World Bank’s outgoing integrity chief leaves ‘indelible mark’ on MDB enforcement

Edward James and Tom Stocker of Pinsent Masons were commenting following reports that Mouhamadou Diagne will step down from his role as the vice-president of the bank’s integrity unit (INT) in December.

Diagne, a seasoned auditor, anti-fraud and anti-corruption specialist, has been in the role since 2020, overseeing the independent unit which is responsible for conducting investigations related to allegations of fraud and corruption involving projects and activities financed by the World Bank Group and the World Bank staff and corporate vendors.

The office of the INT also pursues sanctions related to these allegations and develops best practices to prevent fraud and corruption across the World Bank’s operations and to help raise compliance standards among private sector entities. It plays a particularly critical role in investigating any alleged wrongdoing related to projects funded by the World Bank.

Commenting on Diagne’s imminent departure, Edward James, an investigations expert at Pinsent Masons specialising in multilateral development banks (MDBs), said: "Whilst other multilaterals have equally impressive integrity units, the World Bank INT has set the pace for the past few years and is a model that others seek to emulate. Under the leadership of Mouhamadou Diagne that has continued to be the case and he will leave behind an office that is in good shape to fill the gap left by a slowdown in FCPA enforcement. His shoes will be hard to fill, but he has undoubtedly left an indelible mark on the compliance community that goes well beyond the World Bank alone.”  

Although the unit’s investigations and decisions do not operate under a specific legal system, James says its enduring role as an anti-corruption enforcer is unquestionable. He said failure to comply with its decisions could have ramifications for those looking to borrow from other multilateral institutions too.

“Their power stems from a simple quid pro quo: if you want to benefit from World Bank finance, you need to play by its rules,” he said. “Failure to do so means you could find yourself in the crosshairs of the INT, which could result in lengthy debarment that may also mean cross-debarment by the key multilaterals like the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development and the Inter-American Development Bank.”

These multilaterals are all signatories to the agreement for Mutual Enforcement of Debarment Decisions, which was signed on 9 April 2010 and established a cross-debarment regime between the MDBs.

The agreement enforces the sanctions of the other MDBs, if made public and debarment for more than one year is applied. This means that entities sanctioned by one bank will be automatically sanctioned by the other signatories.

The INT is mandated to investigate the alleged occurrence of five sanctionable practices. The first – corrupt practices – relates to the offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.

Second, fraudulent practices include any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation.

The unit also investigates collusive practices, which involve an arrangement between two or more parties designed to achieve an improper purpose, including to influence improperly the actions of another party.

Coercive practices are the impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party.

Lastly, INT also investigates so-called obstructive practices. Although these may differ from MDB to MDB, the World Bank defines these as destroying, falsifying, altering or concealing of evidence material to a bank investigation, or making false statements to investigators, with the intent to impede a bank investigation; threatening, harassing or intimidating any party to prevent it from disclosing its knowledge of matters relevant to a bank investigation or from pursuing the investigation; or acts intended to impede the exercise of the bank’s contractual rights of audit or inspection or access to information.

Any company that faces potential scrutiny from the unit should seek further advice and guidance from an early stage to avoid falling into traps that may compromise them down the line.  

If an INT investigation finds that someone has engaged in a sanctionable practice on a balance of probabilities, they may seek to sanction them through a two-tier administrative sanction process. The first tier is the Office of Suspension and Debarment (OSD), which will independently determine whether a sanctionable practice has occurred and what the sanction should be in the first instance. The second tier is the sanctions board.

Entities sanctioned by the OSD may appeal to the board which makes final decisions on guilt and what sanction should be imposed. Neither the OSD nor the sanctions board are bound by the laws of any countries or any courts and operate entirely independently. Whilst this means that they cannot directly enforce their decisions in any country, being sanctioned will be enforced on the basis outlined above and for companies that rely on multilateral funded projects, the consequences can be devastating.

Tom Stocker, a global investigations expert at Pinsent Masons, said INT’s work was recognised worldwide and would continue to be critical for businesses and contractors working on World Bank-funded projects. “Having recently visited the World Bank in Washington, it is clear that it will continue to play a leading role in integrity enforcement,” he said. “Things won’t slow down. They may in fact speed up as the INT office continues to deploy innovative investigative techniques taking advantage of AI and an expanded internal team to enable it to look wider and deeper into bank funded projects for potential wrongdoing.”