Exclusive Interview with Jamieson Smith, Chief Suspension and Debarment Officer (SDO) of the World Bank

In April 2018, Jamieson was appointed to lead the Office of Suspension and Debarment (OSD), an independent unit within the World Bank. It is the first tier of the Bank's two-tiered adjudicative sanctions system. In this exclusive interview, Jamieson discusses his work at the OSD and the World Bank’s investigation and sanctions processes, including settlements.

Publicado mercredi, octobre 23 2019
Exclusive Interview with Jamieson Smith, Chief Suspension and Debarment Officer (SDO) of the World Bank

Please tell us about your background and what attracted you to work in the sphere of anti-corruption & compliance.

 

Like a lot of professionals in this area, I fell into it. Right after graduating from law school, I was practicing general commercial litigation for a while. Then I worked closely with a partner at Baach Robinson & Lewis [now known as Lewis Baach Kaufmann Middlemiss], focusing on white-collar criminal defense for corporate executives. There I got an opportunity to help represent a high-level executive at Enron when the scandal broke. Overall, I enjoyed representing individuals and digging into the facts that could matter in our clients’ defense. In 2006, I joined Cadwalader, Wickersham & Taft’s Business Fraud & Complex Litigation Group. I worked for a variety of big corporations and individuals in white-collar crime and regulatory matters, and a lot of the work happened to involve alleged violations of the U.S. Foreign Corrupt Practices Act (FCPA).

 

After nine years in private practice, I was looking at possible in-house and government positions and found an opportunity at the World Bank. My former supervisor Pascale Dubois (currently the Integrity Vice President at the World Bank) was the Bank’s first Chief Suspension and Debarment Officer and had set up the Office of Suspension and Debarment (OSD) in 2007 as the Bank’s first-tier sanctions office. She was looking for an expert with compliance, investigations and FCPA experience to further build & strengthen the work of OSD. This how I got on board and joined the World Bank in 2010.

 

What have been the most exciting experiences for you at the World Bank? What do you enjoy most about your job?

 

I find it extremely interesting to inquire into the many things that can happen in international business when companies are trying to get transactions done. I also enjoy the international aspect of this field. I grew up in a small town in Massachusetts and did not get to travel much when I was young. However, when I was in private practice, I carried out investigations in countries like China, Egypt, and Brazil, locating evidence and conducting interviews with different witnesses. Getting down to the nitty-gritty of what went wrong at a company was really stimulating.

 

Another aspect that I enjoyed of my private practice was that I got to help companies draft their compliance programs. So the job wasn’t just about catching the bad guys and negotiating a resolution to make the problems go away. I also got to help the companies start to do the right thing and help them move past the bad things that happened by introducing compliance policies. With my work at the World Bank, I feel very fulfilled that my office is helping ensure that the Bank’s funds don’t go to fraudulent and corrupt actors, but also that we are helping companies turn the page and become compliant players in their markets.

 

Can you tell us about the OSD? How does it function?

 

We are a small office, with three other attorneys reporting to me. Our job is to assess allegations of misconduct on World Bank-financed projects and make decisions on each case. The office functions in a similar way as an administrative judicial office of first instance. The Bank’s investigative unit is called the Integrity Vice Presidency (INT), which has about 100 staff.

 

Last year the World Bank committed over $60 billion in loans and grants. With that much money available, there will be people who engage in corruption, fraud and other misconduct. The INT received nearly 2,500 complaints last year – from whistleblowers, competitors, Bank staff and government officials. They triage the allegations and investigate to find more details. When they think they have gathered enough evidence to prove that a World Bank contractor has engaged in sanctionable misconduct (which can be fraudulent, corrupt, collusive, obstructive, or coercive practices), they submit a case to my office.  

 

I really want to highlight the independence of my office; no one at the World Bank can tell me how to decide on cases. I do report to Bank senior management on things like policy issues and my office’s budget and hiring, but they have no involvement in decision-making on our cases.

 

In considering cases, our system’s standard for culpability is not the US criminal standard of “beyond a reasonable doubt" but whether it is “more likely than not” that the company engaged in the alleged misconduct. This is more like a civil standard, since we are not a criminal court and we are not putting anyone in jail. As for the evidence I review, our investigators do a great job with the resources they have, especially given that they don’t have any subpoena power. They cannot compel anyone to sit down and talk to them, so they do in-depth investigations to find evidence in whatever way they can.

 

If I do decide that there is sufficient evidence that a company has engaged in misconduct, then my office sends out a file, which includes all the evidence, to the company and I recommend a sanction. This is usually a period of debarment, where the company cannot receive any contracts or finance from the World Bank for a certain period of time.  Depending on the circumstances, however, a company can receive just a letter of reprimand or, at the other end of the spectrum, permanent debarment.

 

Our baseline sanction is a debarment “with conditional release,” which means the company cannot get off our debarment list until they show that they have met the Bank’s compliance standards and implemented policies and training to ensure that the misconduct doesn’t happen again.

