MANILA, FEBRUARY 24, 2009 – At the invitation of Finance Secretary Margarito Teves, an informal technical briefing was held with members of the Senate at the Senate Building on February 24, 2009, on the investigative and sanctions processes of the World Bank in cases where fraud, corruption, collusion, coercion and/or obstruction, as defined by the World Bank, is alleged or suspected in World Bank-funded programs and projects. The World Bank would like to thank Finance Secretary Teves for his invitation and the honorable members of the Philippines Senate for attending.
The World Bank appreciates the initiative of the members of the Philippine Senate, especially the Committee on Economic Affairs, to follow up on the World Bank’s findings in relation to the Philippines National Roads Improvement and Management Program (NRIMP-1) Project. This initiative—together with efforts by Office of the Ombudsman, the Department of Public Works and Highways, and the National Bureau of Investigation to probe into the matter—contributes to our shared goal of improving governance and fighting corruption in the Philippines.
The informal technical briefing was intended to provide information on the role of the World Bank’s Integrity Vice Presidency (INT) in investigating allegations or suspicions of wrongdoing in relation to World Bank financed programs and projects; the nature of the World Bank’s investigative and sanctions processes; the types of documents and reports produced in the course of these processes; and how such reports might be used for follow-up actions appropriate under the laws of the member country in which wrongdoing is alleged to have occurred. The informal technical briefing did not discuss the results of investigations conducted by INT in specific cases or countries, nor any particular deliberation of the World Bank's Sanctions Board.
INT, an independent unit of the World Bank, investigates allegations or suspicions of fraud, corruption, collusion, coercion, and obstruction, as defined by the World Bank, related to Bank Group-supported activities. During the informal technical briefing, the World Bank representatives clarified that INT’s investigations are administrative in nature, in that they are primarily intended to allow the World Bank to determine if its own rules, policies or procedures, have been violated by firms or individuals. Such violations may become the basis for the World Bank to exercise remedies under its legal agreements with its borrowers or to pursue sanction proceedings against firms or individuals. The purpose of such investigations, the exercise of remedies and sanctions proceedings is to help the World Bank meet its obligation to ensure that funds that it provides to borrowers are used for their intended purposes. INT’s investigations are not criminal investigations, and are not intended to substitute for any investigative activities that may be required to be carried out by domestic authorities pursuant to domestic law.
The World Bank representatives explained the nature of collusive practices, which the World Bank currently defines as “an arrangement between two or more parties designed to achieve an improper purpose, including to influence improperly the actions of another party.” The World Bank representatives described in general terms some indicators of collusion that have been found in past investigations through the review and forensic analysis of bidding documents. These included symmetry among bid prices, questionable disqualification of some bidders, sequential bid securities, and abnormally high bids, among others.
The World Bank representatives clarified the distinction among three types of documents that may be issued by the World Bank following the conclusion of an investigation, namely a Referral Report, a Notice of Sanctions Proceedings, and a Redacted Report.
A Referral Report is a summary of investigative findings issued by INT to appropriate government authorities. Referral Reports make no judgment as to whether the laws of the member country have been violated.
A Notice of Sanctions Proceedings is a confidential document produced by INT and issued by the World Bank’s Evaluation and Suspension Officer to respondents in sanctions cases, including documentary and testimonial evidence necessary for respondents to answer allegations against them.
A Redacted Report is a summary of investigative findings issued by INT to World Bank member country governments, the World Bank’s Board of Executive Directors and the general public, following the World Bank’s redaction and review protocol.
The Referral Report summarizing INT’s investigation findings concerning NRIMP-1 were shared with the Government of the Philippines in November 2007. Because the Referral Report includes sensitive information which may be relevant to possible investigations in the Philippines and contains no judgment as to whether the laws of the Philippines may have been violated, it was shared on a strictly confidential basis to allow the investigative authorities in the Philippines to undertake their own investigations if deemed warranted and reach their own conclusions, in each case based on Philippines law.
A member country government that has received a Referral Report and is seeking to investigate the case can always ask the World Bank for additional information. In this case, the World Bank has offered follow-up assistance to the Ombudsman in conducting her investigations. In addition to the Referral Report, the World Bank has also provided the Office of the Ombudsman additional documentary material relevant to the matter.
The World Bank representatives clarified that, separately, when evidence from an INT investigation shows that firms or individuals may have engaged in sanctionable practices as defined by the World Bank, INT prepares a Notice of Sanctions Proceedings (NOSP). When the results of an investigation are submitted to the Sanctions process, this is done in an effort to enable the World Bank Group Sanctions Board to decide whether or not firms and/or individuals should be debarred from being awarded further World Bank-financed contracts or be otherwise sanctioned. The World Bank representatives noted that the World Bank can only sanction firms and individuals involved in World Bank-financed projects, not government officials.
The Redacted Report concerning INT’s NRIMP-1 investigation will be posted on the INT page of the World Bank’s website shortly.
The World Bank representatives noted that both the Referral Report and the other documentary findings are now in the hands of the Office of the Ombudsman (OMB). The World Bank firmly believes that it has provided the Philippines authorities with the relevant body of information to consider in carrying out whatever investigation the Government deems appropriate.
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