. After graduating from Sciences Po Paris, her work as a Compliance Officer focused on integrity due diligence and EIB’s whistleblowing policy. In her present role, she investigates allegations of fraud & corruption and develops EIB’s anti-fraud policy framework.

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