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IDB moves to strengthen anti-corruption framework
  • Outside members to participate in IDB sanctioning body
  • Whistleblower protections bolstered
  • Bank approves action plan to help countries reduce corrupt practices

The Inter-American Development Bank has developed a major overhaul of its anti-corruption framework to ensure that allegations of corruption in Bank financed activities are investigated and sanctioned more quickly, and whistleblowers enjoy stronger protections than before. The IDB is also strengthening the support it provides to countries to battle corruption.

The new measures, which build on an overhaul of the anti-corruption framework put in place in 2001, have been endorsed by the IDB’s Board of Executive Directors. Some of these measures took effect immediately, while others will be rolled out over the course of 2010. In addition, the IDB is exploring ways to coordinate the sanctioning of prohibited practices together with other multilateral development institutions.

“In recent years, at the IDB we have been strengthening our efforts to deter prohibited practices in our own programs, by investigating and sanctioning more cases of fraud or corruption,” said IDB President Luis Alberto Moreno. “At the same time, we are also ensuring that our staff abides by the highest ethics standards. With these new measures, we are taking our battle against corruption to an even higher level.”

 “We are also going to work more closely with countries to help them fight corruption more effectively,” Moreno added. “Corruption weakens democratic institutions, and discourages investment and job creation. Ultimately, it hits hardest the poor and those without access to proper legal recourse.”

External recommendations

The IDB’s anti-corruption framework was reviewed by an external group headed by Richard Thornburgh, former Attorney General for the United States and Governor of Pennsylvania. The report, presented in late 2008, included several recommendations to bolster the investigations and sanctions processes as well as actions to provide greater support to member countries to combat corrupt practices.

A number of those recommendations have been incorporated into the IDB’s organizational policies and procedures:

  • Whistleblower protections are being expanded to include third parties. The Bank may notify National authorities when it receives allegations of reprisals by or against third parties involving Bank programs; and the Bank’s policy of protecting staff members from reprisals – including reassignment where needed – is also reaffirmed.
  • The Office of Institutional Integrity (OII), which investigates allegations of wrongdoing and was previously a unit within the Bank’s presidency, is now elevated as an independent advisory office within the Bank’s basic organization.
  • To enhance the resources available to the sanctions process, the Bank has approved the creation of a new Case Officer position. The Case Officer reviews OII investigative findings and has the authority to sanction parties for wrongdoing, including a suspension from participating in Bank-funded programs.
  • The Case Officer’s recommendations can be appealed to the new Sanctions Committee, which for the first time will include external members (four), as well as Bank staff (three). All seven members will be appointed by the President. Individual cases will be adjudicated by three-member panels appointed by the Chairperson of the Sanctions Committee, which will also have jurisdiction over the Inter-American Investment Corporation (IIC), the IDB-affiliated institution that lends to small and mid-sized companies. 
  • The Sanctions Committee will adjudicate cases previously considered by the Oversight Committee on Fraud and Corruption (OCFC), which was made up of senior Bank managers who had other responsibilities within the institution. The OCFC has been replaced by the Anti-corruption Policy Committee, which will focus on policy development and oversight of the Bank’s anti-corruption initiatives.

Action plan to support countries

In addition, the IDB has approved a new framework containing actions to strengthen the Bank’s ability to identify vulnerabilities and support countries’ efforts to foster transparency and prevent and control corruption.  The plan provides clearer strategic direction and added value to the Bank’s financial, knowledge, and capacity-building products in these areas.

The IDB will allocate more budgetary resources to help countries better analyze and make a diagnosis of anticorruption practices. Working at the country, sector, and institutional level, the aim is to spot potential weaknesses early and identify opportunities to strengthen institutions.

For instance, in its dialogue with national authorities the IDB will strive to draft a joint work agenda to foster transparency and prevent corruption that is sustainable over time. Institution-strengthening actions will be incorporated into Bank program designs, and good practices and lessons learned will be disseminated through the Bank’s knowledge products.

Background

The previous anti-corruption framework was adopted in 2001. In 2004, the Office of Institutional Integrity (OII) was established to investigate allegations of fraud and corruption in Bank-financed activities. As the system became known to Bank staff, executing agencies and the public, the number of investigations conducted by OII increased from 92 in 2004 to 150 in 2008. Last year alone the Bank sanctioned 25 individuals and eight firms.

In 2007, the Bank created the ethics officer position. The ethics officer is responsible for investigating allegations of ethics violations by Bank staff.  It also revised and updated the Code of Ethics and Professional Conduct, as well as the statement of interests program for staff.

The Bank already has numerous tools to assess and detect potential instances of corruption in its programs, including the Project Risk Management, the Red Flags Matrix in Project Procurement, and the Integrity Risks Review program.