World Bank Details Disclosure Plan for Fraud, Corruption Reports

30 January 2008

The World Bank in late January said it will disclose redacted reports on its fraud and corruption investigations, but not the resulting “action plans.”

The Bank’s disclosure intentions came as part of its endorsement of the findings of an internal working group that reviewed a report by an outside group concerning the bank’s investigative operations. The Bank said the Executive Board discussed the subject “informally” Jan. 22, and Bank management indicated its intention to carry out the recommendations with detailed implementation subject to board approval later.

In addition to dealing with disclosure, the Bank said it plans to create an external independent advisory board and a new seven-person internal unit to help Bank staff guard against fraud and corruption in Bank projects. These were among the proposals made in September in the “Volcker” report on the Department of Institutional Integrity (INT), a group named for its chairman, former U.S. Federal Reserve Board chairman Paul Volcker.

While leaving the president final discretion over releasing investigative reports, the panel said there should be a strong presumption in favor of publicizing the findings, provided certain information is removed.

The Bank agreed and goes into some detail about what materials should be excised from the reports before their release.

Public disclosure of the redacted reports would not come until the very end of the internal review process. By that time, regional Bank staff, affected governments, executive directors and co-financing partners will have examined the INT reports in full or in part.  The disclosure policy will apply to INT’s Final Investigative Reports (FIRs) and to Detailed Implementation Reviews (DIRs), two related kinds of investigative reports.

The redaction policy includes ten criteria for deleting material such as “internal deliberative material,” trade secrets, information that could reasonably disclose the identity of a confidential source or investigative techniques, and “information that is otherwise restricted from disclosure by the World Bank Group.” INT would make the redaction decisions with a review by the Bank’s legal department.

In making its decision, the Bank concurred with the Volcker panel that there should be a presumption of disclosure. And, as also proposed by the Volcker panel, the Bank determined that the decision whether and when to disclose the redacted report to the executive directors and to the public would remain in the president’s discretion.

Bank president Robert Zoellick recently released an INT report on India, the first such report released.

Action Plans Unlikely to Be Disclosed

Less clear is whether the Bank will disclose “action plans,” designed as follow-ups to investigative findings. The recommendations of the Bank working group indicate that these will not be disclosed, although this was not ruled out, and the final decision could come when implementing amendments to the disclosure policy are adopted.

The Volcker panel recommended that the Bank prepare “action plans” detailing how to respond to INT reports covering remedies, design changes and changes in Bank practices. The Bank response indicates that an action plan should be considered “an internal document that is not normally disclosed to parties outside the Bank, but if the underlying INT report is shared with Executive Directors, then the action plan for responding to that report also should be shared with them.”

Subject to the president’s discretion, redacted INT reports normally will go to the EDs, according to the Bank response, suggesting that EDs will also see the action reports routinely.

Nor is it clear how a request for them would be handled. The Bank’s overall disclosure regime does not establish a presumption of disclosure applicable to all documents subject to a regime of exemptions.

Overall, the prospective changes suggest that there will be more information available on World Bank fraud and corruption investigations.

Disclosure is now possible for Detailed Implementation Reviews (DIRs), such as the one about India. DIR reviews are not specific investigations, but rather involve using various diagnostic tools to look for risk potential in projects. Begun in 2002, six have been completed.

Some reviews have resulted in “investigations,” which are examinations into whether specific allegations of misconduct are substantiated, and have resulted in 243 debarments since 2002. Investigations culminate in a Final Investigative Report (FIR). One such report has been leaked, on a Bank health project in India, and is available on the Wall Street Journal Web site. These findings contributed to the decision to conduct a DIR on health sector projects in India, the results of which were recently released.

Six DIRs have been conducted: in Kenya, Cambodia, India, Indonesia and two in Vietnam. In two countries, Cambodia and Vietnam, the governments released the findings.

The Cambodia DIR, at the time, was called a Fiduciary Review.

The Bank country team issued a press release at the time.

Here’s the presentation given at the press conference on the Vietnam DIR.

The Bank also issued a press release.

In addition, the Bank may send a “Referral” to a government about an investigation, containing information not to be used directly for enforcement, but providing findings for use by governmental authorities to determine if their laws have been violated.

A “Notice of Sanctions Proceeding,” a nonpublic document, goes to the evaluation and suspensions officer in the Bank, who decides on sanctions. Temporary sanctions notes are nonpublic, but the final debarment notices are made public.

By Toby McIntosh

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Filed under: IFTI Watch


In this column, Washington, D.C.-based journalist Toby J. McIntosh reports on the latest developments in information disclosure in International Financial and Trade Institutions (IFTI).
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