Mind the GAP

21/10/2007 | Lucien Chauvin

World Bank president Robert Zoellick must now address concerns that bureaucracy and inefficiency have allowed graft to take hold of the institution

 By Lucien Chauvin

World Bank president Robert Zoellick must now address concerns that bureaucracy and inefficiency have allowed graft to take hold of the institution
Tackling graft was one of Paul Wolfowitz’s top priorities as World Bank president. Ironically, his downfall was partly a function of the control and oversight mechanisms that he implemented during his two-year tenure.

Wolfowitz commissioned a report on anti-corruption policies within the Bank, which finally aired in early September, months after his departure. Prepared by a panel headed by Paul Volcker, former chairman of the US Federal Reserve, the report stated that, while it was difficult to establish the extent of losses from “bribes, collusive bidding practices and substandard project for goods and services ... there is,  a general sense that the losses are substantial.”

It also stated that the Bank has been slow to implement policies to weed out graft, and that “a lack of common purpose, distrust and uncertainty has enveloped the anti-corruption work of the Bank.”

A report published in April by US News and World Report estimated that 20% of the World Bank’s loan – or $4 billion annually – was lost due to corrupt practices. Another report, also released in early September by the Government Accountability Project (Gap), a Washington-based whistleblower group, found that the Bank’s anti-corruption structure is designed in such a way that much of the graft goes undetected. 

Like the Volcker panel, the Gap report focused specifically on the Bank’s Department of Institutional Integrity (INT), listing a host of maladies during the Wolfowitz years that made the unit inoperable. Gap’s international programmes director Beatrice Edwards says the problems with the INT are structural, and that it cannot adequately perform its job unless it is better integrated. She says that the INT needs more explicit guidelines on how investigations are carried out, and must be linked to operational units to receive and provide information when there are indications of corruption. 

“The problem now is that the INT operates in an alienated way from operations, so when it discovers patterns of corruption, it has a hard time implementing lessons learned. At the same time, INT is dependent on the operation staff for information on corruption, so without a close relationship to operation, the INT is unable to detect wrongdoing,” she says.

Edwards cites the INT’s review of healthcare projects in India as an example of this divorce. The unit is carrying out a sweeping review of healthcare projects there, but is basically doing survey research instead of focusing on areas where other sectors of the Bank have detected problems. 

Other organizations are not sure that the World Bank can conduct business transparently under its current structure. Mark Weisbrot, an economist and co-director of Washington-based Center for Economic and Policy Research, argues the Bank will never be fully transparent. 

“The World Bank is not accountable to anyone but the US Treasury. The other 184 members don’t really matter. It is like a dictatorship. A dictatorship can be pressed for change and something might be achieved, but the structure is going to stay basically the same,” he says. 

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