 

Can companies file an appeal? How do you decide on the sanctions?

 

Yes, if a company wants to challenge my decision or the sanction I recommended, it can appeal to a Sanctions Board (second tier) made up of seven external independent members who are impressive judges and other experts in the field. The Sanctions Board is not bound by any of my decisions and serves as the final decision-maker in all appealed cases. A hearing may be held at the Sanctions Board stage, while there can be no hearing at the first tier.

 

If a company does not appeal within 90 days, my sanctions recommendation becomes final. You might be surprised but two-thirds of the companies do not appeal. The decision to appeal a sanction can depend on things like how important World Bank business is to the company. Some companies have not done a lot of business with the World Bank and may care less about being debarred, but there may be collateral consequences to be considered. For example, during a due diligence process for an acquisition, the company’s debarment listing may get flagged and that can potentially affect the acquisition.

 

Does the World Bank offer settlements?

 

Yes, this is relatively new. We introduced settlements in 2011. I have a very limited role in settlements. INT negotiates the settlements and the General Counsel of the World Bank Group approves it. It then comes to my office to get final approval to ensure that the company wasn’t under any duress to settle and the sanction is within the Bank’s Sanctioning Guidelines.

 

My office gets an average of about 50 cases annually, out of which 35 are active cases where I have to make a decision, and about 15 are settlements. I’d say the response to the settlement option has been great. In the US, it’s very rare for a case to go to trial, but I have learned that in many parts of the world, it is rare for cases to settle. The more than 150 companies and individuals that have settled with us, however, have been from all around the world, from American and European companies to ones from China and India.

 

How, specifically, is the World Bank shaping the anti-corruption and compliance field?

 

Through our work, the World Bank is exporting the concept and practice of compliance to companies of all sizes all over the world. I mentioned earlier that our debarments usually come with a conditional release. My colleague Lisa Miller leads the Integrity Compliance Office (ICO) at the World Bank. After a debarment is issued, the ICO will get in touch with the debarred company to help it implement or amend its compliance policies in order to get a conditional release. The World Bank funds projects all over the world, where contracts can go to all sizes of businesses from giant infrastructure companies with thousands of staff to small companies with a handful of employees.

 

The ICO helps to customize the companies’ compliance programs depending on the misconduct that occurred, as well as the size and business model of the company. So, while all debarred companies have to meet the World Bank’s general compliance standards, the ICO clearly is not going to expect the same type of compliance program from, say, a 10-person consulting company in Southeast Asia and a massive construction company from North America. One of the things the ICO wants to see in a compliance program is a whistleblowers program. At a large firm, a hotline or website might be put in place to report allegations. But is that going to be feasible in a small company without even computerized records? Of course not. However, there is still a way to have an effective compliance program even there. For example, for a small company in a developing region, the ICO has recommended installing a suggestion box in a safe place, where employees can submit anonymous concerns. This is compliance too.

 

How do you monitor companies post-conditional release?

 

We have adopted a carrot and stick approach. Once a company is off the list, they are free to get Bank-financed contracts again. However, if there is sufficient evidence that they engage in misconduct again, the company gets an automatic 10-year debarment.

 

Please share some of the recent developments in the field of compliance.

 

In 2010, the World Bank Group, Asian Development Bank, African Development Bank, European Bank for Reconstruction and Development and Inter-American Development Bank Group signed the Agreement for Mutual Enforcement of Debarment Decisions. This was possible because we have similar two-tier sanctions systems and the same definitions of corrupt, fraudulent, collusive, and coercive practices. If any of these multilateral development banks (MDBs) debar a company for more than a year, the other MDBs will also cross-debar the company. The effectiveness of this strategy has been that a company debarred by one of the MDBs cannot just switch its business to winning contracts from other MDBs. This cooperative alliance between these five MDBs has been a great tool to reach more companies worldwide.

 

At the World Bank, we are seeing more and more companies from around the world who are open to the idea of possibly settling their cases and, even if they don’t settle, responding to the ICO to implement compliance programs. The world now looks at corruption as a serious issue and at the World Bank, we continue to get fantastic support from the highest levels to tackle it.

 

In terms of global trends, it has been great to see many other countries besides the US now engaged in prosecutions against international corruption. 10-15 years ago, it was just the US and a few other countries; now, there is real cooperation between prosecuting authorities of different countries.

 

What are the main professional challenges that you face, and how do you plan to tackle them?

 

We cannot catch every instance of fraud or corruption. Even if we had 500 or 1,000 investigators, we still wouldn’t catch everything, so it’s sometimes frustrating to realize that there might be some folks who get away with taking funds that should go the poor. But there is a demonstration effect. If your company is paying bribes or lying in your bids, you might not get caught, but maybe your competitor will. Then you are bound to think that maybe you are next in line. The word is getting out there that the World Bank is serious about its anti-corruption efforts and hopefully, this will deter companies from engaging in misconduct in the first place.