Licence to probe: World Bank trains its sights on corruption crackdown

This is significant news from the World Bank so I’m posting the entire Guardian article below.  I tend to agree with the author’s assessment: this is an important step in the right direction, but there’s a long, long way to go.  I’m looking into non-compliance on aspects of the loan agreements with Chad and Cameroon that have not been effectively enforced.  Avoiding obligations—with no apparent consequences—is not corruption. But it certainly doesn’t help advance the rule of law. And what better for corruption than a culture of impunity? I’ll be posting more about this soon.

Article by Larry Elliott,, October 8 2010

Actor Daniel Craig as James Bond in Casino Royale

The World Bank’s latest anti-corruption initiative may sound a bit Bond, but it shows issues like fraud and bribery are being taken seriously. Photograph: Reuters

It will have 250 staff operating out of 150 countries and sounds like Ian Fleming dreamed it up. Yet the International Corruption Hunters Network (ICHN) is not something out of a James Bond novel, but the World Bank‘s latest initiative for stamping out bribery, fraud and the pilfering of money designed to alleviate poverty.

The idea is a good one. There are countless individual agencies around the world dedicated to stamping out financial crime: pooling their expertise should make it more difficult for the venal to get away with it. And not before time, since the taxpayers who last year provided the $70bn-plus spent by the World Bank in the field need to know that their money is not finding its way into numbered Swiss bank accounts or swelling the profits of unscrupulous companies.

Crackdowns on corruption are nothing new. James Wolfowitz arrived at the bank in 2005 vowing to root out wrongdoing but promised far more than he delivered. So what’s different this time?

Leonard McCarthy is the bank’s vice-president for integrity and the man responsible for the ICHN. Yesterday he published an annual report showing that his department’s caseload involved 260 projects in 84 countries. As a result of the investigation, the World Bank debarred 45 firms, individuals, and NGOs, preventing them from participating in future bank projects for varying periods of time. The UK publishing house, Macmillan, was one of them – debarred for six years after admitting it had paid bribes to win a contract in southern Sudan.

I put three questions to McCarthy when I saw him this week. First, is the bank committing real resources to tackling corruption? Second, is it doing any more than scratching the surface of the problem? And third, how clean is the bank itself given the amount of money it disburses?

The answer to the first question is that between 2006 and 2010 the budget for the integrity unit rose from $13.3m to $18.7m, with staff numbers increasing from 46 to 98. The bank can say, therefore, that it is putting its money where its mouth is.

Unsurprisingly, McCarthy believes the bank is getting to grips with the problem of corruption, announcing in the past year a cross-debarment deal with four other regional development banks. Bob Zoellick, the World Bank president, said the agreement sent out a message: “steal from one of us, and you will be punished by all”.

McCarthy says that cross-debarment, the closer links with organisations such as Interpol and the UK’s Serious Fraud Office, and the sanctions against big name companies such as Siemens, are collectively acting as a deterrent.

Refreshingly, the bank admits that with 15,000 staff operating out of more than 180 countries it is bound to have a few bad apples. It opened 54 cases in the last year relating to alleged staff fraud and corruption, a slight rise on the previous year, which it put down to an improved reporting environment rather than an increased incidence of malfeasance.

What does that add up to? Personally, I’d say the bank is taking corruption seriously, as it has to at a time when money is tight. But it has a long, long way to go before it can safely say it has cracked the problem. By the way, the bank staff read these blogs, so let them know what you think.

One Response to “Licence to probe: World Bank trains its sights on corruption crackdown”

  1. It is interesting how few times the ICHN appears on the World Bank website.

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