Procurement - fraud and corruption

Amendment to Paragraph 2.9 of the Bank’s Procurement Policies and Rules

On the 2nd of May 2007, the Bank's Board of Directors approved amendments to paragraph 2.9 of the Bank's Procurement Policies and Rules. The amendments reflect the IFI's "Uniform Framework for Preventing and Combating Fraud and Corruption" and provides as set of definitions for corrupt, fraudulent, coercive and collusive practices.

The amendments to paragraph 2.9 are reflected on the Bank's internet site as well as in various documents (such as the Bank’s Standard Tender Documents) in the context of procurement and Bank funded projects.

Bank policy

"It is the Bank's policy to require that clients (including beneficiaries of Bank loans, as well as tenderers, suppliers, contractors, concessionaires and consultants under Bank-financed contracts, observe the highest standard of ethics during the procurement and execution of such contracts."  (Paragraph 2.9 of the Bank's Procurement Policies and Rules  (0.6Mb)).

Firms and individuals

"In the event that the Bank determines that a firm or individual has engaged in corrupt, fraudulent, coercive or collusive practices in competing for or executing a Bank-financed contract, the Bank may declare the firm/individual as ineligible, either indefinitely or for a stated period of time, to be awarded a Bank financed contract." (Paragraph 2.9 (c) Procurement Policies and Rules).

The Bank also reserves the right to declare a firm or individual that was held by a judicial process or other official enquiry to have engaged in corrupt, fraudulent, coercive or collusive practices, as ineligible, either indefinitely or for a stated period of time, to be awarded a Bank-financed contract (Paragraph 2.9 (d) Procurement Policies and Rules).

Clients and beneficiaries

In the event that the Bank determines that a representative of a client or beneficiary of the Bank's financing has engaged in corrupt, fraudulent, coercive or collusive practices during the procurement or execution of a contract the Bank will take the following action:

• Cancel the portion of the Bank's financing allocated to the contract in question unless the client has taken timely and appropriate actions to remedy the situation.
• If a pattern of corrupt, fraudulent coercive or collusive activity is detected, consider partial or total cancellation of the project under which these activities arose.

Anti-terrorist statement

Measures to prevent award of contract to persons or entities ineligible under UN security council chapter VII:

"The proceeds of the Bank's loans, equity investment or guarantees should not be used for payment to persons or entities or for any import of goods, if such payment or import is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." Under this provision, persons or entities affected by such a prohibition are ineligible for the award of any Bank-financed contracts. (Paragraph 2.7 of the Bank's Procurement Policies and Rules).

The United Nations Security Council passed Resolution 1333 on 19 December 2000. This Resolution calls for a prohibition on the provision of financial resources to persons or entities who assist or facilitate the work of certain terrorist groups. The persons or entities that are currently ineligible from being awarded a Bank-financed contract for goods, works or services due to this prohibition are identified on the lists that have been published by a committee of the Security Council. A consolidated list can be found via the following United Nations website: http://www.un.org/Docs/sc/committees/AfghanTemplate.htm. In addition, the Bank closely follows the work of Counter-Terrorism Committee established according to UN Security Council Resolution 1373 of 28 September 2001. The Bank will not finance entities or individuals that might be nominated by the Counter-Terrorism Committee as supporters of terrorist activities. Further information about the Counter-Terrorism Committee is available at http://www.un.org/Docs/sc/committees/1373/.

Declaration of ineligibility on the basis of paragraph 2.9 (d) Procurement Policies and Rules

Date of update: 25 March 2008

Effective 8 February 2007, the Bank determined that Lahmeyer International GmbH ("Lahmeyer") would be ineligible to be awarded EBRD financed contracts until such time as Lahmeyer had implemented an anti-corruption programme satisfactory to the EBRD. In the period that has ensued, Lahmeyer has introduced an enhanced Compliance Management System (CMS), which represents a comprehensive anti-corruption programme satisfactory to the EBRD, the implementation of which is on-going. In order to recognise Lahmeyer's efforts to date, the EBRD has decided that, effective 3 March 2008, Lahmeyer's eligibility to be awarded EBRD financed contracts be re-instated.

However, in order to ensure that full implementation of the CMS is achieved, Lahmeyer's Compliance Monitor is required to provide to the EBRD two monitoring reports, the first of which to cover the period from 1 January 2008 to 30 June 2008 and the second to cover the period 1 July 2008 to 1 February 2009, demonstrating Lahmeyer's implementation of its anti-corruption programme to the satisfaction of the EBRD.

In the event of failure on the part of Lahmeyer to fully implement its CMS to the satisfaction of the EBRD by 1 March 2009 and/or that there be a new finding of fraud or corrupt practices in the company by a judicial process or other official enquiry at any time prior to 1 March 2009, then, in any such event, the Bank may summarily decide to re-instate Lahmeyer's debarment and declare Lahmeyer ineligible to be awarded a future EBRD financed contract for an indefinite period of time. Any such declaration of debarment will not, however, adversely impact any Bank financed contract that may have been awarded to Lahmeyer in the interim.