La coopération internationale dans la lutte à la corruption

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Arrow Institute - Conférence sur
La lutte contre la criminalité financière et organisée
La coopération internationale dans la lutte à la
corruption – Le cas des BMDs
by
Luigi La Marca
Policy Adviser – Inspectorate General
European Investment Bank
Hôtel Lutétia
Paris, 23 - 24 mai 2013

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 International Bank for Reconstruction and Development
(IBRD / World Bank) and its Group (IFC, IDA, MIGA, etc)
 Asian Development Bank (ADB)
 African Development Bank (AfDB)
 Inter-American Development Bank (IADB)
 European Investment Bank (EIB) and its Group (EIF)
 European Bank for Reconstruction and Development
(EBRD)
 Council of Europe Development Bank (CEB)
 Nordic Investment Bank (NIB)
 Black Sea Trade & Development Bank (BSTDB)
The MDBs and the IFIs
European
Investment
Bank
European
Investment
Bank
The Multilateral Development Banks (MDBs) and the
International Financial Institutions (IFIs)

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 Created by an International Treaty under International
Public Law;
 International Organisations;
 National Law not applicable to the Organisation;
 Membership open to:
• All member countries of the UN;
• Countries located in a specific region;
• Countries satisfying specific requirements.
 Regions of intervention fixed by their Statues or by-laws;
 Lending subject to specific requirements.
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Investment
Bank
International Financial Institutions (IFIs) – (2)

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The Lending Requirements :
 The Project ;
 The Eligibility Criteria :
• Geographical ;
• Sectors of intervention.
 The Lending Policies ;
 The Horizontal Policies:
• Procurement ;
• Competition (incl. Subsidies, State Aids, etc) ;
• Environment ;
• AML-CFT and Fraud.
European
Investment
Bank

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The Bankers’ approach:
 The Project:
• Financial Sustainability;
• Technical Adequacy;
• Economic Viability;
• Legal Conformity;
• Environmental Compatibility.
European
Investment
Bank

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The Bankers’ approach (2) :
 The Promoter / Borrower :
• Financial Soundness ;
• Technical Skills ;
• AML-CFT and Fraud Checks.
European
Investment
Bank

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The Main International Treaties / Conventions
Fighting against Corruption
 UNCAC (2003)
 OECD (1997)
 Council of Europe (1999)
European
Investment
Bank
The MDBs and the IFIs – The Legal Framework (1)

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The Specific Legal Evironment of the MDBs/IFIs :
 The Uniform Framework of 2006
• Standard Principles and Rules;
• Cooperation among MDBs;
• Exchange of Information.
European
Investment
Bank

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The interaction between National Law and the Law of the
MDBs/IFIs :
 The nature of Intl. Treaty of Lending Agreements;
 The requirements imposed on National Borrowers
(States);
 The value of National Criminal Law;
 The cooperation with National Enforcement Agencies.
European
Investment
Bank

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The Preventive Measures undertaken by the MDBs/IFIs :
 The Ex-ante Integrity Assessment ;
 The Procurement Evaluation;
 The PIR – Proactive Investigation Report;
 The Integrity Contractual Provisions.
European
Investment
Bank

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The Cooperation among the MDBs/IFIs :
 The Provisions in the Uniform Framework;
 The Ad-hoc arrangements;
 The Joint Investigations;
 The Exchange of Information;
 The Cooperation Meetings.
European
Investment
Bank
The MDBs/IFIs Debarment Procedures

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The Debarment / Exclusion Procedures of the MDBs/IFIs :
 The Individual/Different Debarment Procedures;
 The overlap with National Law;
 The Quasi-Judicial Procedure;
 The MDBs/IFIs Cooperation Efforts;
 The problem of crime definitions.
European
Investment
Bank

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 Integrity of counterparts and behaviours as basic
requirements;
 Sanctions for violations of Integrity commitments;
 Sanction/Debarment procedure different in IFIs;
 Cross-debarment and parallel debarment issues;
 Agreement of coordination and mutual recognition (cross-
debarment) signed by some IFIs in April 2010.
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Investment
Bank
MDBs and the IFIs – The Legal Framework (7)

