On April 29, 2016, the Supreme Court of Canada (“SCC”) held that the World Bank Group (the “Bank”) cannot be compelled to turn over volumes of investigation materials in Canada’s prosecution of Kevin Wallace, Zulfiquar Bhuiyan, Ramesh Shah, and Mohammad Ismail, all former employees or agents for Canadian corporation SNC-Lavalin Group Inc.
At issue in the case was whether an international organization such as the Bank – having conducted an investigation and shared its findings, which resulted in domestic criminal charges in Canada – can place its investigative files beyond the reach of defense counsel by asserting immunity.
The decision rebuilds a cornerstone of the Bank’s anti-corruption regime, namely its active engagement with national enforcement agencies and the related provision of investigation reports and materials. As the Bank’s anti-corruption regime has grown in reach, strength, and confidence, so too has its enthusiasm in ensuring that enforcement agencies have the benefit of any information gained from the its investigations.
In December 2014 that practice was clipped in the wings when the Superior Court of Justice in Ontario found that the Bank had waived its privileges and immunities by consciously assisting the Canadian criminal prosecution. The Bank, protective of its immunities and mindful of the wave of liability that could be opened, closed down its referral system as it appealed the decision and sought to repair the damage that had been done.
The Bank’s Anti-Corruption Regime
The Bank’s Integrity Vice Presidency (“INT”) was created in 2001 and is responsible for investigating and prosecuting corrupt practices (i.e., corruption, fraud, collusion, coercion, and obstruction) that occur in Bank-financed projects. Since then, INT has grown its authority, enhanced its investigation and sanction processes, and deepened its engagement with other multinational development banks. Today, INT and the Bank are among the most vocal advocates in the global campaign against corruption.
The Bank uses a two-tier system for making its determinations on whether an entity engaged in corrupt practices. Following an investigation, INT submits its findings to the Bank’s Office of Suspension and Debarment for determination. The respondent is also invited to provide written submissions. If the determination is adverse, the respondent may appeal the determination to the Sanctions Board, the final decision-maker in the system, for a de novo hearing. The default sanction applied by the Bank is debarment from participating in Bank-funded projects, with conditional release.
Despite the fact that such sanctions are confined to Bank-funded projects, the greater penalty is arguably that the sanction, and the reasons for it, are made available publicly on the Bank’s website. The debarment list has become an information hub for many due diligence systems and presence on the list frequently leads to being blacklisted by a significant number of public and private organizations.
INT provides referral reports and investigation materials to national enforcement authorities to encourage follow-on prosecutions. These reports and materials have proved to be an important source of information for investigations in multiple countries, and, since July 2009, INT has reported that it has made 158 referrals to 62 countries, including the United States, the United Kingdom, Germany, Australia, France, and Canada.
The Canadian Government Gets Involved
In 2010 the Bank began receiving information about corruption regarding foreign public officials and SNC-Lavalin employees involving the planned construction of the Padma Bridge in Bangladesh, a Bank-financed project valued at $2.9 billion. INT subsequently commenced an investigation into the allegations. As early as March 2011 INT approached the Royal Canadian Mounted Police (“RCMP”) about the allegations and the RCMP commenced its investigation in April 2011.
In April 2013 the Bank announced its 10 year debarment of SNC-Lavalin. The sanction was among the most severe ever handed down by the Bank. Shortly afterwards the defendants were charged by the Canadian government under the Corruption of Foreign Public Officials Act. The defendants resolved to fight the charges, particularly given that Canada does not yet have a Deferred Prosecution regime allowing for an acceptable resolution that would avoid SNC-Lavalin incurring a potentially devastating criminal conviction with significant collateral consequences.
The Defendants Obtain an Order for Production
In 2014 the defendants brought an application for an order requiring the Bank to produce various documents relating to INT’s investigation into SNC-Lavalin’s corrupt practices. This was because the RCMP, at the start of its investigation, relied on information it had received from INT to obtain a wiretap on the defendant’s communications. According to the defendants, the Bank had in its possession information that was relevant to the charges, including, in particular, information regarding the authorization of the wiretap.
