FCPAméricas Blog
World Bank Sanctions: Formal Evidentiary Rules Don’t Apply
8.31.2012
In the World Bank sanctions program, “[f]ormal rules of evidence shall not apply.” See Section 7.01 of the Sanctions Procedures. Indeed, the World Bank Sanctions Board has a high degree of discretion when considering evidence of corruption, fraud, and collusion. It has the authority to consider the “relevance, materiality, weight, and sufficiency” of “any kind of evidence.” Hearsay and circumstantial evidence are fair game.
This makes sense. The World Bank is not a sovereign authority. It is a bank. Its sanctions program is administrative in nature. As such, the Bank’s investigations unit, the Integrity Vice Presidency (INT), lacks many of the powers that a government might otherwise have. It cannot compel witnesses to speak or produce evidence. There is no World Bank subpoena, no World Bank handcuffs.
As a result, it is essential that the Sanctions Board have the ability to draw inferences that connect evidence to conclusions. Without it, INT would have a hard time proving cases. Based on my own experiences at INT, I learned that evidence of acts like corruption and collusion can sometimes be difficult to obtain. One cannot expect corrupt businesspeople to freely admit they paid bribes to win Bank-financed contracts. These sanctionable activities, by their very nature, occur in secrecy. They are done with conversations and conspiracies, not normally with overt physical acts. A plan to pay a bribe or fix a price might be hatched over the phone. People have hidden ways of transferring money to procurement officials. Because of this, broad evidentiary standards are necessary for the Sanctions Board to fulfill its mandate with respect to corruption and collusion. (Fraud, on the other hand, is usually easier to prove. When a winning bidder claims in its bid to have construction experience from building Bridge X, it is not so difficult to confirm that it was the actual builder of Bridge X.)
A review of the Sanction Board’s first Law Digest reveals that, in its first few years of existence, the Board has begun to rely on the totality of evidence and circumstantial evidence in the corruption and collusion cases it considers. For example:
Totality of the Evidence: In Sanctions Board Decisions No. 40 (2010) and No. 41 (2010), witness denials and inconsistencies in witness statements were afforded less credibility after consideration of the totality of the evidence. The Board considered other witness statements when deciding on collusion and considered documentary evidence when deciding on corruption. In the former case, the Board looked at “the totality of the evidence, including all statements made in the interviews, read in context and weighted for relative credibility.” In the latter case, “[c]ontemporary documentary evidence from multiple sources provided support for a finding that the respondents had paid a sum of money to a designated account with the understanding the payment was for the benefit of a public official, identified in the wire transfer by name, of the implementing agency identified in the wire transfer by its acronym.”
Circumstantial Evidence: In collusion cases, circumstantial evidence has played a central role. In Sanctions Board Decisions No. 1 (2007) and No. 40 (2010), the Board drew inferences of collusion between two or more bidders based on things like an “inexplicable degree of congruity” across bid prices, including a “significant number of unit prices that were either identical or differed consistently by small, standardized amounts.” It considered “physical similarities” across the bids like identical envelopes, same fonts and styles, appearances of an identical computer file path numbers at the bottom of pages, the same number of fields left blank, and identical spelling errors in bids.
If the Sanctions process continues to be successful, practitioners should expect more of such evidentiary treatment. What does this mean for companies defending themselves before the Board? It means they should assume that most evidence will be considered. This often requires respondents to mount a defense that is heavily fact-based – the more facts in their favor, the less likely the Board will be to reach a finding of a sanctionable practice.
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© 2013 Matteson Ellis Law, PLLC
Post authored by Matteson Ellis, FCPAméricas Founder & Editor
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September 4th, 2012 at 9:21 pm
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