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• Agreement for Mutual Enforcement of Debarment
Decisions signed on April 9, 2010; now effective for all
Participating Institutions.
• MDBs requirements for implementation of Agreement:
 Adoption of harmonized definitions of Prohibited Practices
 Adoption of Principles and Guidelines for Investigations
 Separate investigative and decision-making authorities
 Written and publicly available procedures
 Standard of Preponderance of evidence
 Range of sanctions that considers principle of
proportionality
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Investment
Bank

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 More than 150 entities and individuals have been cross-
debarred;
 None of the Participating Institutions has used the
escape clause;
 Recognition of debarment by other institutions and
agencies?
European
Investment
Bank

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Harmonized sanction Guidelines for Cross-Debarment:
Adopted by MDBs as principles and guidelines :
September 10, 2011.
Designed to ensure consistent treatment of individuals and
firms.
Describes Sanctions Process: administrative in nature.
Recognizes separate Sanctioning Authority independent of
Investigative Office.
States who is sanctioned: Entities that engage in
Prohibited Practices.
Recognizes Principle of proportionality-mitigating and
aggravating circumstances when applying sanctions.
European
Investment
Bank
The MDBs/IFIs Debarment Procedures/ Harmonized
Sanctions Guidelines

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 Recommends range of sanctions e.g. Debarment,
Release, Permanent or indefinite debarment, Conditional
debarment, Restitution, Letter of reprimand.
 Recommends Base sanction: three year debarment with
conditions.
 Considers aggravating circumstances for debarment
period e.g. severity, harm caused, obstruction, past
sanctions history and violation of sanctions.
 Considers mitigating circumstances for debarment period
e.g. minor role, voluntary corrective action, cooperation
with investigations.
 Considers Sanction on a cumulative basis: for multiple
conduct by entity.
European
Investment
Bank
The MDBs/IFIs Debarment Procedures /
Harmonized Sanctions Guidelines

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The interaction between National Law and the Law of the
MDBs/IFIs :
 The requirements imposed on National Borrowers
(States);
 The value of National Criminal Law;
 The cooperation with National Enforcement Agencies.
European
Investment
Bank

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The EIB :
 The EU Financial Body ;
 Created by the EC Treaty on 1957;
 Its Statute is a part of the Treaty on Funct. EU ;
 Its Members are only and all EU Member States;
 Its Capital subscribed by EU MS according GNP ratio;
 Mission defined by the Treaty on Funct. EU (Art. 309) ;
 Own Decision-making Structure;
 Own Legal Capacity;
 Placed in the EU Legal Framework.
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Investment
Bank
The particular case of the EIB
(European Investment Bank)

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The Statutory Governing Bodies:
 The Decision-making Bodies:
• Board of Governors;
• Board of Directors;
• Management Committee.
 The Control Body:
• Audit Committee.
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Investment
Bank
The Governance

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 Mission defined by the Treaty on Funct. EU (Art. 309) ;
 EU Commission designated Member(s) in the BD;
 Art. 19 opinion.
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Investment
Bank
The EU links

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 Jurisdiction of the EC Court of Justice, in particular for
Extra-contractual Liability ans Staff related matters;
 Art. 19 Statute opinions:
• The Member States;
• The Commission.
 EC Court of Auditors (for ext. Mandates);
 European Ombudsman;
 OLAF;
 Civil Society:
• NGOs;
• Press;
• Transparency Policy;
• Complaint Procedure.
European
Investment
Bank
The external controls

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 The Dialogue with the European Parliament ;
 The Mandates assigned by the EU Council ;
 Relationship with other EU Institutions and Bodies :
• Economic and Social Committee ;
• Committee of Regions ;
• Olaf ;
• European Central Bank.
The external controls (2) European
Investment
Bank

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Contracts under Private/Commercial Law:
• Not International Treaties like other MDBs/IFIs ;
• Not derogating or superseding applicable National Law in
force ;
• Choice of applicable National Law in accordance with a set
of criteria ;
• Choice of National Jurisdiction ;
• Possible Recourse to Arbitration ;
• Possible Jurisdiction of the EC Court of Justice.
European
Investment
Bank
The implementation of the lending activity at the EIB.

