Multilateral Development Bank Sanctions: 15 Years Of Cross-Debarment

As multilateral development banks (MDBs) mark the 15th anniversary of their cross‑debarment agreement, enforcement of integrity breaches in connection with MDB-financed projects is both broader and more harmonized than ever. The World Bank Group (WBG), the Inter-American Development Bank (IDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), and the African Development Bank (AfDB) have intensified enforcement, synchronized core procedures, and embedded compliance remediation through “conditional release.” The risks of MDB enforcement extend beyond contractors to sponsors, investors, and affiliates across corporate groups. This Legal Update takes stock of the latest trends and developments and flags practical implications for companies participating in MDB-financed projects.

The 15‑year Mark: Cross‑debarment’s Consolidation and Reach

The cross-debarment architecture is now well developed. A debarment of more than one year imposed by one MDB will generally trigger recognition by the other participating MDBs, resulting in a global loss of eligibility for MDB-financed contracts. Furthermore, the consequent reputational taint will often impact other commercial opportunities. At the same time, MDBs routinely stipulate that release from sanctions is conditional on demonstrable integrity reforms, often assessed with the support of independent integrity monitors. For sponsors and financial investors, there are collateral risks: a sanction affecting one portfolio company or operating affiliate can impact related entities, and often prompts referrals to national authorities.

The 2010 Agreement for Mutual Enforcement of Debarment Decisions (the Cross-Debarment Agreement) marked a shift of MDB enforcement from MDB-specific regimes to an integrated system grounded in common definitions of prohibited practices and minimum due process expectations. 15 years on, three features define the landscape:

• The list of “prohibited practices” is effectively harmonized across the MDBs (corruption, fraud, collusion, coercion, and obstruction), with broadly common sanctioning frameworks that emphasize proportionality and remediation.
• Debarment with “conditional release” has become the baseline sanction, aligning incentives toward compliance program design, implementation, and testing, with a reliance on the use of independent integrity monitorships during the sanction period.
• MDB investigations will often seek to follow evidence across corporate groups and third parties involved in MDB‑financed contracts, raising group level exposure and heightening diligence expectations.

Enforcement Trends

Enforcement activity by each of the AfDB, EBRD, IDB, ADB and WBG is set out in their annual reports in some detail and point to sustained investigative tempo, growing use of temporary suspensions, and continued reliance on negotiated resolutions.

For example, the ADB 2024 report states that:

• 2024 marked a 40% increase in enforcement actions over 2023, including debarment or conditional non-debarment of entities, largely involving corporate groups implicated in fraud, corruption, and conflicts of interest.
• The ADB's Office of Anti-corruption and Integrity (OAI) received 190 new complaints of alleged integrity violations related to ADB projects or ADB staff, in addition to 104 unresolved complaints from 2023.
• The OAI commenced 53 new investigations, in addition to 175 ongoing investigations from previous years.
• The OAI sanctioned 10 firms and 3 individuals through debarment or conditional non-debarment, extending these sanctions to 529 affiliated firms.
• In 2024, ADB submitted 1 firm and 227 affiliates to other MDBs for cross debarment. ADB cross debarred 87 firms and 9 individuals in alignment with sanctions imposed by other MDBs.

The WBG remains the most active of the MDBs. It has announced eleven settlements in 2025 to date, the most recent of which concerns Netherlands-based GenKey Solutions B.V.:

• GenKey was found to have engaged in “fraudulent practices” by not disclosing commissions paid to an agent.
• GenKey was debarred for a reduced period of 18 months in light of its compliance program, cooperation, acceptance of responsibility, and commitment to restrain from seeking additional WBG-financed contracts.
• As a condition for release from sanctions, GenKey committed to developing and implementing integrity compliance measures reflecting WBG Integrity Compliance Guidelines, and to fully cooperating with the WBG Integrity Vice Presidency.
• GenKey's subsidiary, GenKey Africa Ltd, was also debarred. GenKey's debarment by the WBG triggered debarments by the other MDBs.

In another recent case (which was not the subject of an agreed settlement) Thi Son Company Limited, a Vietnamese timber trading company, was debarred by the WBG for a minimum period of one year.

• Thi Son was found to have engaged in an “obstructive practice”. The WBG had sought to exercise its wide ranging contractual inspection and audit rights and Thi Son had refused to provide the requested documents.
• Thi Son did not contest the proceedings brought by the WBG or the recommended sanction.
• Thi Son is ineligible to participate in WBG-financed contracts or loans during the debarment period, and thereafter until it meets the stipulated conditions for release.

