Conflict of Interest

1
Conflict of Interest
2
General Considerations

• Policy currently found in
• Consultants Guidelines, pars. 1.9 and 4.12
• Procurement Guidelines, par. 1.08(b)
• Two Main Categories of Conflicts
• Conflict of Interest by nature
• Conflict of Interest by proximity

3
(contd)

• The latter has created some difficulties in the
  past. (What is its true rationale Protecting
  against feather-bedding, avoiding to create a
  captive market, etc. Where exactly is the
  conflict?)
• The Bank looked at existing practices among
  government bodies and decided to break down the
  concept of conflict

4
Conflict of Interest by Naturere CG 1.9(a) first
and second sentences (goods, works and services),
and 1.9(b)

• When Any time the advice, findings or
  recommendations under either assignment may be
  influenced by the other assignment
• Examples
• Consultant assisting client in privatization of
  assets and advising purchaser of such assets
• Drafting TORs and competing for the assignment
  itself

5
(contd)

• Waivers, mitigation?
• None
• If too late, one of the two assignments should be
  dropped

6
Conflict of Interestby proximityre CG 1.9(a)
second sentence (consulting services)

• When Consulting assignment follows a previous
  consultant assignment related to it, but there is
  no conflict by nature usually results in unfair
  competitive situation.
• Examples
• Sector study followed by pilot implementation
  study followed by pilot implementation study.
• Privatization of a group of commercial banks
  under the same project.

7
(contd)

• Waivers
• No, when Borrower is the executing agency
• Yes, if Bank executes exceptionally in some
  partnership situations, but fair competition has
  to be established (mitigation)

8
Proposed New Provisions

• Objective To differentiate between substantive
  conflicts and unfair competition.
• (Approach proposed in the draft revised
  Consultants Guidelines)
• Conflicts
• In which situations?
• Conflict between consulting activities and
  procurement of goods, works or services (other
  than consulting services)

9
(contd)

• Conflict among consulting assignments (same as
  COI by nature)
• Relationship with Borrowers staff
• Risk that the selection of the Consultant or
  his output be subjective, to accommodate another
  interest
• No waiver, no mitigation

10
(contd)

• Unfair Competitive Advantage
• When incumbent has insight, or is perceived as
  having such insight.
• Risk discourage competition.
• No need for a waiver, but mitigation is necessary.

11
A Few Other Issues

• How do we define affiliates?
• Timing is critical
• Assignment under competition consequence is
  ineligibility for this assignment
• Assignment under completion consequence is
  ineligibility for future assignments (difficult
  to monitor since the Bank might have no say in
  those future assignments).
• Do individuals transfer conflict from one
  assignment to another?
• Partnerships