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 EIB Policies, incl. Integrity (AML-CFT, Off-Shore, Fraud,
etc.) , must be reflected in contractual documentation;
 Contract must specify requirements agreed with the
Promoter;
 Contractual Derogations to National Law possible only if
allowed by National Law;
 Separation of responsibilities between the EIB and the
Promoter;
 Extracontractual Liabilities Regime applicable to the EIB;
European
Investment
Bank
The consequences

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 Reflects and Implements EU Law and Policies;
 Decided by EIB competent Governing Bodies;
 Accomodates Standard EU Law requirements in Banking
Activities and Project financing;
 Modulated according to geographical field of intervention.
European
Investment
Bank
The consequences (2)

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 Sanctions for non-compliance by the Promoter with
contractual requirements established in the contract;
 Acceleration / Early Repayment or Default Events as
Sanctions;
 Loan Reimbursement and Correct Project Implementation
on equal standing.
European
Investment
Bank
The consequences (3)

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European
Investment
Bank
Nature of the Compliance in (some) IFIs
InvestigationsPreventive actions

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 Could be different in the various IFIs according to the
nature, scope of the institution and the Compliance
position in its institutional structure
 Developed around the core idea of “Integrity”
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Investment
Bank
Sectors of intervention

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 AML/CFT
 Corruption and Fraud
 OFC – NCJ (Non-Cooperative Jurisdictions)
 Ethics (Codes of Conduct)
 Governance
 Compliance of Procurement (internally and/or
externally, Debarment, etc)
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Investment
Bank
Main activities

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 Human rights
 Horizontal Policies (Environmental and Social issues,
Information, Transparency, Procurement Policies,
etc…)
 Complaints
 Data Protection
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Investment
Bank
Main activities (2)

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 Distinction (ex ante and ex post controls), but
 Cooperation
 Audit on Compliance
 Compliance of Audit.
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Investment
Bank
Compliance v. Audit

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 Board of Directors
 Executive Committee
 President and top management
 Auditing Board
 External Audit
 Rating Agencies
 Presence in the various Committees
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Investment
Bank
Dialogue with the “Boss”

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 AML/CFT => Lending/Risk/Funding/Treasury Dpts
 Ethics => HR
 External Procurement => Lending/Project Dpts
 Horizontal Policies=> various Dpts
 Complaints => originating Dpt
 Investigation => originating Dpt and, as applicable, HR
(just some examples)
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Investment
Bank
Internal Cross-border Relations

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 Acceptance by the top
 Acceptance by the basis
 Recognition of the role & Independence
 Avoiding confusion with IA
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Investment
Bank
Some basic issues

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 How large the scope of the competence and activities
should be in order to be still “manageable” ?
 Kompetenz-Kompetenz issue: how to get the necessary
knowledge and acquire the know-how ?
 The flux of information and the issue of confidentiality
 Complaints
 Environmental and Social Rating
European
Investment
Bank
Some open questions and some new interesting
developments

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 Zero Tolerance’ stated in Anti-Fraud Policy
 Pre-project screening – Integrity Due Diligence
 NCJ Policy (Policy towards weakly regulated, non
transparent and un-cooperative jurisdictions)
 Legal covenants in project documentation
 Fraud investigation & proactivity: prevent and deter
 Fraud awareness training for staff (red flags etc.)
 Whistleblowing Policy
 Exclusion system - overlap with EU & IFIs
 Proactive Integrity Reviews (PIRs) - review of sample EIB
projects based on a risk assessment
 Cooperation with national authorities, OLAF & other IFIs
European
Investment
Bank
EIB’s Anti-Fraud and Corruption Framework

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 AML-CFT Directives: core principles and best practices
applied by IFIs and national development agencies
 Specific guidelines in place for EIB’s operations with
weakly regulated, non transparent and un-cooperative
jurisdictions (NCJ Policy)
European
Investment
Bank
EIB AML-CFT and Integrity Framework

