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Multilateral Development Banks Sign Cross-Debarment Agreement

In April, five multilateral development banks (MDB’s) – the World Bank, the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank Group – signed an agreement to “cross-debar firms and individuals found to have engaged in wrongdoing in MDB-financed development projects. (See here [1] for more information).

World Bank Group President Robert Zoellick noted that with the “cross-debarment agreement among development banks, a clear message on anticorruption is being delivered: steal and cheat from one, get punished by all.”

Under the agreement (here [2]), each participating institution “will enforce debarment decisions made by another participating institution” to the extent the debarment exceeds one year. However, as is often the case, notwithstanding such a commitment, the agreement also states that a “participating institution may decide not to enforce a debarment by the sanctioning institution where such enforcement would be inconsistent with its legal or other institutional considerations …”

It remains to been seen whether the cross-debarment agreement will have any deterrant effect by raising the “cost” of engaging in bribery and corruption.

For a World Bank list of debarred firms and individuals (see here [3]).

In July 2009, the World Bank announced (here [4]) “an agreement of up to a four-year debarment for Siemens’ Russian subsidiary, and a voluntary two-year shut-out from bidding on Bank business for Siemens AG and all of its consolidated subsidiaries and affiliates.” In November 2009, the World Bank announced (here [5]) that it “debarred [for four years] Limited Liability Company Siemens (OOO Siemens), a Russian subsidiary of Siemens AG, for having engaged in fraudulent and corrupt practices in relation to a World Bank-financed project – Moscow Urban Transport Project.” For more information on what was and was not included in that debarment proceeding, see here [6].