1. Streamlining Anti- Corruption in FM Support to Bank Operations By Nestor Coffi Cluster Leader AFTFM

2. Overview 1. Background 2. Assessment of Corruption Risks 3. Mitigating Measures: conventional approaches 4. Mitigating Measures: Non-conventional approaches 5. Dealing w/Corruption Allegations &Cases 6. Documentation: IRIS/PRIMA 7. Collaboration w/Procurement & INT

3. Background Corruption defined Corruption defined Clarified technical definition butClarified technical definition but Controversy about the roles of actors and endemic causesControversy about the roles of actors and endemic causes Engaging Government w/WB & Donors Engaging Government w/WB & Donors GAC Implementation A/P: GAC Implementation A/P: key FM roles?key FM roles? How to discharge them?How to discharge them? Country level: Strategy & diagnostic => ACT (CAS, Programs)Country level: Strategy & diagnostic => ACT (CAS, Programs) DPL triggers as leverage… DPL triggers as leverage… Project level: infrastructure projects Vs soft/TA projects Project level: infrastructure projects Vs soft/TA projects

4. Assessment of Corruption Risks New Requirement New Requirement COT Approach COT Approach Materials: Indicative Questionnaires Materials: Indicative Questionnaires Recommendation: guidance notes needed, systematic Vs Ad-hoc, Recommendation: guidance notes needed, systematic Vs Ad-hoc,

5. Mitigating Corruption Risks: Bureaucratic or Documentation-Based Approach Reinforce Internal Controls Reinforce Internal Controls But ineffective when there is collusion!But ineffective when there is collusion! Ensure timely review of IFR Ensure timely review of IFR To detect fraudulent financial reportsTo detect fraudulent financial reports Increase Transactions Reviews / In-depth SOE Reviews (frequency, scope) Increase Transactions Reviews / In-depth SOE Reviews (frequency, scope) To detect fictitious/inflated invoicesTo detect fictitious/inflated invoices Physical verifications Physical verifications to corroborate with financial reports (apply 20/80 principle)to corroborate with financial reports (apply 20/80 principle) Require High Quality Audits Require High Quality Audits

6. Mitigating Corruption Risks: Non- conventional Approach Involve Audit Committee, Anti-Corruption Commissions Involve Audit Committee, Anti-Corruption Commissions Complement Financial Audit w/ Performance/Technical Audit (TOR expended…) Complement Financial Audit w/ Performance/Technical Audit (TOR expended…) Require Parallel Auditing (deterrent force) / “Agreed-Upon-Procedures” Audits/ ISA240 Require Parallel Auditing (deterrent force) / “Agreed-Upon-Procedures” Audits/ ISA240 Require Social Accountability Arrangements for CDD and HIV/MAP type projects Require Social Accountability Arrangements for CDD and HIV/MAP type projects Involve Independent Media / Disclose Project Audit Reports Involve Independent Media / Disclose Project Audit Reports Increase Sensitization: Corruption Awareness Workshops / Campaigns Increase Sensitization: Corruption Awareness Workshops / Campaigns

7. Dilemmas in Dealing with Corruptions Allegations or Cases Fiduciary role Vs Advisory role Fiduciary role Vs Advisory role Development Drive Vs Investigation Drive Development Drive Vs Investigation Drive Zero-Tolerance Corruption Vs Selectivity Zero-Tolerance Corruption Vs Selectivity Avoiding throwing away the Baby with the Washing Water Avoiding throwing away the Baby with the Washing Water Professional judgment,Professional judgment, Seriousness of allegations or facts/evidencesSeriousness of allegations or facts/evidences Good understanding of the contextGood understanding of the context

8. Corruption and Use Country Systems : challenges Reasonable Fiduciary Assurance easily Questionable? Reasonable Fiduciary Assurance easily Questionable? Reputational Risks Vs Risk AppetiteReputational Risks Vs Risk Appetite L/M Corrupt Country RiskL/M Corrupt Country Risk H/S Corrupt Country RiskH/S Corrupt Country Risk Fongibility Vs Earmark Fongibility Vs Earmark Dilution into Macro Issues Vs Transactional Mode Dilution into Macro Issues Vs Transactional Mode Risk of Diversion w/Multiple PFM Actors Risk of Diversion w/Multiple PFM Actors Political sensitivity: manipulation, pressures, threats, bargaining, …etc. Political sensitivity: manipulation, pressures, threats, bargaining, …etc.

9. Documentations FMA – specific section summarizing corruption risks with detailed discussions in the questionnaires & ratings FMA – specific section summarizing corruption risks with detailed discussions in the questionnaires & ratings FM SPN – H/S Risk Corruption Project => QA FMS review FM SPN – H/S Risk Corruption Project => QA FMS review PRIMA Module on Anti-Corruption (under development) PRIMA Module on Anti-Corruption (under development)

10. Collaboration with INT and Procurement Teams Collaborative work & exchange of information w/Procurement team Collaborative work & exchange of information w/Procurement team Speak out, Involve TTL & RMFM Speak out, Involve TTL & RMFM Request TTL to Report to INT Request TTL to Report to INT Ask when in Doubt b/c It’s a Learning Process for all of us… Ask when in Doubt b/c It’s a Learning Process for all of us…