EBRDs Prohibited Practice Actions Rohan Schaap Office of the Chief - - PowerPoint PPT Presentation

EBRD’s Prohibited Practice Actions

Rohan Schaap Office of the Chief Compliance Officer 24 May 2017

Chernobyl New Safe Confinement

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What do we expect from our clients?

EBRD expects its Public Sector Clients to have:  Comprehensive internal controls that are designed to detect and limit the opportunities for fraud and corruption.  Reporting mechanism that allows internal and external parties to report suspicions of fraud and corruption, and to do so without fear of retaliation (whistle-blower protection).  A process for effectively reviewing and resolving complaints of fraud and corruption.

Essential Elements of an Anti- Corruption Compliance Programme

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What t exists on paper er? How w com

• mpre

rehen hensiv ive?

• Anti-bribery/corruption policy
• Prohibition on bribery
• Rules on gifts and hospitality, political donations, charitable donations, bribery solicitation
• Code of Conduct/Ethics
• AML/CFT and sanctions compliance policy
• Whistleblowing/Reporting mechanism

Meanin aningful l impl mpleme ementatio tation?

• Ownership/tone from the top and middle management
• Training and awareness/raising
• Repeat risk assessments
• Response to compliance failures/internal investigations
• Financial and non-financial control measures
• Monitoring and review

What does the EBRD do to help reduce the demand side corruption?

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• Ukrainian Business Ombudsman Council
• Extra-judicial dispute resolution mechanism
• MOU between Govt of Ukraine, EBRD, etc.
• Legislatively enshrined
• Engagement with govt authorities
• Technical capacity building
• Raising awareness of business integrity
• “Appropriate” enforcement /sanction
• Identifying demand side situations
• Business integrity and controls improvements

EBRD Investigations of Prohibited Practices

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• Investigates allegations of Prohibited Practices committed in respect of

Bank Projects.

• There are seven Prohibited Practices:
• Fraud
• Corruption
• Collusion
• Coercion
• Theft
• Misuse of Bank resources
• Obstruction
• Prohibited Practices can result in debarment of the relevant entities, and

then(potentially) cross-debarment by other MDBs.

Our Expectations (during an investigation)

EBRD expects its client to:  Inform us of all suspicions of fraud and corruption

• ccurring within project at the earliest possible time.

 Fully cooperate with EBRD’s investigations, including making its records and personnel available to investigators;  Suspend (and if appropriate, dismiss) all individuals suspected of being involved;  Review internal controls and make improvements where required.

What will an EBRD investigation involve?

On receipt of an allegation, EBRD will:  Assess the reliability and seriousness of the allegation;  Assess the implications of the allegation on the EBRD programme / EBRD procurement activity;  On the basis of the above, determine whether to commence an EBRD investigation into the allegations.

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EBRD Investigations

An EBRD investigation:

• Will seek to determine whether tenderers or contractors

/ subcontractors have engaged in fraud and corruption.

• Will not investigate the actions of a public sector client or

its personnel (including personnel from the Project Implementation Unit). This is the role for national authorities and / or the client;

• May result in EBRD imposing sanctions on an entity that

is involved in fraud or corruption and / or deciding not to fund the affected project.

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Focus Country – Ukraine

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• Four corruption-related enforcement actions 2015-2016

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Subject

Payments Benefit Result 1 ACTI Ukraine (Subsidiary of multinational agribusiness corporation) US$22 million US$100 million in VAT refunds 3-year debarment 2 Medium-sized, family-

• wned plastic manufacturer

€7.2 million VAT refunds, customs clearance, court case facilitation 3-year conditional nondebarment 3 Medium-sized, family-

• wned steel manufacturer

€4.3 million €18.3 million in VAT refunds 3-year conditional nondebarment 4 Medium-sized, regional grain trading company US$380,000 Land registration 3-year conditional nondebarment

Useful Resources

26 May, 2017 11

• Transparency International Business

Principles for Countering Bribery

• ISO 37001 on Anti-Bribery

Management Systems

• UNODC/World Bank/OECD Anti-

Corruption Ethics and Compliance Handbook for Business

• UN Global Compact: A Guide for Anti-

Corruption Risk Assessment

• U.S. DOJ Evaluation of Corporate

Compliance Programs

• Business Anti-Corruption Portal
• World Economic Forum Partnering

Against Corruption Initiative

Questions?

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EBRD Website: www.ebrd.com List of Ineligible Entities: www.ebrd.com/ineligible-entities.html Report Fraud and Corruption: http://www.ebrd.com/eform/contact/1390580844264 Ombudsman Business Council: https://boi.org.ua/en/