Development banks target corruption

World: The International Monetary Fund (IMF) has joined forces with the World Bank and other international development banks to fight corruption. Under the agreement the IMF, World Bank, African Development Bank, Asian Development Bank (ADB), European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD) will develop a framework to tackle fraud.

According to a recent report issued by Transparency International, respondents in 48 out of 69 countries questioned in the annual Global Corruption Barometer survey said that corruption had risen over the past three years.

World Bank president Paul Wolfowitz said that the World Bank needed to move “more decisively and energetically” against corruption. He also described corruption as the “single biggest obstacle to economic and social development” and that action was “horribly overdue”.

The Banks' leaders agreed at a meeting in February on the need to standardise their approach to preventing and combating fraud and corruption. This includes harmonising the definition of corruption, creating consistent investigative rules and procedures, strengthening sharing of information and ensur ing action taken by one institution is supported by the others.

The group has established a taskforce to develop a uniform Framework for Preventing and Combating Fraud and Corruption. This framework is expected to be presented at annual meetings of the World Bank Group and the IMF in September.

It was also agreed during the meeting that the organisations would work together to develop proposals to assist countries over the longer term in strengthening their capacity to combat corruption. Figures released by the World Bank suggest that countries that successfully tackle corruption can increase their national income four-fold and reduce child mortality by up to -75%. The World Bank also estimates that US$ 1000 billion was paid in bribes in 2004, compared to a global economy of US$ 30000 billion.

Mr Wolfowitz said the World Bank is currently withholding five loans worth US$ 250 million from Kenya because the country has problems with corruption involving high level officials. However, the Bank has recently approved another loan to the country to help it improve its capacity for managing corruption.

“The fact that we're moving on with one loan but holding up another five is a strong message to the Kenyan Government,” said Mr Wolfowitz.

The ADB is also taking a strong stance on corruption. The Bank announced last month that investigations carried out in 2005 resulted in 40 companies and 33 individuals being barred from working for the ADB. More than 250 companies and people have now been banned by the ADB since it began its corruption investigation in 1998.

According to the ADB's report, the bank received 199 corruption complaints last year, a +44% increase on the number received in 2004. Over 100 investigations were carried out, of which 72% involved ADB financed activities, 15% ADB staff and the remainder involved other parties.