Brazilian affairs: World Bank and IDB Compliance systems

In the past years, the Inter-American Development Bank (IDB) and the World Bank have increased their investigations in Brazil, sanctioning two Brazilian construction companies on grounds of corruption in projects financed by them. In 2020, Andrade Gutierrez, one of the companies involved in Operation Car Wash (codenamed Lava Jato), was prohibited from participating in public procurement projects financed by the IDB and the World Bank until the end of 2022. The sanction was reduced due to a Negotiated Resolution Agreement (NRA) with the IDB. Given that an NRA is conditional on presenting relevant information to the IDB, it is expected that Brazil will remain under the IDB’s scrutiny.

Roland Stein and Bruno Galvão are closely observing the developments in Brazil and have published two articles on JOTA, a leading, specialised legal journal in Brazil, with an average of one million qualified readers each month.

The first article, Debarment due to irregularities committed in projects financed by the World Bank and IDB, was published in December 2020, and presents an overview of the IDB’s and the World Bank’s sanction mechanism of debarment on grounds of committed irregularities such as corruption, fraud, collusion, coercion and obstruction of justice. Two recent Brazilian cases on this topic are also addressed. (Please find here full versions of the article in Portuguese and in English).

The second article, Negotiation and Cooperation with an IDB investigation, was published in January 2021, and deals with the process of the NRA, its conditions and possible consequences, highlighting the benefits of cooperating with the IDB as well as the need for preventive and timely action by companies subject to an investigation. (Please find here full versions of the article in Portuguese and in English).

BLOMSTEIN has a well-established Compliance Practice, in particular with regard to Multilateral Development Banks (MDB) and their compliance mechanisms. If you are interested in discussing other aspects of the investigation processes of MDB, please do not hesitate to reach out to Roland Stein or Bruno Galvão. They are more than happy to assist you.