IDB Integrity Framework Promoting the highest levels of integrity within the IDB Group/ Ethics Office Ensuring that activities financed by the IDB Group are free of fraud and corruption/ OII Supporting programs that strengthen good governance, enforce the rule of law and combat corruption/ VPS /IFD/ ICS Pillar 1 Ensuring that activities financed by the IDB Group are free of prohibited practices Pillar 2 Supporting programs that strengthen good governance, enforce the rule of law and combat corruption Pillar 3 Promoting the highest levels of integrity within the IDB Group
Roles and Responsibilities vis a vis Integrity To verify eligibility of contractors/suppliers/consultants All To report suspected prohibited practices Sector Specialists, OII To manage integrity risk at the design and execution phases of IDB-financed operations and Country Strategies Office of Institutional Integrity To investigate, to advice operational teams regarding the Case Officer and Sanctions Committee To sanction Executing Agency, Fiduciary Specialists 5
Prohibited Practices as recognized by the IDB (1) Corruption - offering, giving, receiving, or soliciting anything of value to influence the actions of another party Fraud - misrepresentation that knowingly or recklessly misleads a party in order to obtain a benefit or to avoid an obligation Coercion - threatening to impair or harm a party in order to influence improperly the actions of that party
Prohibited Practices as recognized by the IDB (2) Collusion - arrangement between two or more parties designed to achieve an improper purpose Obstruction - deliberately destroying, falsifying, altering or concealing evidence material to the investigation or making false statements to investigators in order to materially impede a Bank Group investigation into allegations of a prohibited practice
Office of Institutional Integrity (OII) Activities Develop and implement activities designed to identify, assess and mitigate integrity risk Prevention Investigate allegations/ information of possible Prohibited Practices in IDB Group-financed activities (external parties) Investigations Develop capacity building on integrity-related issues Exchange integrity-related knowledge with comparator institutions Outreach
OII Caseload January 1, 2007 – December 31, 2012 200720082009201020112012 Pending Investigations (prior year)1239769806545 New Investigations (Allegations)136122163139130127 Active Investigations259219232219195172 Completed Investigations162150152154150104 Pending Investigations (period's end) 976980654568 Post-Investigation Activities (cases) 9
Source of allegations January 1, 2007 – December 31, 2012, (in percentage)
Investigative Process: Anatomy of an Investigation
Cross-debarment: rising the cost of corruption for the private sector An innovative coordinated global initiative 5 MDBs including the AfDB, ADB, EBRD, IDB, WBG agreed to mutually enforce each others debarment actions, with respect to corruption, fraud, coercion, and collusion. – Deterrent to firms and individuals engaged in fraud and corruption in MDB-financed development projects; and – Provides an incentive for firms to clean up their operations.
IDB S PREVENTIVE STRATEGY Identification of risk factors at the sector level and relevant stakeholders Agreement on relevant risk indicators to monitor across the procurement phases Perform risk assessment Based on assessment, identify areas for action, allies and incentives systems Implement mitigation actions Monitor & Evaluation of interventions Country context
Identification and assessment of integrity risks in SG Operations During the procurement process: looking for red-flags and consulting with OII Regular monitoring of disbursements: checking anomalies (cash payments, off-shore places, data-mining) During the life of the operation: using the Project Risk Management tool (GRP for its Spanish name) and consulting with OII During execution: conducting due diligence concerning the Banks Sanctions Supervision of the Auditors: making sure that independent recommendations in management letters are implemented
Integrity Due Diligence in NSG Operations A process for identifying, assessing and reducing Integrity Risk and Reputational Risk Also incorporates review of Offshore Financial Centers (OFC) related risks and compliance with the relevant guidelines What is it? To reduce the occurrence of prohibited practices To reduce the incidence of reputational harm to the IDB Group arising from integrity issues. Objectives Identify risk indicators through due diligence Assess risks presented Mitigate risks Disclose risks Record results of due diligence Conduct ongoing due diligence periodically Steps Involved Confidential
18 Contacting OII Web page: http://www.idbfc.org http://www.idbfc.org Phone International Line +(877) 223-4551 Fax +(001) - 202 312-4029 Mail or in person: Inter-American Development Bank Office of Institutional Integrity 1300 New York Avenue, N.W. Stop B-680 Washington D.C. 20577, USA Personal and Confidential E-mail firstname.lastname@example.org OII-Consult@iadb.org
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