Across the MDBs, the following trends have emerged:

• Proactive integrity audits are an important source of detection. The Integrity Vice Presidency (or “INT”) and its equivalents at other MDBs can launch risk based integrity audits that do not depend on a whistleblower or complaint. These audits will encompass not only financial records, but “any other documents, data and information” in hard copy or electronic form that are deemed relevant, as well as staff interviews, site visits, and third party verification.
• A significant number of sanctions are being imposed by the regional MDBs. For example, the ADB reported several hundred entities sanctioned in its last full reporting year, notwithstanding a comparatively small number of originating investigations—a function of the cross-debarment system and group‑level coverage.
• “Fraudulent practices” (misrepresentations in bids, inflation of past performance, falsifying CVs and other documents) account for the majority of allegations and sanctions. Corruption, collusion and obstruction feature regularly but to a lesser extent, reflecting both enforcement focus and evidentiary practicalities. However, as highlighted in the GenKey case, facts that could potentially indicate corruption— non-disclosed agent commissions— may be sanctioned as a fraudulent practice.
• Compliance conditions are adopted as part of the enforcement regime, across the MDBs. Integrity offices increasingly require tailored program enhancements, targeted discipline of individuals, business‑partner controls, and independent assessment as predicates to conditional release.
• MDBs increasingly expect or require a company to appoint an independent investigative firm to conduct a credible impartial investigation. These appointments may:
  • be demanded by the MDB as part of a company's cooperation requirements;
  • form part of remedial actions after a self-disclosure; or
  • be a condition of a settlement agreement.
• Information‑sharing and referrals are commonplace. MDBs will make referrals to national authorities where the evidence suggests violations of domestic laws, reinforcing the need for companies to manage parallel exposure.

What’s New?

Updated WBG sanctions procedures (2023) and WBG sanctioning guidelines (2024)

• The treatment of prior misconduct is now clarified: the scope of the “past history of misconduct” aggravating factor is limited to adjudicated misconduct by another MDB, not national authorities.
• Breach of confidentiality of the sanctions proceedings is now a new aggravating factor.
• “Undue pressure” will be a mitigating factor where a respondent claims to have acted under threat or intimidation.
• The Suspension and Debarment Officer appointed by the WBG can withhold sensitive evidence against the respondent in certain limited circumstances.
• Sanctions can now be extended to companies determined to be successors of previously sanctioned entities to address the risk of evasion.

A uniform approach to compliance remediation

• The MDB General Principles for Business Integrity Programmes (2023) now function as a shared yardstick for compliance remediation across institutions. Integrity offices and monitors are using these principles to assess risk assessment, culture and governance, investigative capacity, training and communications, third‑party risk management, and stakeholder engagement and to gauge whether a program is “robust and generally well implemented” for mitigation purposes.

Practical implications for companies, sponsors, and investors

First, MDB risk is group-wide risk. Harmonized principles on treatment of corporate groups prescribe that parent companies, sponsors, and entities under common control can be sanctioned where willful blindness, failure to supervise, or direct/indirect involvement is substantiated. Sanctions can extend across portfolio structures.

Second, procurement representations are enforcement touchpoints. A sizable share of sanctions continue to arise from misstatements of experience, capacity, qualifications, or financial condition during prequalification and tender stages. Integrity controls over bid content, CVs/key personnel, and past‑performance claims are therefore central.

Third, negotiated resolutions are relatively common and can reduce uncertainty and result in tailored compliance obligations. Navigating the settlement process should take account of the following.

• Timing is important. MDB integrity offices tend to offer the most flexible, favorable settlement terms when companies move quickly to engage, admit and cooperate and there will be much less scope for negotiating with the MDB after a case is formally charged or referred to the adjudicative body.
• Cooperation is required. MDBs will evaluate the timeliness, truthfulness, completeness, and usefulness of the cooperation offered. Further, beyond agreeing facts, they will expect proactive, verifiable assistance that advances their broader integrity objectives.
• Settlement terms can include a requirement on companies to perform structured reviews across their MDB-financed portfolios, surface additional misconduct, share red flags/patterns, and assist in actions involving other parties.

Fourth, monitorships and conditional release are now standard pathways back to eligibility. Companies should expect an external integrity professional to test program design and effectiveness against MDB standards, including targeted remediation on third‑party management, investigative capabilities, and case handling discipline.

Fifth, expect spillover. MDBs will often make referrals to national authorities and companies can find themselves exposed to parallel investigations for anti‑corruption, procurement fraud, or under false-statements legislation.

What to Do Now?

• Assess integrity controls against MDB standards. Map your compliance program to the MDB General Principles for Business Integrity Programmes and WBG sanctioning guidelines, with particular focus on procurement integrity, third‑party risk, recordkeeping, and investigative capacity. Where you rely on group-wide policies, test whether borrower side audit/access obligations are operationalized in practice (data access, interview readiness, document holds).
• Verify procurement representations. Ensure that there are controls for experience and capacity claims used in bids and prequalification—including signoffs, source document verification, and key personnel vetting—and maintain a defensible audit trail.
• Prepare a monitorship ready posture. If integrity enhancements may be required for conditional release, pre-identify independent monitor candidates, reinforce KPI-driven remediation plans, and explore program testing that will align with MDB expectations.
• Update diligence procedures. In M&A, JV, and sponsor contexts, expand screening to include MDB debarment lists and cross‑debarments; analyze any conditional release obligations; and quantify contract eligibility and reputational impacts. Pay particular attention to markets with active MDB funding.

Mayer Brown is experienced in advising on all aspects of MDB integrity compliance and enforcement. For further details of our capabilities in this area, please visit the Multilateral Development Banks - Integrity Compliance and Enforcement page of our website.