On Aug. 1, 2006, the World Bank (“the Bank”) launched its new, proactive Voluntary Disclosure Program (“VDP”), a mechanism designed to address and reduce corruption. Through the VDP, the World Bank has enabled the private sector to self-police and avoid joining the more than 330 companies on the World Bank’s debarment “black list.” Participants in the VDP program agree to certain Terms and Conditions requiring them to:
- commit to ceasing corrupt practices;
- disclose to the Bank the results of an internal investigation into past corrupt practices; and
- implement a robust internal compliance program monitored by a Bank-approved third party for three years.
If a participant breaches the Terms and Conditions, it is subject to a 10-year debarment from participation in Bank-related activities.
There are clear benefits for participation in the VDP program. VDP members avoid debarment for disclosed past conduct, are able to continue to compete for Bank-supported projects, and ensure that their identities are kept confidential.
However, the VDP also imposes significant costs, such as attorney fees, the costs of performing an internal investigation and devising a compliance program, and the commitment to pay all costs associated with future compliance monitoring. Regardless of the costs involved, the Voluntary Disclosure Program promises to be an important tool for the Bank to combat corruption by providing incentives for private entities to voluntarily address and improve their compliance programs.
This article is presented for informational purposes only and is not intended to constitute legal advice.
