The International Finance Corporation (IFC), a member of the World Bank Group, is dedicated to supporting private sector development in developing countries. To ensure that the companies it supports adhere to ethical and sustainable practices, the IFC integrates integrity commitments into its financing and investment agreements. The specific contract remedies outlined in agreements with the IFC may vary based on factors such as project nature, jurisdiction, and sector. In the financing agreements established between the IFC and supported companies, a sanctionable practice provision may be included. This provision requires the counterparty to represent that neither it, nor its affiliates, agents, owners or sponsors have engaged in corrupt acts in relation to the project, and that they will not do so during the term of the IFC’s financing. Moreover, the financing agreement could link the funding to milestones outlined in a compliance action plan, established during contract negotiations based on the outcomes of the IFC’s due diligence process. A potential breach of contractual terms can have both enforcement and contractual implications. First, if suspicions arise regarding sanctionable practices, including corruption, the IFC, acting through the World Bank Group’s Integrity Vice Presidency, may initiate an investigation and potentially debar the company from accessing World Bank Group financing in the future. Second, a breach of the sanctionable practices provision may result in commercial remedies, such as mandatory prepayment of a loan and termination of the contract.
Source: International Finance Corporation (IFC), https://www.ifc.org/en/home