The Bank refused to acknowledge the application for production. The Bank asserted that, as an international organization, it was immune from the jurisdiction of the Canadian courts in terms of any order for production of documents.
The court was not happy. In his decision dated December 23, 2014, Judge Nordheimer made the following remarks:
“Putting aside the measure of disrespect that the World Bank Group demonstrates to this court by absenting themselves from this application, it remains the fact that it becomes more difficult for this court to fully understand and assess the claim for immunity, in these circumstances, given the dearth of evidence from the World Bank Group on the various issues that would be helpful to the analysis.”
Judge Nordheimer concluded that the Bank had implicitly waived its immunity by making a conscious decision to take the benefit of pursuing a criminal prosecution as part of its efforts to maintain the integrity of Bank-financed projects. The Judge’s view was that, if it wishes to take the benefits of causing a criminal prosecution to be instituted, the Bank must accept the burdens of its actions and accept that it will be required to comply with the procedural rules and obligations of such a prosecution, including the possible result that third party records will be ordered to be disclosed.
The potential repercussions of the decision were immense. The court’s decision imposed a low threshold for waiver of immunity by international organizations and their officers. From the Bank’s point of view, this was a dangerous precedent. There are few, if any, decisions from respectable jurisdictions which peel away the immunities of international organizations and their officers. On an extreme reading of the case, an international organization could waive its immunity merely by consciously affecting state policy.
In effect, every Bank-financed project reaches far enough into the state to affect policy, and, as mentioned above, investigation referrals similar to those made in Wallace had already been made to over 62 countries. INT had spread wide with its referrals on the assumption that its immunities were unassailable. The Wallace decision had showed otherwise.
The Bank, concerned about the potential repercussions of Wallace, reigned in its referrals to every enforcement agency while it appealed the decision. While it is highly unusual for a decision of a provincial court to be appealed directly to the SCC, the special nature of the issues under consideration, and the potential implications for the international community, warranted the highest intervention. On July 2, 2015, the SCC granted the Bank’s application for leave to appeal.
The Supreme Court of Canada Reconsiders the Issue
The Supreme Court’s decision was rendered on April 29, 2016, with Justices Moldaver and Côté writing for the unanimous Court. The Court held that the appeal should be allowed and the production order set aside. In reaching the decision, the Court made a number of key findings that bolster the Bank’s protections against state interference.
First, the Bank’s archives and its officers and employees enjoyed “absolute” immunity, meaning that the Bank is not subject to a case-by-case determination of functional necessity. Subject to waiver, the relevant immunities apply.
Second, the Bank’s “archives” extended to all records and documents held by the Bank, and the term did not differentiate between current and historical documents.  Further, the Bank’s archives were found to be “inviolable”, meaning they are afforded a complete shield from investigation, confiscation, or interference, with this immunity not subject to waiver.
Finally, the personnel immunity afforded to Bank officers and employees had not been waived; an express waiver of personnel immunity is required. Further, to read “waiver” as including forms of implied or constructive waiver would subject immunities to case-by-case determination, which would run counter to the “absolute” nature of the immunity. To find otherwise would subject the Bank to inconsistencies from jurisdiction to jurisdiction which could cause considerable confusion and interfere with the Bank’s orderly operations.
The Court’s decision ends a period of uncertainty regarding the long term status of the Bank’s investigation referral system. With little intervention from outside sources, the Bank rapidly expanded its anti-corruption system over the past 10 years. This included moving to a point where its investigation materials are valued by those jurisdictions that are actively enforcing, or approaching more active enforcement of, anti-corruption laws.
Following this decision, the Bank will likely recommence its referral of investigation materials with the added knowledge that it has been vindicated in its approach and provided added protection from interference. The SCC is well regarded and respected in the international community, particularly in Commonwealth jurisdictions, and on that basis the Bank may take this favorable and unanimous outcome and rely on it should the issue arise in other jurisdictions.