New report slams Bank/Fund corruption agendas

News|Bretton Woods Project|11 August 2000|update 18|url
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The World Bank and IMF are urged to rethink their approaches to anti-corruption work in a new briefing. Published by the Corner House, a UK-based research and solidarity group, it states that:

"corruption is increasingly cited as a reason for withholding foreign aid or debt relief. Most commentators on corruption - and on the good governance initiatives instigated to combat it - dwell on developing countries, not industrialised ones. Most call attention to the petty corruption of low-paid civil servants, not to the grand corruption of wealthy multinationals. This focus needs to be shifted."

The 24 page report marshals many disturbing statistics about corruption, and the roles of the World Bank and IMF in fostering or abetting it. Specific cases are discussed from Uganda, Pakistan and Lesotho. Privatisation is a component of 70 per cent of World Bank adjustment loans and 40 per cent of sectoral adjustment loans. Privatisation processes have often "been accompanied by widespread corruption".

Despite the fact that the Bank uses International Competitive Bidding for most contracts, the briefing argues that transnational companies and borrower governments are able to distort the system to their advantage. One means is using the specialised lobbying and consultancy firms - often employing ex-Bank staff - which have grown up around the Bank and Fund.

The Bank has been unable to ensure that its loans are used properly, because its institutional culture rewards drawing up and disbursing loans rather than supervising their impact on the ground. Former Bank staffer James Wesberry, now Director of the Americas' Accountability/Anti-Corruption Project has described the audits demanded by the International Financial Institutions "generally innocuous, untimely and therefore useless".

Progress has been made, however, with the World Bank drawing up a list of firms debarred from participation in Bank-financed contracts because they have been found guilty of corruption or fraud. The briefing argues that the Bank should go further, sharing liability with borrower country taxpayers in major cases such as Zaire/Congo and Indonesia "if it is found that World Bank and IMF staff knowingly lent money to regimes who immediately siphoned it off through corruption".

The report also urges the World Bank to:

• introduce proper guidelines for staff dealing with corporate lobbyists;
• review the system by which former Bank staff become advisers to private clients; and
• commission a full independent review of the link between structural adjustment and corruption.

The Corner House

cornerhouse@gn.apc.org

The World Bank's Report on the State

This text may be freely used providing the source is credited.

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Published: 11 August 2000 , last edited: 27 May 2010

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