On February 22, 2022, the World Bank Group (WBG) Sanctions Board issued its decision no. 136, imposing a two-year debarment on a managing director for corrupt and fraudulent practices. The decision is significant for three reasons: (1)  it was rendered more than 11 years after the offending conduct occurred; (2) the Sanctions Board blocked the integrity vice-president’s (INT) attempt to use incriminating evidence without disclosing it to the respondent; and (3)  the Sanctions Board was not influenced by a non-guilty verdict in domestic criminal proceedings based on the same allegations.

This case is about a bid submitted in 2009 for a WBG project in Romania relating to influenza pandemic control and preparedness. The respondent managing director was accused of offering and paying a percentage of the contract at issue to a WBG consultant involved in the procurement process and of failing to disclose commissions paid to an agent in connection with the contract.

An alleged misrepresentation in the bid documents occurred in May 2009, and the corrupt payment was allegedly made in May 2010. The record indicated that the INT had interviewed the WBG consultant involved in the procurement process in April 2011. The WBG’s suspension and debarment Officer issued a notice of suspension on March 5, 2021.  This passage of time led to “significant mitigation” regarding the sanction.

The decision is a reminder that, just like under Canadian criminal law, there is no statute of limitations under the WBG sanctions regime. Corporations that uncover potentially unsavoury conduct, regardless of how long ago it happened, should therefore not be complacent and assume the past will remain in the past.

The Sanctions Board also rebuffed INT’s request to rely on a “Strictly Confidential Exhibit” that contained incriminating evidence and was not disclosed to the respondent. The justification was that the evidence constituted WBG “confidential personnel information” that could only be disclosed with the individual’s consent. Whether this individual was the WBG consultant involved in the alleged bribe at issue is unknown. The Sanctions Board rejected this argument, citing INT’s right to redact any confidential information in its discretion. Based on precedents cited by the Sanctions Board, this is at least the third time the INT has tried unsuccessfully to withhold evidence because it contained an employee’s confidential information.[1]

The Sanctions Board attached little significance to a non-guilty verdict in domestic criminal proceedings based on the same facts, finding that national law standards and judgments are not binding on the WBG or Sanctions Board. That may well have a certain function and value – not all judicial systems are created equal and certain local courts may be under corrupt influences, although it is worth noting that Canadian courts have more stringent legal burdens than does the WBG.

For example, in a Canadian criminal proceeding the Crown must prove the defendant has committed the offence beyond a reasonable doubt. This is a higher threshold for a guilty verdict than the Sanction Board’s “more likely than not” burden, which it describes as requiring that a “preponderance of the evidence supports a finding that the respondent engaged in a sanctionable practice.” This is similar to the burden of proof for civil cases under Canadian law. Based on this lower threshold, a Canadian corporation found not guilty in the context of Canadian criminal proceedings could still be sanctioned under the WBG regime, with the lower evidentiary threshold.

This case is thus a stark reminder to Canadian corporations that the WBG and the Sanctions Board march to the beat of their own drum and do not take cues from related domestic proceedings. Canadian entities must therefore remain vigilant after discovering a potential breach of WBG rules, as neither the passage of time nor a successful domestic outcome can shield them from eventual debarment.

^{[1] See Sanctions Board Decision No. 71 (2014), at para. 48; Sanctions Board Decision No. 113 (2018), at paras. 21-23.}