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Voluntary disclosure to fight corruption

On Tuesday the World Bank quietly announced a bold program to combat corruption on its own projects.

Under the new Voluntary Disclosure Program (VDP), firms, NGOs or individuals who work as contractors on Bank projects perform an internal investigation, report their corrupt acts and pledge to follow the rules on future projects. In exchange, they secure confidentiality and the right to continue working with the Bank. According to the press release, “those under active investigation by the World Bank are not eligible to enter the program.” Once firms sign on, any deviation from the VDP’s non-negotiable contract means ineligibility for Bank work for 10 years. (They’ll join the 330+ firms currently debarred.)

I asked Pascale Dubois, acting manager of the VDP, about the move to voluntary disclosure. She said:

Putting together a VDP that would work well for the private sector and for the Bank meant for us a long process of consultations and research into the latest trends in international anticorruption law and corporate social responsibility. We have also been working with pilot firms for the past two years, and that experience helped us to refine the program.

But is the Bank letting offenders off too easy by granting immunity? Pascale corrected me:

Now that we’ve launched the program, one challenge is to make sure that firms and other potential participants have no misconceptions about it. For example, the word “immunity” keeps popping up when people describe the VDP. This is inaccurate. VDP allows firms to avoid public debarment by the Bank, which is an administrative sanction. This has nothing to do with firms’ liabilities under national laws where they do business. Participating in the VDP does not protect firms from being prosecuted according to national legal systems.

I think the success of the VDP will hinge partially on how successful we are in getting the message out – accurately – about how it works.

Transparency International has been a huge supporter of the proposal. I see the initiative as perhaps the most cost-effective way to reduce corruption at the World Bank – considering that firms pay virtually all of the costs.


Submitted by Lars on
Having read the FAQ on the VDP, I still have to say I don't how this program will be helpful, except perhaps as facilitating some dialogue. If the Bank receives knowledge about a criminal act that pertains to contracts/actions that involve losses not only to the Bank, then in quite a number of countries it would be illegal to withhold this information. If, say, the criminal act involves civil servants, would the bank only notify the Anti-Corruption Authority with some sort of anonymous, "redacted" information about how something might not be quite right in this or that Department. That could well be impossible to investigate: Rumours abound in many countries - what is needed is hard facts. Of course, there is nothing wrong with helping companies strengthen internal procedures against corruption, etc. But I think that might be done better without this somewhat confusing concept of forgiving companies their sins. The sins which will be confessed are bound to be the minor ones, anyway. Well, maybe it's just me that is stupid and overly pessimistic. Let's hope the VDP does the job. It will be interesting to see its impact some years from now. Best wishes Lars, Denmark

Submitted by Lars on
If what Mr. Guha of the Financial Times implies concerning Mrs. Folson 's employment is true, it isn't a good symbolic start for the campaign, in my humble opinion. Considering that hiring "friends and family" for public office is one of the most widespread AND most debilitating forms of corruption in the developing world, Mr. Wolfowitz should have done the utmost to set a good example. I'm not suggesting that Mr. Wolfowitz has acted against the rules, but maybe then Bank employment policies should be revised!? Best wishes Lars, Denmark

Submitted by Frank Vogl on
World Bank Voluntary Disclosure Program It is useful to place this important new program in both its historical context and in its current international context. When a few of us launched Transparency International in 1993 we sought as a key objective to convince the World Bank's leadership to assign priority to the issue of anti-corruption and to ensure that the Bank's procurement guidelines were appropriately modified to fully take into account basic issues of transparency and good governance. It was an uphill struggle. The Bank long argued officially that dealing with the corruption issues was too "political" and thus counter to the mandates of its Articles of Agreement and, more informally, the Bank's staff suggested that there was no corruption in Bank procurement! Well, as the new Voluntary Disclosure Program attests, the Bank has come a huge distance over the last 13 years. For this it should be applauded. It is, unquestionably, taking the corruption issue seriously, from the projects and programs it promotes, to the procurement it manages. But, how effective is the Bank in these areas? It would be good to see the Bank appoint a genuinely independent panel of external experts from developing countries to objectively evaluate its performance. It would also be good if the Bank were to listen to such experts to gauge if its new approaches are well understood and welcomed. This takes me to the global current context of the Bank's new program. It is a pioneer. The Bank is setting the stage for a new level of disclosure that may very well be emulated in the year ahead by regional development banks and perhaps some bilateral aid agencies. We also need to see a more aggressive approach by export credit agencies. But, while congratulating the Bank on its leadership and its new intelligent approach, we must also take into account a harsh realty: as our news reports on so clearly show, as well as insightful research, successful prosecutions of bribe-paying multinational companies are minimal outside of the United States. It is five years since the OECD Anti-Bribery Convention came into force that bound all OECD member countries to act to prevent bribe paying to officials in developing countries by multinational corporations - so far, hardly any of the OECD countries (the US is a notable exception) have demonstrated any serious interest in investigating and prosecuting bribe-paying com,panies. The record of enforcement is quite awful. So voluntary disclosure by the Bank, yes. But far more needs to be done across the globe to convince multinational corporations that bribe-paying involves serious risks. Thank you. Frank Vogl, Publisher,

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