World Bank Statement To Root Out Corruption
Posted by egovindia on August 6, 2006
World Bank Statement To Root Out Corruption
Dear Paul Wolfowitz,
I am glad to read about the World Bankï¿½s resolve to root out corruption in internationally funded projects.
On the basis of 30 years experience as an inventor familiar to most of the sectors funded by WB I submit that; –
1. Most of the projects funded by WB or other foreign agencies are largely ï¿½Politically Motivatedï¿½, public interest and viability is of least priority.
2. Invariably such projects donï¿½t pay even for their maintenance.
Remedy is to; –
A. ï¿½Fund Best Innovative & Most Viable Projectsï¿½ every year proposed by consultants.
B. Most viable projects will have least pay back period. Normally WB provide loans for 20-40 years to most government projects, henceforth WB shall get back the money in 2-5 years. This will boost economic development and eradicate poverty. And soon WB funding shall multiply to accelerate economic development of developing countries.
C. Obviously corruption is eliminated in ï¿½Selection Most Viable Projectsï¿½.
I have scores of Innovative Projects for WB to promote.
Statement by Maarten de Jong
Director, World Bank Department of Institutional Integrity
Visit to Sweden, June 22, 2005
I am here today to discuss the results of the first five years of the World Bankï¿½s Department of Institutional Integrity, the group charged with investigating allegations of fraud, corruption and staff misconduct related to projects we finance as well as our own organization. We have come to Sweden to discuss the results published in the Bankï¿½s Annual Integrity Report for Fiscal 2004, as well as some issues of common interest. And I would like to share with you six goals for our joint work over the next decade.
I want to talk today about poverty reduction just as much as about what we are learning and doing about fraud and corruption related to patterns of development lending and operations. You canï¿½t do one without the other.
We look at a lot of opinion surveys done by the World Bank and by many others. Citizens in developing countries are telling us that corruption is one of the biggest issues facing their countries, that they want it to be curbed, and that it is one of the biggest obstacles to reducing poverty and getting results for development. We know they are specifically concerned about corruption attached to overseas development assistance, and this is troubling because the reputation of aid is important feedback about its effectiveness on the ground. Corruption is one of the biggest obstacles to achieving the Millennium Development Goals too, as everyone from the Commission on Africa to the Millennium Challenge Account to the work of the World Bankï¿½s Governance team has pointed out.
All of us in development work must all do better in confronting the reality of corruption that infects public procurement generally in many, but not all, developing countries and sometimes our own projects.
Since 1996, the World Bank has done more that any other multilateral development bank to increase its capacity to investigate and sanction fraud and corruption in development projects it finances. In the five years that I have been director, the Department of Institutional Integrity has assembled a first class, international team of over 50 staff with a 10 million dollar budget, more than any other international organization. We have investigators, forensic accountants, former prosecutors and attorneys from all over the world, working on more than 321 open cases a year now in approximately 70 countries, 76 of them external cases. The World Bank has sanctioned over 310 firms and individuals for fraud and corruption related to projects it has financed, and it has done this openly. The Bank also taken action against some Bank staff and consultants when the evidence warranted it, though the proportion of staff cases is small compared to the 10,000 staff working in the Bank.
We have seen progress in anticorruption work in the past 10 years, but it is certainly not sufficient. The capacity has been increased, so has the know-how and in many cases, the political will. Most importantly, the problem is out in the open. There is an international movement supported by increasing data and analysis, and a widespread, active civil society movement. We must support these people, many of whom have risked their lives to bring this issue into public view.
But the next decade will be critical in making real progress in reducing corruption and improving results. The development community must stay the course and be extremely focused and demanding of itself in order to achieve this. We must fight cynicism and denial — and we must have high expectations.
There are two ways to meet the Millennium Development Goals in 2015. One is obviously to increase the amount and quality of overseas development assistance, as the international community is working so hard to do at this moment. The other way to meet the MDGs, of course, is to measurably decrease the amount of funds lost to fraud, corruption and abuse. This will also increase the quality and the results of development efforts.
That is why the work of an investigative unit such as ours is part of the core mission of the World Bank. Our goal also is to reduce poverty and increase results by making development more effective. To increase the funds available for real results, we must decrease grand corruption in the poorest countries, and in the middle income countries.
Let us be clear. Corruption in a project sets in motion a chain of events that can be very destructive to a development project. The money to pay a bribe must come from some part of the project. As a result, prices may be raised and/or quality lowered. Less qualified bidders win by bid rigging. Qualified bidders become discouraged and stop bidding. In addition, citizen awareness of unchallenged corruption undermines trust in government and public institutions. This leads to acquiescence to poor quality and performance in public services and infrastructure. It leads to reluctance to report fraud and corruption. All these effects must be taken into account when we assess the true impact of corruption on publicly financed projects.
