This is a resource page for the session, International Anti-Corruption Investigations presented by IIU Deputy Head Albert Lihalakha at the Symposium on Supranational Responses to Corruption, 28 April 2022 in Vienna, Austria.
WHITEPAPER LINK: Understanding the Integrity Enforcement Regime at the Green Climate Fund by Dr. Sanjeev Narrainen, Integrity and Compliance Officer, IIU
This event was organized by the World Bank Office of Suspension and Debarment (OSD), the Anti-Corruption Law Interest Group of the American Society of International Law, and the Organization for Economic Cooperation and Development’s Anti-Corruption Division.
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Context
The climate crisis requires immediate collective action: communities are already facing its adverse effects, and policymakers are in a race against time to meet the goals of the Paris Agreement. Limiting global warming to 1.5°C is still narrowly possible and will be determined by the investment decisions made over the next decade.
Climate finance is an indispensable tool that empowers communities to combat climate change and to build strategies and development pathways that promote resilience and equitable growth. The Green Climate Fund (GCF) is one of the instruments set up after the Paris Agreement to channel climate finance to countries with an ambition of USD 100 billion per year.
In the recent board meeting, USD 187.7 million was allocated to support Climate-smart agricultural production systems in Columbia (FP182) and a project with the International Fund for Agricultural Development (IFAD) for agricultural banks and financial institutions in Great Green Wall (GGW) countries to foster climate-resilient, low emission smallholder agriculture (FP183). The current portfolio is a commitment of USD 10.2 billion, where USD 7.0 billion is under implementation.
The volume of investments, along with complex climate finance models and country ownership, make climate funding vulnerable to integrity risks.
The Integrity Framework in GCF
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Under clause 68 of the Governing Instrument, the Independent Integrity Unit (IIU) was set up as one of the accountability mechanisms for the Fund. GCF has a zero-tolerance policy against Prohibited Practices to ensure that funds are used for their designated purposes and enable adaptation.
LINK: Terms of Reference of the Independent Integrity Unit
In the same way that the GCF Business Model relies on Accredited Entities and delivery partners to operate, integrity obligations are also carried by the national, regional and international intermediaries and implementing entities to ensure integrity standards are met.
LINK: Business Model Framework: Financial Instruments of the Green Climate Fund
The IIU undertakes the following main activities:
- Build a robust policy environment that enables integrity and to which all stakeholders must adhere, GCF Integrity Policy Framework with key policies for AML/CFT, Prohibited Practices, SEAH, COI and others;
LINK: Compilation GCF Integrity Policies
- Prohibited practices include amongst other fraud, corruption, coercion, collusion, obstruction, money laundering and terrorism financing
LINK: Policy on Prohibited Practices
- Integrate/align integrity policies in all legal arrangements and across GCF operations (advisory services);
- Proactively monitor the implementation of GCF projects for integrity risks with two flagship projects to risk mitigation:
- Proactive Integrity Reviews – Comprehensive integrity risk assessments aiming to rate organizational and operational (project-related) integrity risks across numerous policy defined criteria, and carries out risk-based integrity reviews of GCF-funded projects and programs to detect compliance failures and potential integrity red flags.
- Integrity Due Diligence Platform (IDDP) – A data-driven approach to integrity risk rating using machine learning which employs natural language processing (NLP) to identify “red flags” from text extracted from project documents.
- Collaborate through peer alliances and strategic partnerships with stakeholders (capacity-building technical assistance); and
- In the event of an integrity failure, activate an investigative response and enforce compliance reform.
Administrative Remedies and Exclusion (ARE) Policy
LINK: Administrative Remedies and Exclusion (ARE) Policy
The ARE regime establishes a formal administrative process designed to protect the Fund from abuses while providing due process to respondents before deciding on appropriate action.
The unique principle of the ARE Policy is the opportunity for reform by requiring individuals or entities to rehabilitate their processes to adhere to the GCF Integrity Compliance Guidelines before being reconsidered for GCF financing. The IIU will monitor this through an Integrity Compliance Programme and ensure appropriate mechanisms are in place to prevent the reoccurrence of integrity violations.
The Policy also excludes the individuals or entities engaged in Prohibited Practices from financing for the period decided by the Case Review Panel/Officers.
The structure of the administrative process has two tiers:
First, the Case Review Officers (CRO) determines that the preponderance of evidence submitted leads to a finding that the respondents have engaged in Prohibited Practices.
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Second, a Case Review Panel (CRP) conducts further review if the respondents are not satisfied with the initial determination of the CRO.
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Finally, the CRO/CRP decides on the appropriate administrative remedies and exclusions to be applied on each case based on the criteria to be elaborated in the Administrative Remedies and Exclusion Guidelines.
The process applies a system of rigorous assessment review of the relevant evidence, affords sufficient due process to respondents, and assures independent and impartial decision-making by subject matter experts.
Conclusion
Climate action is a collective, multi-stakeholder effort. Everyone needs to pitch in. Our motto is: 0% Corruption, 100% Climate Action.
The combined outcome of a proactive preventive approach, of establishing a robust policy framework, investigative practice and administrative remedies should be able to optimize the mission of ensuring that the benefits of climate finance is protected for the sake of people and the planet.
For inquiries or any collaboration opportunities, please email: [email protected]
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