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| World Bank Corruption May Top $100 Billion |
| 2004-05-13 |
| World Bank corruption may exceed $100 billion and while the institution has moved to combat the problem, more must be done, the chairman of the U.S. Senate Foreign Relations Committee said on Thursday. Sen. Richard Lugar, an Indiana Republican, charged that "in its starkest terms, corruption has cost the lives of uncounted individuals contending with poverty and disease." He commended World Bank President James Wolfensohn for bringing greater attention to the issue, but said, "Corruption remains a serious problem." Lugar opened a hearing on corruption at the multilateral development banks, the first public examination in an ongoing Senate investigation. He cited experts who calculated that between $26 billion and $130 billion of the money lent by the World Bank for development projects since 1946 has been misused. In 2003, the bank spent $18.5 billion in developing countries. Jeffrey Winters, an associate professor at Northwestern University, said his research suggested World Bank corruption wasted about $100 billion and when other multilateral development banks are included, the total rises to about $200 billion. Winters said the World Bank’s anti-corruption effort was having "minimal effects" and the banks should all focus on supervising and auditing their lending. "The lion’s share of the theft of development funds occurs in the implementation of projects and the use of loan funds by client governments," he said. Like other United Nations agencies, World Bank rules prevent staff from testifying in public so Wolfensohn was not at the hearing. But senior bank officials on Monday privately briefed lawmakers on its anti-corruption efforts, a bank spokesman said. Carole Brookins, the U.S. executive director on the World Bank board, defended the bank saying it was leading efforts to fight corruption but acknowledged "there is more that could be done to strengthen the system." More than 180 companies and individuals have been blacklisted from doing business with the World Bank and their names and penalties posted on the bank’s public Web site. Between July 2003 and March 2004, it said it referred 18 cases of fraud or corruption to national justice authorities based on investigations by its anti-corruption unit. What about the "Food for Oil" program? Specific bank projects under review by the committee include the Yacyreta dam on the Argentina-Paraguay border, the Lesotho Highlands Water Project and projects in Cambodia. Hector Morales, acting U.S. executive director to the Inter-American Development Bank, testified that his institution recently accelerated anti-corruption efforts "but still has much work to do." - EMPHASIS ADDED - Anyone else smell a "Food for Oil" style coverup coming with this revelation? |
| Posted by:Zenster |
| #7 The fatal flaw of transnational institutions is the ultimate lack of accountability. Its much worse than that. AFAIAA Kofi Annan could write million dollar checks to anyone he likes, loot the UN vaults at gunpoint and shoot a couple of guards in the process, but not do anything illegal. The UN exists in a legal blackhole that makes its statements about 'international law' laughable. |
| Posted by: Phil_B 2004-05-13 10:00:25 PM |
| #6 The fatal flaw of transnational institutions is the ultimate lack of accountability. At least most democratic governments can be tossed by the electorate for corruption or fraud. How does one impeach Kofi? |
| Posted by: john 2004-05-13 9:35:46 PM |
| #5 Poor countries either have or have not evolved rule of law and transparent institutions. If there is no rule of law, poor countries can no more use capital than you or I can digest celluose. Kazaarts! And there you have it. |
| Posted by: Shipman 2004-05-13 7:44:37 PM |
| #4 I think that you meant to say lendee countries, LH. The problem is that when a country is ready to economically take off on its own accord, it does a fine job of accumulating capital on its own. Capital cannot be accumulated in a country without rule of law and transparency. If a country cannot accumulate capital on its own, it makes no sense to lend it capital since the very conditions that prevent capital from being accumulated will lead to any outside capital to be stolen or mis-invested. There have been dictatorships that have rule of law (e.g. Singapore, Korea, Taiwan, Chile). It makes sense to invest there. Eventually, democracy takes root. Otherwise, we should just provide direct food, sanitary, medical, and educational aid until they evolve the appropriate institutions. So as you can see, LH, the World Bank's charter contains a contradiction. It's goal is to solve poverty through capital investment. Poor countries either have or have not evolved rule of law and transparent institutions. If there is no rule of law, poor countries can no more use capital than you or I can digest celluose. If there is rule of law, the market will take care of the problem and readily invest. Therefore, the World Bank has no reason to exist. There is an almost mathematical purity to my little "proof." PS Nowhere do Barbara and I accuse the WB of being corrupt in the traditional sense. I don't know where you get that from. |
| Posted by: 11A5S 2004-05-13 6:38:46 PM |
| #3 so would y'all approve world bank loans to countries that arent dictatorships?? Note the above was misleadingly worded - the corruption cited is all in the lender countries - NOTHING about bribes received or given by anyone at the WB itself. Remember when US companies were attacked by the left for giving bribes - "thats just the way you get things done down there" |
| Posted by: Liberalhawk 2004-05-13 5:51:39 PM |
| #2 Here's an idea: The U.S. shouldn't contribute any more money to this scam called a "World" Bank until we have a COMPLETE PUBLIC ACCOUNTING OF WHERE EVERY PENNY WENT FOR THE LAST 20 YEARS. Let the rest of the world fund the dictators - it's what they do best anyway. |
| Posted by: Barbara Skolaut 2004-05-13 5:33:55 PM |
| #1 Ah, the house that McNamara built. When are we going to learn that loaning money to kleptocratic elites is the problem. People in developed countries use capital to build. Kleptocrats will simply steal and launder the money. The only positive is that the money ultimately ends up in the OECD as either payments for goods and services or investments. |
| Posted by: 11A5S 2004-05-13 5:01:33 PM |