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NCJ Policy specifically targets:
 money laundering, financing of terrorism, tax fraud, tax
evasion and harmful tax practices;
 in EIB operations linked to weakly regulated,
uncooperative and non-transparent jurisdictions which
do not comply with standards posed by international
standard-setting organisations (EU, UN, OECD, FATF etc.);
 EIB strictly conforms with the listings, findings and
country assessments of above standard setting
organisations for determing whether a country is a non-
compliant jurisdictions (« NCJ ») which includes
blacklisted and greylisted jurisdictions
European
Investment
Bank
NCJ Policy – Core Principles

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 Prohibition to operate in blacklisted countries
 Systematic enhanced due diligence on all counterparts
and projects with a link to grey-listed countries;
 Tax disclosure imposed to all counterparts located in an
NCJ, owned and/or controlled by an NCJ-located entity for
cross border operations
 Reporting to the Bank’s management of any information
presenting a link to NCJs
 Relocation requirements for counterparties located in
monitored jurisdiction
 Exceptions: local projects in NCJ
 in order to allow EIB to perform its mission under the EU
Treaty and mandates from the EU,
 Subject to satisfactory outcome of EIB due diligence
European
Investment
Bank
NCJ Policy – EIB Measures

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 Need to achieve coordination among MDB/IFI Compliance
at wide European level
 Established in 2009 (Paris Meeting) among CEB, EBRD,
EIB, EIF and NIB. Meets regularly on annual or semi-
annual basis
 Ensures coordination, adequate flux of information
among its members and updates on important
developments of mutual interest
 Protection of confidentiality – exchange of information on
confidential basis reserved to members only without
further dissemination
European
Investment
Bank
ECCO

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 The Council of Europe (CoE) was the first international organisation which since
1977 emphasised the importance of taking measures to be used for combating the
dangers of money laundering with respect to democracy and the rule of law. In
September 1990, Ministers adopted the CoE Convention on Laundering, Search,
Seizure and Confiscation of the Proceeds of Crime;
 The aim of MONEYVAL, established in 1997, is to ensure that its member states
have in place effective systems to counter ML-FT and comply with the relevant
international standards like FATF recommendations, UN Conventions, relevant EU
Directives on AML-CFT and CoE Convention on laundering, search, seizure and
confiscation of the proceeds from crime;
 MONEYVAL reviews AML-CFT measures in CoE member States (and CoE
applicants) which are not members of the FATF. Its reports provide highly detailed
recommendations on ways to improve the effectiveness of domestic regimes to
combat money laundering and terrorist financing and states’ capacities to co-operate
internationally in these areas. MONEYVAL also conducts typologies studies of
money laundering and terrorist financing methods, trends and techniques;
 MONEYVAL has 28 permanent and 2 temporary members. In addition an important
number of countries and organisations (EU, WB, OECD, FATF, UNODOC, EBRD,
CEB, etc.) have observer status with MONEYVAL or participate to its works.
European
Investment
Bank
Cooperation with Moneyval

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 The Group of States against Corruption (GRECO) established in 1999 by the
Council of Europe to monitor States’ compliance with the organisation’s anti-
corruption standards.
 GRECO’s objective is to improve the capacity of its members to fight corruption by
monitoring their compliance with Council of Europe anti-corruption standards through
a dynamic process of mutual evaluation and peer pressure. It helps to identify
deficiencies in national anti-corruption policies, prompting the necessary legislative,
institutional and practical reforms. GRECO also provides a platform for the sharing of
best practice in the prevention and detection of corruption.
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Membership in GRECO not limited to Council of Europe member States. Any State
Party to the Criminal or Civil Law Conventions on Corruption automatically accedes
to GRECO and its evaluation procedures. Currently, GRECO comprises 49 member
States (48 European States and the United States of America).
 GRECO has granted observer status to the Organisation for Economic Cooperation
and Development (OECD) and the United Nations – represented by the United
Nations Office on Drugs and Crime (UNODOC). CEB representative participates to
the meetings.
European
Investment
Bank
Cooperation with GRECO

