Member's Documents
Comparative Review of Sanctions Practices across Multilateral Development Banks
Published by: Independent Development Evaluation, African Development Bank
The objectives of the review were (i) to assess the sanctions experience of these MDBs to date; and (ii) to apply the lessons learned to assist the AfDB in its own sanctions practice. The ultimate goal is to promote integrity and combat fraud and corruption in future development operations. The review utilized a mixed-methods approach combining multiple sources of qualitative and quantitative information.
The report presents comparative data and analysis of MDBs’ sanctions regimes in terms of their mandate and organization; overall use and efficiency; outcomes including debarments and conditionalities; use of penalties or other monetary sanctions; and transparency to external stakeholders and partners, as well as practices related to coordination and knowledge sharing across MDBs.
The findings of the study revealed significant differences across the MDBs in terms of policy frameworks, organization, and procedures, but there is notable harmonization of basic features of sanctions regimes in furtherance of cross-debarment. The study established that the majority of allegations in MDB sanctions proceedings have been fraud, followed by collusion and corruption in much smaller numbers, and rarely other allegations such as coercion or obstruction. The majority of respondents at most of the MDBs were found to be firms rather than individuals, with a substantial proportion comprising of small and medium enterprises (SMEs). Sanctions practices were found to be effective, but some constraints were noted including insufficient data to assess the broader impact of sanctions on operations, respondents’ behavior, or industry practices or perceptions; risk of sanctions systems becoming overly formal and legalistic; and risks related to the exemption of government officials from sanctions proceedings.
In terms of outcomes, the range of available sanctions was found to be largely harmonized across MDBs, and debarments of various types constitute the vast majority of sanctions to date. Nonetheless, a closer look showed that the use of specific types of debarments or other sanctions and conditionalities varies substantially across and sometimes within MDBs. In regard to use of monetary sanctions, it was found that restitution is recognized as an available sanction across all MDBs, but is rarely used in practice; while financial penalties or fines are currently accepted and used only by the AfDB. MDBs’ sanctions systems were found to vary widely in their degree of transparency and dissemination of information on debarment and settlements. For instance, while most choose to publish the identities of debarred entities on their websites, some also include a synopsis of the reasons for their decisions. In terms of knowledge sharing and coordination, mechanisms for information sharing such as periodic meetings and exchanges as well as more informal bilateral consultations were found to be in existence.
Some of the suggestions for improvement that the study provided include:
use of a standardized protocol for settlements within or across institutions to streamline sanctions processes, enhance consistency, and mitigate concerns of unequal treatment for different types of respondents;
more systematic analysis across investigations and sanctions cases to mine data, identify systemic vulnerabilities and red flags, strengthen preventive work with operations staff and other stakeholders, and evaluate the impact of sanctions;
greater transparency and outreach across MDB sanctions systems to bolster credibility and accountability, enable greater deterrence, and support awareness creation;
enhanced knowledge sharing and better coordination of cross-debarment to ensure consistent and timely notifications of eligible debarments and updates on existing debarments with conditional release.
The study also proposed a number of points for the consideration of AfDB Management as it reviews and continues to strengthen its sanctions regime and practice.
N.B.: Only the Executive Summary of the report has been made public.
