The School of Tomorrow Conference series was initiated by Beaconhouse in 2000, and the recent event focused on seeking inspiration and equilibrium in a new age. The conference took place at the Pak-China Friendship Centre in Pakistan’s capital and involved more than 40 panel discussions. Alex sat on two panels: “The China Pakistan Economic Corridor and the Future of the Region: Socio-cultural and Economic Perspectives” and “Global Media in a Post-Truth Era”. As a barrister who specialises in international corruption and Multilateral Development Banks (‘MDBs’) sanctions cases, Alex gave his perspective of the impact which the recently established Beijing-based Asian Infrastructure Investment Bank (‘AIIB’) has had on the balance of power in the International Financial Institution (‘IFI’) arena. Specifically, he analysed the result of the AIIB-part-funded projects in the region on the MDB landscape and the traditional balance of power comprising the US-dominated World Bank, the European-dominated International Monetary Fund (IMF), and the Japanese-dominated Asian Development Bank (ADB). To a certain extent, the AIIB together with the Shanghai-based New Development Bank (NDB) suggests a new age in the world of MDBs in which China has a pivotal role, resulting in a number of opportunities for Pakistan and the surrounding region to make the most of the opportunities which an increasingly globalised world has to offer. Alex identified corruption and transparency as the two biggest challenges in this context. Alex also discussed the vital role of the judiciary and the Law in general in light of recent political events such as the US election and the High Court judgment at the end of 2016, concerning the UK Government’s capacity to trigger Article 50 – or ‘Brexit’ – after which the British press attacked its judges.
The Asian Infrastructure Investment Bank (‘AIIB’) is the latest Multilateral Development Bank (‘MDB’) to join the ranks of the other long-established MDBs such as the African Development Bank (‘AfDB’), Asian Development Bank (‘ADB’), the European Bank for Reconstruction and Development (‘EBRD’), the Inter-Amerian Development Bank (‘IADB’) and the World Bank (‘WB’). In furtherance of this objective, the AIIB has announced that it will voluntarily and unilaterally enforce debarment decisions of the other MDBs within its own sanctions regime. Although not yet formally a signatory to the Agreement on Mutual Enforcement of Debarment Decisions (the ‘Agreement’) dated 9th April 2010, the effect of the AIIB’s decision is to render any debarment decisions of the other MDBs which qualify for cross debarment, also applicable at the AIIB, such that nearly one thousand companies which find themselves debarred by the other MDBs will also be ineligible to bid on contracts at the AIIB.
This unilateral action is, of course, likely to be a precursor to the AIIB becoming a formal signatory to the Agreement whereupon decisions within the sanctions regime of the AIIB which qualify for cross debarment will also have effect at the other MDBs. However, whilst the AIIB recognises the harmonised sanctionable practices contained in the Agreement (i.e. ‘fraudulent’, ‘corrupt’, ‘collusive’ and ‘coercive’ practices), it also casts its net wider than the other MDBs by listing three further prohibited practices, namely, ‘obstruction’, ‘theft’ and ‘misuse of resources’.
This announcement comes not long after President Jin Liqun of the AIIB stated publically at the European Financial Forum that he viewed the role of the AIIB as being that of steward of taxpayers’ money from many different countries – a position which requires the highest bar for integrity and compliance.
The AIIB has appointed Hamid Sharif to the post of Director General of its Compliance, Effectiveness and Integrity Unit (‘CEIU’) which has been set up to lead the charge against corruption on bank-financed projects. Sharif notes that:
“AIIB’s institutional arrangements creates increased accountability and transparency because I report directly to our Board of Directors as the head of the integrity unit. This creates an open channel that will improve the bank’s ability to react and deal with any suspicions of corruption or unethical behaviour in our projects”.
On 8th December 2016, the AIIB published its Policy on Prohibited Practices (the ‘Policy’) in which it made it clear that all parties are “to adhere to the highest ethical standards” whilst also creating the authority for the conduct of investigations by an Investigations Officer into allegations of prohibited conduct by parties who engage with the Bank. In the context of the AIIB Policy, ‘party’ means any party (and its respective officers, employees and agents), who:
- in the case of a Project financed by a Sovereign-backed Financing, is involved in such Project, including, inter alia, recipients of Financing, beneficiaries of technical cooperation, bidders, suppliers, contractors, subcontractors, consultants, sub- consultants, service providers, applicants, concessionaires and financial intermediaries; or
- in the case of a Project financed by a Non-sovereign-backed Financing, is involved in such Project, including, inter alia, borrowers, sponsors, recipients of Financing, beneficiaries of technical cooperation, bidders, suppliers, contractors, subcontractors, consultants, sub-consultants, service providers, applicants, concessionaires, financial intermediaries, guaranteed parties, and investee companies; or
- contracts with the Bank for advisory services to be performed by the Bank.
- contracts with the Bank in relation to the Bank’s corporate procurement or any other matter not covered by the preceding three clauses, except for Bank Personnel.
Given the very significant impact that cross debarment can have on the ability of a company to do business, parties which find themselves under investigation, or which receive a Statement of Charges from an Investigation Officer or a Notice of Administrative Action from the Sanctions Officer should recognise that the way in which such matters are handled at the early stages can have a lasting impact on the case and a company’s future.
The lawyers at Bretton Woods Law are uniquely placed to deal with investigations, negotiated resolution agreements (‘NRAs’) and sanctions proceedings within the regimes of the multilateral development banks.
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