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 OLAF – fraud investigators of the European Union
 OLAF’s expertise
• investigation & prosecution
• contact with national judicial systems
• good mix with knowledge of EIB and other IFIs
 Regular meetings between IG/IN (EIB) and OLAF
 Joint missions
 EIB staff and records open to review by OLAF
 EIB staff can report suspicions directly to OLAF
 Cooperation Agreements for Joint Investigations and Exchange of
Information between OLAF and MDBs
European
Investment
Bank
Cooperation with OLAF

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 The OECD Working Group on Bribery in International Business Transactions is
responsible for monitoring the implementation and enforcement of the OECD Anti-Bribery
Convention, the 2009 Additional Recommendation and related instruments. This peer-
review monitoring system is conducted in three phases and is considered by
Transparency International to be the ‘gold standard’ of monitoring.
 Anti-Corruption Network for Eastern Europe and Central Asia, established in 1998, is
a regional forum for promotion of anti-corruption activities, exchange of information,
elaboration of best practices and donor coordination. The ACN targets countries in
Central, Eastern, and South Eastern Europe, Caucasus and Central Asia; OECD and EU
members, international organisations, multilateral development banks, civil society and
business associations also participate in its activities. The ACN Secretariat is based at
the OECD Anti-Corruption Division and it reports to the OECD Working Group on Bribery.
 The Istanbul Anti-Corruption Action Plan is the main sub-regional initiative of the ACN
since 2003 for Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic,
Tajikistan, Ukraine and Uzbekistan and includes: review of legal and institutional
framework for fighting corruption and adoption of recommendations (2004-2005);
monitoring progress in implementing the recommendations; and providing regular
updates. The reviews were completed in. The first round 2005-2007, second round
launched in 2008.
European
Investment
Bank
Cooperation with OECD

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 The FATF is an inter-governmental policy-making body established in July 1989 by a
Group of Seven (G-7) Summit in Paris whose purpose is to establish international
standards, and develop and promote policies, both at national and international
levels, to combat money laundering (ML) and terrorist financing (TF).
 The priority of the FATF is to ensure global action to combat money laundering and
terrorist financing, and concrete implementation of its 40+9 Recommendations
throughout the world. Starting with its own members, the FATF monitors countries'
progress in implementing AML/CFT measures; reviews money laundering and
terrorist financing techniques and counter-measures; and, promotes the adoption and
implementation of the 40+9 Recommendations globally.
 FATF expanded its membership from the original 16 to its current 34 members.
 In performing these activities, the FATF collaborates with other international bodies
involved in combating money laundering and the financing of terrorism. Some
international organisations which have, among other functions, a specific anti-money
laundering mission or function, have observer status with the FATF. (WB, IMF, ECB,
EU, EBRD, ADB, AfDB, IADB, UNODOC, etc.).
European
Investment
Bank
Cooperation with FATF

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 The Global Forum has been the multilateral framework within which
work in the area transparency and exchange of information has been
carried out by both OECD and non-OECD economies since 2000 in the
context of OECD work on tax havens. It was restructured in September
2009 in Mexico in response to the G20 call to strengthen exchange of
information in the context of major progress made towards full
transparency. The restructured Global Forum now ensures that all its 97
members are on an equal footing and will fully implement the standard
on exchange of information they have committed to implement.
 The Global Forum’s main achievements have been the development of
the standards of transparency and exchange of information through the
publication of the Model Agreement on Exchange of Information on Tax
Purposes in 2002 and the issuance of a paper setting out the standards
for the maintenance of accounting records Enabling Effective Exchange
of Information: Availability Standard and Reliability Standard developed
by the Joint Ad Hoc Group on Accounts in 2005.
 In addition, the Global Forum has, since 2006, produced an annual
assessment of the legal and administrative framework for transparency
and exchange of information in over 80 jurisdictions.
European
Investment
Bank
Cooperation with The Global Forum on
Transparency and Exchange of Information for
Tax Purposes

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THANK YOU
European
Investment
Bank

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