GAC STRATEGY IMPLEMENTATION: LEGAL IMPLICATIONS

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GAC STRATEGY IMPLEMENTATIONLEGAL IMPLICATIONS

• Core Course on Public Sector Governance and
  Anti-Corruption
• April 23-26, 2007

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MAIN ISSUES

• Legal Issues
• Articles considerations
• Exercise of Contractual Remedies
• Consistent but differentiated treatment
• Legal and Judicial Reform
• Related Policy Issues
• Bank Investigations
• Guidance Note
• Policy Updates
• DPLs
• Asset Recovery

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KEY LEGAL ISSUES

• ARTICLES CONSIDERATIONS
• GAC Strategy falls within the Banks mandate
• Implementation subject to certain legal
  constraints, in particular the political
  prohibition as it applies to proposal for
  multi-stakeholder engagement on GAC issues

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• Political Prohibition entails a two-part test
• Economic considerations only should guide Bank
  decision-making
• Focus on economic (and not political) benefits of
  reform initiatives
• Bank must not interfere in political affairs of
  member countries
• Remain impartial vis-à-vis partisan political
  actors
• Ensure full country ownership
• Prefer acting with broad coalitions and
  activities that enjoy consensus support
• On the demand side avoid engagement with
  actors with strong partisan associations

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• EXERCISE OF REMEDIES UNDER BANK LOAN AGREEMENTS
• GAC Strategy does not analyze the exercise of
  remedies, but the issue is critical
• Banks contractual remedies (i.e., suspension,
  cancellation, acceleration, refund) may need to
  be strengthened (e.g., refund for loans)
• Need more clarity on interpretation (i.e.,
  improve General Conditions commentaries)
• Need guidance on exercise of remedies (e.g., a
  good practice note)

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• CONSISTENT BUT DIFFERENTIATED APPROACH
• Equal treatment is a guiding principle, per
  Development Committee GAC Strategy calls for
  consistency in approach but also cites need to
  differentiated per country conditions
• Need more clarity on this approach
• Normative and procedural measures to ensure
  uniform standards and principles, consistently
  and impartially applied across countries in a
  transparent manner
• Credibility will depend on appearance of
  impartiality as much as reality
• Flexibility is key objective is consistency in
  approach, not in outcomes

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• LEGAL AND JUDICIAL REFORM
• GAC Strategy calls for legal and institutional
  reform (e.g., courts) to strengthen
  accountability and transparency
• Need to formulate an Action Plan for Legal and
  Judicial Reform component of the GAC Strategy
• Plan would include scaling up of work with
  oversight institutions such as courts and supreme
  audit institutions

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RELATED POLICY ISSUES

• BANK INVESTIGATIONS
• GAC Strategy cites the important role of INTs
  work in preventing and combating corruption in
  Bank projects
• Need standard protocols on key issues such as
  information sharing with member countries and
  handling investigation findings within the Bank
• Could be done by a Bank-wide working group to
  develop these protocols

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• GUIDANCE NOTE
• Need to develop a comprehensive Guidance Note on
  GAC-related policies and procedures
• Cover all new and existing requirements and good
  practices
• Would not replace existing OP/BPs, but act as a
  navigational tool
• No new OP/BP for now, maybe later

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• POLICY UPDATES
• GAC Strategy will require an update to Disclosure
  Policy
• Fiduciary aspects of GAC Strategy suggest the
  need to update existing fiduciary policies and
  procedures better quality control for
  procurement plans, ex ante controls for high-risk
  projects, enhanced monitoring of compliance with
  loan covenants
• Need to balance strengthening Bank fiduciary
  practices with over-arching need to strengthen
  country systems, one of the guiding principles of
  the GAC Strategy
• Need to reflect on implications of GAC Strategy
  on Trust Funds

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• DEVELOPMENT POLICY LENDING
• DPLs can play important role in promoting
  GAC-related policy reforms
• Strengthening existing framework in OP/BP 8.60 on
  GAC-related issuesno need for policy revisions
• Examples
• Include GAC concerns in DPL analytic work and
  local consultations
• Clearer guidance on when to apply enhanced
  fiduciary requirements in DPLs

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ASSET RECOVERY

• Proposal was discussed at recent Spring meetings
• Main ideas build country capacity, build global
  partnerships, support implementation of UNCAC
• Legal Issues
• Bank can play a facilitative role in
  implementation of international conventions,
  including in the area of stolen assets
  recoverybut it has no standing to act as an
  enforcer
• Capacity building should focus on overall
  capacity, should avoid support for individual law
  enforcement cases
• Same general Articles considerations (e.g.,
  political prohibitions) would apply to AR work as
  apply to GAC work generally