Debarment

Governments and development banks use debarment as an administrative sanction. It follows proof or admission of fraud, bribery, collusion or similar breaches, and is separate from any criminal case. Grounds, process and length vary. The World Bank, other multilateral development banks, the EU and national governments each keep their own lists, and several development banks recognise each other's decisions under a cross-debarment agreement. Debarment may reach affiliates and successor firms, and can be shortened if the company cleans up, for example by dismissing those responsible, adopting a compliance programme and sometimes accepting a monitor. A lighter outcome, called conditional non-debarment, imposes obligations without exclusion. For a firm that earns much of its income from public work, debarment can be worse than a fine. Compliance teams screen suppliers and partners against debarment lists as part of third-party due diligence. A contractor that earns most of its income from public work may not survive losing access to that market.

An international development bank investigates a contractor for paying bribes to win a road project. It finds the evidence credible and debars the contractor for four years. Other development banks that recognise the decision bar it as well. A mid-sized supplier that subcontracts to the firm checks its contract to see whether it can keep working with it.