Wednesday, May 27, 2009

World Bank and Corruption

World Bank Generous to a Fault
The International Development Association (IDA), the arm of the World Bank that makes grants and interest-free, long-term loans to poor countries around the world, lacks effective safeguards against corruption, according to a report by the bank's own Independent Evaluation Group (IEG).
The damning report concluded that IDA, which lends and grants about US$10 billion annually to governments in Africa, Asia, Latin America, and Eastern Europe, doesn't
After 13 years of rhetoric deploring fraud and corruption, the World Bank's management hasn't even minimally equipped its staff to protect IDA funds.
Since its establishment in 1960, IDA's loans and grants have totaled over $193 billion, and indications are that the global financial crisis will provide a rationale for increasing annual
lending. During the bank's last fiscal year, Vietnam and India were the two top beneficiaries of IDA funds: Vietnam borrowed nearly $1.2 billion and India received over $800 million, although both countries had been previously assessed in separate reviews as running projects with a high probability of corruption.
A review of two of Vietnam's infrastructure projects found "a proliferation of indicators of collusion, fraud, misrepresentation and preferential treatment in the procurement and award of contracts. The DIR also found vulnerabilities to irregularities in the projects' financial management activities and control environment. Lastly, a large number of the project sites visited by the DIR team showed design and construction irregularities in works."

The depth and breadth of the accountability weaknesses exposed at IDA are alarming.
The real problem at the bank is a failure of will at the top. The Government Accountability Project (where I work), for example, found that Wolfensohn, while flogging anti-corruption
measures on the one hand, silenced staff members who tried to warn investors that an international criminal was hijacking a privatization scheme in Azerbaijan.
And Wolfowitz, while touring Africa preaching anti-corruption, was feathering his girlfriend's nest and quietly suppressing an INT report that showed Joseph Kabila, president of the Democratic Republic of Congo, allowing his girlfriend to feather
hers with the World Bank's money. Not incidentally, the funds she took were intended to finance airlifts to transfer Congolese children from war zones.

Extract from Asia Times
(From Foriegn Policy in Focus)
Thursday, May 28, 2009 By Bea Edwards

Bea Edwards is the Government Accountability Project's
International program director and a Foreign Policy In Focus

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