FORUM (Spotlight Weekly)

The Role Of The World Bank In The Fight Against Corruption

By PETER EIGEN

Transparency International has for the first time today (31 August) released a press statement focusing exclusively on the World Bank. The date is of course no coincidence. The World Bank, perhaps even more than the International Monetary Fund (IMF), will, in a few weeks time, be at the centre of public attention and criticism. The protest to be expected at the occasion of the Annual Meeting of both institutions in Prague poses a question which goes beyond their sphere of influence: is the wrong play being performed on the world stage of globalisation?

This play was supposed to be about the globalisation of opportunities for all, the increase in the quality of life expected to emerge from recent political and technological developments for the mass of humanity. Instead, many see opportunities only for a few, who manage to reap the benefits of these developments for themselves: In the wealthier countries, shareholder values have become a lopsided priority, and many of the poorer countries are poorer as a consequence of corruption .

The World Bank does not have the starring role in the globalisation drama; its work concentrates on the less significant players, the "bit players", i.e. the poorer countries. However, the World Bank does play several important supporting roles. This distribution of roles can be seen well enough when we take the example of corruption, TI-92's subject of focus. Here the main roles are played by governments who have allowed corruption to continue or have even promoted it where it served their political and economic interests. The governments who also exerted influence on the World Bank and the IMF towards this objective. The main actors here are the rich and powerful elites in poorer countries, who become even richer through corruption. And of course the private sector plays a part in this, too, and it has only recently begun to recognise that corruption undermines the whole basis of globalisation.

In its core business of funding development programmes, the World Bank has long been a part of the problem. Corruption was a taboo which could not even be talked about. Although this has changed the impact of corruption on its projects, it is still strongly felt in the World Bank When a new corruption scandal comes to light, few choose to examine exactly when the crucial decisions were taken which led to corruption or who precisely it was who made them. Our experiences clearly show that it takes a considerable time to change corrupt systems and practices. Even if it has become increasingly difficult to misuse World Bank funds for corrupt objectives, undoubtedly there will still be new cases of corruption occurring in World Bank financed projects. These may well be less than is the case in other organisations, but they will attain a higher profile than they do elsewhere because of the other roles the Bank plays on the global stage.

As a result of TI 92's work, the issue of corruption came into the World Bank agenda, the new president chose to contact TI already early in 1996. He addressed the issue for the first time in the global arena at the World Bank/IMF Annual Meeting in 1996. He chose the 1997 Annual Meeting to declare good governance and the fight against corruption as a top priority. Thus the World Bank took the lead for international public organisations and for numerous national and private development organisations. As the World Bank took on this role, it has also, perhaps inevitably, become the primary target of criticism for failures whether due to badly designed initiatives or due to mismanagement. In addition, new priorities are often imposed on the organisation, before it has dealt with the old ones sufficiently. More on this one later.

The World Bank also plays a significant, often leading, role in research and the development of new concepts. The same organisation that is responsible for the arduous task of putting such concepts into practice, simultaneously assesses the performance of the development system critically and recommends which future practice ought to be implemented - immediately. The conflicting roles of giving conceptual guidance and being the world's largest player in development assistance lead the World Bank and its management into frequent crises of credibility. There is a need to separate out roles of design and implementation from that of evaluation as any good auditor will tell you.

In Prague the World Bank will again be at the centre of world-wide attention with issues that assumed only minor importance at its last Annual Meeting. Globalisation is one example. To heed widespread public pressure concerning debt relief for the world's poorest countries, as announced by the G8 Cologne Summit, is another. There it was also postulated that resources saved in debt payments would have to be used for poverty alleviation. Following the comprehensive framework it had declared necessary for successful development, the World Bank established a concept of poverty alleviation strategies that in all probability is far too ambitious. Many were supposed to take part, TI for instance underlining the risk of corruption in the process of debt relief.

Aside of challenging requests there are new opportunities. These also require the World Bank's attention in order to convince sceptics of the importance that public global institutions may still have. For instance, the fight against AIDS has suddenly become a major issue in the U.S. In short: with all the new problems and opportunities, we expect that in Prague corruption and the fight against corruption will not dominate the news headlines. Something similar is happening in the UN where Kofi Annan in his Global Compacts failed to mention corruption.

While this is plausible and common in the public realm, drawing from that the wrong conclusions would have catastrophic effects. In spite of the progress being made to date, the fight against corruption is yet widely enough spread and deeply enough rooted within World Bank policy to have sustained success. If efforts were to be reduced now, the World Bank would find itself soon vulnerable, again, in a very sensitive area. Because of the leading role of the World Bank in the system of development assistance this effect would spread. We can already observe a number of areas in which the efforts being made thus far are both insufficient and not sustainable.

This is of course true also for any other priorities which are prematurely downgraded in their importance. But there is one critical difference: if corruption is not curbed, neither old nor new priorities will have the expected or necessary success. Corruption is a cross-cutting issue, and one that impacts negatively on every single facet of human endeavour and concern. To control corruption is not therefore one priority among many, but rather a prerequisite for successful work. It is an over-riding priority. Containing corruption must become an accepted routine in planning, implementation, and assessment of everyday work. For this to happen, a guiding framework must be established, be it through legal sanctions, leadership or by allocating resources. TI is dedicated to working on the establishment or improvement of such frameworks in many areas. Our Annual Report which will be released together with the Corruption Perceptions Index 2000 in two weeks time will give you an overview of our work and strategies. We will also hold our ground on this issue towards the World Bank. You will find a Ten-Point Programme in the press release in front of you on how the fight against corruption should be intensified and anchored on a long-term basis in the World Bank.

EIGEN is the president of Transparency International