Thatï¿½s why anticorruption is not just about the money that is stolen. Itï¿½s about quality. Itï¿½s about quality projects that produce results in health, education, infrastructure and other vital areas. You donï¿½t get quality without having quality companies working on those projects. If quality companies ï¿½ local companies as well as international companies — wonï¿½t bid on developing country projects because of corruption makes projects simply unprofitable and because of the very real increasing legal and reputational risks to them, then results suffer. We know that European companies are concerned about these issues, and many feel caught. Many want to be part of changing the business environment, and indeed are contributing. Many are working with us, and we welcome that.
The work of the investigative unit is not just about sanctions ï¿½ it is about knowledge and creating change. The specific patterns of corruption being documented by our investigative unit and by others in public procurement including in donor projects will provide guidance to everyone, the developing countries as well as donors, in how to protect government funds better in future. That is the purpose of our annual report and the other kinds of communications we are doing very actively now. Strategic communications is a vital tool for proactive deterrence and prevention. The learning that we are doing through World Bank investigations and sanctions into what we call the anatomy of transnational corruption ï¿½ how white collar crime works in these kinds of projects ï¿½ is one of our major contributions to future deterrence and prevention. The World Bank will be working hard with member countries to incorporate this knowledge into their programs and to improve everyoneï¿½s systems for financial accountability in future years. This is critical because disengagement is not an option for the World Bank. Some the poorest people in the world live in countries where corruption is a real issue. We must find ways to help them while using our knowledge of how corruption and fraud work to ensure against corruption.
From our point of view, what needs to change if the international community is serious about reducing corruption and meeting the Millennium Development Goals in 2015? Here are six absolutely key goals where we must work together:
1. We need more successful enforcement, with consequences, of white collar crime corruption laws or rules, both locally and internationally and by international agencies such as the World Bank.
2. We need to move to better, more integrated compliance systems, where we ask companies and borrowing countries to make sure they have in place clear systems for ensuring high standards and for self-reporting when standards fail.
3. We need to improve the ethical environment inside all our organizations, including our ability to talk frankly about corruption when we see it happening internally or in projects we finance.
4. We need to reduce grand corruption through international cooperation and improved governance.
5. We will inevitably need to move over time to common systems and standards, including probably common definitions of fraud and corruption, first among international agencies and secondly with other donors such as the bilateral agencies.
6. Finally, we need to move to proactive programs to combat fraud and corruption, in addition to reactive investigations. We need carrots as well as sticks.
On this last point, the Bank has been using a Detailed Implementation Review (forensic audit) of high risk sectors for three years now. For over a year, we have been piloting a proposal for a Voluntary Disclosure Program for contractors to provide detailed information about involvement in fraud and corruption in return for more lenient sanctions. It will not be an amnesty or immunity program but it will provide confidentiality and a ï¿½safe spaceï¿½ for companies to cooperate with us. We have already seen from a pilot effort that this will be a quantum leap forward in our ability to analyze and quantify the kinds of corrupt activity, and to identify weaknesses in borrowing country systems as well as opportunities to reduce corruption through joint action and fix our own systems.
In short, we must move from detection and treatment of the severely ill to prevention and creation of healthy systems. That is the true goal of our work in Institutional Integrity, and the one that will endure.
In conclusion, some perspective. I have been working in this area for nearly 40 years. My training is as a Dutch criminologist. I can tell you that corruption is never going to go away but it can, like all criminal activity, be reduced and contained and stigmatized if the proper steps are taken. Countries can and do reduce their crime levels, and they can and have reduced their levels of corruption. Not all countries have the same level of problems. One of the most encouraging things we can say is that our work supports the research done by our colleagues in the World Bank Institute that in some countries the incidence and pervasiveness of corruption is much lower. Countries can change. We should remember that.
For some of the poorest people of the world right now, reducing fraud and corruption is vital to ensuring that they can improve their lives. We cannot avoid the fact that development projects can, despite the best of intentions and procedures, get caught up in these corrupt patterns.
For generous donors such as Sweden, taking corruption seriously is an unavoidable part of meeting the MDGs. For the World Bank, it is now a part of our core mission of poverty reduction. For our investigative unit, it is what we do every day, not theoretically but practically, one case at a time. We hope our annual integrity report will begin to give some insight to what we are finding, and that you will understand that the World Bank is addressing these problems concretely, proactively and with impact.