Overview of the Sanctions System
I. Why a Sanctions System? What is the mission of the Sanctions System?
The Sanctions System of the African Development Bank Group (the “Bank Group”) is an administrative regime designed to sanction firms or individuals who have engaged in Sanctionable Practices in connection with Bank Group financed or administered projects. The Sanctions System was established pursuant to the fiduciary and legal duty entrusted to the Bank Group to ensure that resources mobilized and allocated for investments in development projects are used for the purposes for which they were intended.
Diversion of funds from development projects through corruption undermines the ability of International Financial Institutions (IFIs) to achieve sustainable development. Therefore, the IFIs, including the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, and the World Bank Group decided to adopt a common approach and share efforts to fight corruption and other wrongful practices. In this connexion, the foregoing IFIs signed on 9 April 2010, the Agreement for Mutual Enforcement of Debarment Decisions, pursuant to which a debarment decision taken by a signatory of the Agreement, may be applied by the other signatories, under specific conditions. The establishment of the Sanctions System, in its current form, enables the implementation of the Agreement by the Bank Group.
II. What are the Sanctionable Practices?
The wrongful practices covered by the sanctions proceeding are referred to collectively as “Sanctionable Practice(s)”. Sanctionable Practices include a corrupt practice, fraudulent practice, collusive practice, coercive practice and obstructive practice, carried out in connection with a Bank Group-financed or administered Project or an investigation, audit or sanctions proceeding. The above-mentioned Sanctionable Practices are defined in Section 4 of the Sanctions Procedures of the Bank Group.
III. What sanctions may be imposed?
The following sanctions may be imposed on the parties: letter of reprimand, conditional non-debarment, debarment with conditional release, debarment for a fixed or indefinite period, restitution and/or remedy, and other sanctions such as total or partial reimbursement of the costs associated with investigations and proceedings. The sanctions are described in Section 11 of the Bank Group Sanctions Procedures.
Debarred entities or individuals are ineligible to participate in any Bank Group financed or administered activities. In addition, in accordance with the aforementioned Agreement, the other signatories of the Agreement may cross debar and declare ineligible the parties debarred by the Bank Group, for a period of one (1) year or more.
Other than the reprimands, the respective sanctions, the identity of each sanctioned party, the Sanctionable Practices for which the sanctions are imposed and a summary of the final sanctions decisions will be publicly disclosed.
IV. What is the structure of the Sanctions System?
The Sanctions system is a two-tier administrative process which offers firms and individuals involved, an opportunity to respond to the allegations against them. It is composed of the Sanctions Office or Office of the Sanctions Commissioner (“SC”) at the first level, and the Sanctions Appeals Board (“SAB”) at the final level.
The SC and the Alternate SC are external members appointed by the Board of Directors of the Bank for three years and are assisted by a Sanctions Secretary. The SAB is made up of four external members, two substantives, two alternates, and two internal members, one substantive and one alternate, appointed for a three-year term that is renewable once. SAB members are appointed by the Board of Directors, on recommendation of the President of the Bank Group. The SAB is assisted by an Executive Secretary.
V. What is the process before the Sanctions Commissioner?
Allegations that a firm or individual have been engaged in a Sanctionable Practice are investigated by the Bank’s Integrity and Anti-Corruption Department (IACD). IACD may present a Request for Temporary suspension or initiate Sanctions Proceedings before the SC.
IACD may before concluding an investigation, or at the time of presentation of the Findings of Sanctionable Practices (as explained below) request that the subject of an investigations (The “Respondent”) be temporarily suspended from eligibility to participate in Bank-financed Projects and to be awarded new contracts, if IACD believes that continuous eligibility would cause imminent financial or reputational harm to the Bank Group.
The SC may grant such Temporary Suspension if the evidence supports a finding of a Sanctionable Practice for which an appropriate sanction would be a debarment of no less than one year. The Respondent has the right to object to the Temporary Suspension within forty (40) days. If the Respondent submits an Objection, the SC will consider the arguments submitted by both parties and may decide to terminate or uphold the temporary suspension. The SC’s determination on this issue is final.
At the end of an investigation, if IACD believes that there is sufficient evidence to support the occurrence of a Sanctionable Practice, IACD prepares a “Findings of Sanctionable Practices” (FoSP) and presents it to the SC.
If the SC determines that there is not enough evidence to support IACD’s findings, the SC makes a Determination of Insufficient Evidence and notify IACD. In this case, proceedings against the Respondent are terminated. IACD may however submit a new FoSP with additional evidence.
If the SC determines that IACD’s FoSP supports a prima facie finding that the Respondent has engaged in a Sanctionable Practice, the SC issues a “Notice of Sanctions Proceedings” (“Notice”) to the Respondent. In this case, the Respondent may contest the allegations by submitting to the SC, a written Response within sixty (60) days of receipt. If the Respondent does not submit a Response, the SC makes a determination solely on the basis of the evidence provided by IACD.
If a Respondent submits a Response, the SC determines, from all evidence and arguments presented, whether or not by a preponderance of the evidence, it is more likely than not that the Respondent engaged in the alleged Sanctionable Practices. In such a case, the SC imposes one or more sanctions, which may be extended to a Respondent’s affiliates, successors and assigns. The SC’s decision is final and binding unless the Respondent refers the matter before the SAB.
VI. What is the process before the Sanctions Appeals Board?
The Respondent may refer the matter before the SAB within twenty-five (25) days of receipt of the SC’s Sanctions Decision. In such a case, the SAB carries out a full de novo review of the contested case. SAB may hold a hearing either upon a party’s request or at its own discretion. SAB considers the Record constituted by IACD’s Findings of Sanctionable Practices, the Respondent’s Response, if any, the Respondents’ Appeal, and eventually IACD’s Reply, the Respondent’s Rebuttal and the parties’ presentations at a hearing, if applicable, as well as any other materials contained in the Record.
After completing its review, the SAB determines whether a preponderance of the evidence supports a finding that the Respondent engaged in a Sanctionable Practice(s) and whether it is “more likely than not” that the Respondent engaged in the alleged practice(s). If the answer is yes, the SAB prepares a Final Decision summarising its findings and imposing one or more of the above-mentioned sanctions. The decisions of the SAB are final and non-appealable. If SAB determines that the Respondent did not engage in the alleged Sanctionable Practice(s), the Secretary to the SAB prepares a written document recording the SAB’s finding and the closure of the proceedings and delivers the documents to the participants in the sanctions process.
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