Multilateral Development Banks' Audit Rights Under Scrutiny
An arbitral tribunal backed the World Bank's broad contractual audit rights against a consultancy that redacted its records — key lessons for companies under MDB scrutiny.
Multilateral development banks (MDBs) only conduct administrative investigations. Unlike law enforcement agencies, they do not have the power to compel anyone to share documents or testify.
Their core investigative power lies in one clause present in all MDB project-related contracts: the infamous audit clause.
This clause gives MDBs the right to access the contracting company’s books and records. Coupled with the company’s obligation to cooperate with integrity investigations, subject to sanctions for obstruction, these audit rights can be quite powerful.
But what is the scope of these audit rights?
A recent arbitral tribunal ruling suggests it’s broad and difficult to challenge—at least in the case of the World Bank.
Here’s a breakdown of what happened (according to a recent news report) and why it matters.
Unicon entered into a contract with the World Bank in 2021 to assist with waste management in Somalia. This contract, governed by New York law, allowed disputes to be resolved through UNCITRAL arbitration in Washington, DC.
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Topics: MDB System & Sanctions · Investigations
