Anticorruption and Integrity

Issues on Publicizing ADB's Anticorruption Sanctions List

Background

When ADB first established its procedures to implement the Anticorruption Policy (the Policy), it decided not to make public its list of entities on which it had imposed sanctions. The Integrity Division of the Office of the Auditor General (OAGI) provides ADB staff access to the list of sanctioned entities and terrorism-related entity information, and shares the information, on a confidential basis, with the World Bank, the Inter-American Development Bank, other international organizations, and parties outside ADB with a need to know.

Since Management approved that position, OAG has often reassessed the benefits and weaknesses of publicizing ADB's Anticorruption Sanctions List. OAG supports retaining the current practice that those names are confidential because it has concluded that practice best supports fair and consistent implementation of its Anticorruption Policy. The primary reasons are:

• ADB's Anticorruption Policy and procedures are administrative tools, not a legal or judicial assessment of fraud or corruption, terms that carry significant legal implications in most member countries.
• Publishing the names of entities upon which ADB has imposed sanctions would focus on only a portion of ADB's efforts, which OAG believes would contravene the principle of equitable treatment under the Anticorruption Policy.
• Entities whose names would be published are more likely to present significant challenges to ADB's decisions, further challenging already limited resources.
• There has been no evidence to show disclosing the names of entities would have any beneficial deterrent effect vis-à-vis the Policy.

Administrative Tool

Each of ADB's 63 members likely has its own definitions of fraud and corruption, and those definitions may vary significantly among those members. In adopting the Policy, ADB set a consistent standard for all members and established definitions pursuant to the Policy. In consistently and equitably applying that standard, ADB makes no judgment of the legal aspects in its member countries. In addition, other international organizations have their own definitions of fraud and corruption, which vary (usually slightly) from ADB's, though there is an effort to harmonize those definitions.

Basically, the Anticorruption Sanction List are entities with which ADB decided it does not wish to do business because those entities have not observed the highest ethical standards during procurement or execution of an ADB-financed contract by engaging in corrupt or fraudulent practices, as defined by ADB.

Since the Policy and anticorruption procedures are administrative tools, and recognizing the terms fraud and corruption carry significant legal implications, OAG has concluded it is not appropriate to publicize names of entities on which ADB has imposed sanctions pursuant to the Policy.

Focus

Although the majority of OAGI's work is to investigate allegations of fraud and corruption involving contractors and consultants involved in ADB-financed activities, a significant portion of OAGI's cases relate to government officials or ADB staff.

Because ADB's Charter constrains ADB from involving itself in sovereign matters, ADB deals with issues relating to government officials differently than with contractors and consultants. The Anticorruption Policy provides ADB leverage of loan and technical assistance programming decisions, and encourages engagement and dialog with, as well as requests to governments, to deal with concerns of fraud and corruption.

We also recognize that certain human resource decisions, particularly details of disciplinary actions against named staff, are appropriately not publicized. Furthermore, we have concluded it would be inappropriate to publicize the results of cases related to ADB staff. Doing so would breach the bounds of privacy and security to which personnel that are innocent should be entitled.

In addition, we recognize that publicizing ADB's Anticorruption Sanction List could lead to incorrect conclusions regarding the focus of ADB's anticorruption efforts or levels of corruption in member countries. For many reasons, OAGI's cases do not principally reflect levels of corruption within a particular region or country. Similarly, the geographic dispersion of debarred entities does not demonstrate levels of corruption within a particular country. However, it is likely that the Anticorruption Sanction List would be used in that way, if publicized.

With those constraints, OAG does not believe it is equitable to focus attention only on the contractors and consultants that violate the Policy.

Challenging ADB's Decisions

To prevent the stigma of being publicly labeled fraudulent or corrupt, entities-particularly large firms with deep pockets-are likely to vigorously challenge ADB's investigations and administrative actions pursuant to the Policy.

During its existence, OAGI has addressed fraud and corruption allegations without bias to whether it was dealing with large or small firms, from developed or developing countries. We believe a critical element of due process, which ADB's anticorruption procedures provide, is consistent, equitable treatment. OAG has found this fair, reasonable, consistent approach has supported acceptance by firms and individuals of its findings and ADB's decisions when it is known the names of entities listed on the Anticorruption Sanction List are not publicized.

OAG has concluded ADB would need to devote significant additional resources to further defend investigative findings and related administrative decisions against challenges undertaken solely because an entity's name may be publicized.

Fair Treatment

OAG supports transparency in its operations to the same extent it supports transparency in the rest of ADB's operations. But a principle of transparency is to provide benefit of fair and equitable treatment, due process, and justice. OAG has worked diligently to ensure those characteristics are incorporated into ADB's anticorruption procedures, and OAGI adopted and publishes its principles and guidelines for its investigations that support each of those elements.

OAGI does not place itself "above the law" in the way it applies this administrative process. OAGI has found its investigations and the potential of ADB debarment is a significant deterrent to fraudulent or corrupt practices, and does garner appropriate attention. Also, OAGI makes significant effort to increase awareness of the Policy and ADB's anticorruption procedures to staff, governments, and contractors, consultants and others, to deter fraud and corruption related to ADB-financed activity.

We have concluded that publicizing the list would publicly label parties with terms that have serious legal implications, yet provide no legal remedies because of ADB's immunity. Further, parties with the most resources would present the greatest challenge to the administrative process, leading to inequity in the way ADB could apply its sanctions.

Conclusions

OAG's goal is the fair, consistent and equitable application of the Policy to all entities involved in ADB-financed activity. OAG has concluded the current policy of not publicizing the names of entities listed on the Anticorruption Sanction List provides the best balance of addressing fraud and corruption related to ADB-financed activity, and allows ADB to best implement the Policy.