The World Bank and its overcast corruption exposed

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Despite the World Bank’s catchy slogan “fighting poverty around the world,” it cannot ensure that communities in poor countries are adequately served to lift their impoverishment.

by Anwar A. Khan

The World Bank is an international development organization owned by 187 countries. Its mission is to reduce poverty by lending money to the governments of its poorer members to improve their economies and improve the living standards of their people.

The World Bank was established with the International Monetary Fund (IMF) at the 1944 Bretton Woods Conference. The President of the World Bank is traditionally an American. The World Bank and IMF are both based in Washington, DC and work closely together.

Although many countries were represented at the Bretton Woods conference, the United States and the United Kingdom were the strongest participants and dominated the negotiations. The intention behind the creation of the World Bank was to provide temporary credit to low-income countries that could not obtain credit commercially. The bank can also make loans and require recipients to undertake political reforms. Both the World Bank and the IMF are dictated purely by the US in their operations.

If we delve under the World Bank, it focuses on massive corruptions – depravity within it, while always a very blunt attack on such morally reprehensible activities around the world that use the name of poverty alleviation and the people who shroud theirs in dust in the eyes sprinkles real character.

It also addresses extensive internal problems at the bank, including how “kickbacks, payoffs, bribery, embezzlement and secret tenders plague bank-funded projects around the world.” The Government Accountability Project (GAP) report, which focuses on corruption at the World Bank, estimates that more than 20 percent of World Bank lending, or $4 billion annually, is linked to corrupt practices.

In the wake of these findings, GAP is again urging the World Bank to implement its own “Vaughn Report,” which the bank has had for more than a year but did not intentionally release. The report offers a blueprint for modernizing this institution’s inadequate whistleblower protections. If the Vaughn Proposal at the World Bank had been in effect during the article’s corruption examples, many of the issues detailed in that landmark report would have come to light earlier, and the resulting damage might never have happened.

The thorough investigative report describes numerous problems at the World Bank. These include the following (with GAP comment in italics):

Employees are traditionally rewarded for making sure projects go ahead as planned, but not for reporting corrupt practices. GAP has information that whistleblowers who report corruption are often fined.

The bank’s Institutional Integrity (INT) unit currently has a backlog of over 250 complaints, which only 22 investigators are working on. However, GAP has information that not all of these complaints are legitimate, but are spurious attempts to harass whistleblowers for reporting corruption. INT is not independent of the World Bank. The Vaughn report recommends the introduction of conflict of interest protocols to create greater independence.

As early as 1995, allegations were made that a $600 million bank program was corrupt, but it was two years before the bank even looked into the matter and another four years before the bank officially opened an investigation. The bank found evidence of widespread theft related to the program.

Last year, the then INT director imposed a travel ban on investigators — a “critical element in exposing corruption,” according to both the article and GAP. In addition to independence, an effective INT must also have adequate resources and quality investigative training.

The Vaughn Report (Part 1, Part 2), recently published by GAP, contains the full recommendations of well-known whistleblower legal scholar Robert Vaughn of American University Law School. The report, commissioned by the World Bank but hidden from the outside world, contains “best practices”, many of which have already been adopted by the United Nations.

GAP’s international reform program has focused on a failure to account for the $222 billion development agency. These new examples of fraud reinforce the need for deep reform of the culture of corruption that exists within the global body. Congress has repeatedly ordered the Treasury Department to establish secure channels for reporting corruption, fraud and abuse to protect America’s $32 billion investment in the World Bank.

Despite the World Bank’s catchy slogan “fighting poverty around the world,” it cannot ensure that communities in poor countries are adequately served to lift their impoverishment.

Bank employees are increasingly frustrated by the lack of their own leadership, particularly by their failure to put in place transparent and impartial procedures to protect employees from retaliation when they come forward to report wrongdoing.

“The Bank is uniquely positioned to set the highest standards of accountability in the world,” said Melanie Beth Oliviero, GAP’s International Program Director. “Management can no longer point the finger at borrower countries with lax protections as the source of the devastating costs of corruption. The World Bank itself encourages fraud and abuse within its own organization by silencing many responsible staff and shielding those who abuse the system.”

The Senate Foreign Relations Committee continues to focus its attention on the need for dramatically improved accountability at all five multilateral development banks. Tomorrow, March 28, the committee will hold another hearing with senior Treasury officials and the executive directors they appoint to the boards of these banks. These witnesses must explain why best practices for legal protections for whistleblowers, enacted by Congress just last November in the Expatriate Funds Act and recommended in the Vaughn Report, continue to be rejected.

The United Nations has already adopted many of these best practices. Since this body’s new anti-retaliation policy, on which GAP has advised, went into effect on January 1, the last witnesses of corruption have come forward to help the World Peacekeeping Body uncover wrongdoing before it becomes a major scandal or the overall mission undermines.

“The World Bank should follow the example of the United Nations,” Oliviero observed. “Fighting corruption requires a real commitment to transparency. The World Bank should immediately deploy its own frontline defenders against wrongdoing – its staff. The World Bank should publicly share the roadmap for a secure early warning system provided by Prof. Vaughn with staff and other overseers such as Congress and monitoring groups.

During the upcoming annual board meetings of the World Bank and International Monetary Fund in April, GAP will join other international nongovernmental organizations to coordinate campaigns calling for bank accountability and an end to policies that allow billions of dollars to be siphoned off impoverished people steal . Early warning of whistleblower corruption is a tried and tested antidote – the World Bank has the ability to easily implement this reform, and its staff advocates for these actions to be taken.

-The end –

The author is an independent political analyst based in Dhaka, Bangladesh who writes on politics, political and people-centred figures, current affairs and international affairs

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