EBRD adoption of World Bank debarment deters corruption in development assistance
Today’s decision by the European Bank for Reconstruction and Development (EBRD) to make Lahmeyer International ineligible for EBRD-financed contracts is a welcome move towards consistency among the multilateral development banks’ (MDBs) anti-corruption efforts. Lahmeyer was originally debarred by the World Bank last year for bribery in connection with the Bank-financed Lesotho Highlands Water Project.
The EBRD’s debarment of Lahmeyer is the first instance in which any of the development banks has debarred a company for fraud or corruption committed in a project financed by another bank. This is a first step in showing bribe payers that their ability to do business with any of the MDBs is on the line.
Transparency International (TI) urges all of the MDBs to move forward on this type of consistent and coordinated action, debarring across the board to fight corruption. The establishment of a single standard for debarment across the MDBs would have far-reaching impact, increasing the risk and the penalty for corruption.
The World Bank and the regional development banks have for some time been discussing whether one bank would debar a company based on a decision by another bank to debar due to fraud or corruption.
Today’s powerful debarment action by the EBRD, following a debarment by the World Bank should become standard policy against corruption,” said Jermyn Brooks, leader of TI’s private sector programmes. “It also represents a constructive use of the EBRD’s policies to proactively promote improvements in companies' anti-corruption programmes.”
The risk of debarment provides a compelling incentive for companies with weak anti-bribery controls to institute robust measures. The willingness of both the EBRD and the World Bank to reduce the debarment period if a company agrees to implement improved procedures also is a powerful incentive for companies to enhance their practices.
TI continues to urge the MDBs to make the establishment of an effective anti-bribery compliance programme a pre-condition for companies to participate in MDB-financed procurement and investment. Preventive measures to reduce fraud and bribery could then become a more effective instrument than remedial measures to decrease the dangers linked to the supply side of corruption.
Transparency International is the global civil society organisation leading the fight against corruption.
Note to editors:
Transparency International has long promoted effective corporate anti-bribery compliance programmes and encourages companies to model their own initiatives on international standards, which include the TI-developed Business Principles for Countering Bribery.
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