World Bank President Paul Wolfowitz yesterday outlined a comprehensive strategy for tackling corruption, a serious impediment to development and effective governments. Speaking in Jakarta, Indonesia, Wolfowitz laid out a three-prong plan for expanding the World Bank Group's work on governance and anti-corruption at the country level, in Bank projects, and through partnerships with various stakeholders.
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"Corruption is often at the very root of why governments don't work," said Wolfowitz. "It weakens the systems and distorts the markets. In the end, governments and citizens will pay a price, in lower incomes, lower investment and more volatile economic swings.? But when governments do work—when they tackle corruption and improve their rule of law—they can raise their national incomes by as much as four times."

At the country level, Wolfowitz said that governance and anti-corruption measures will be strengthened in all Bank instruments, including loans, grants, research and technical assistance. Bank investments in areas such as judicial reform, civil service reform, the media and freedom of information and decentralization of public service delivery will be increased, and progress will be measured through tools like the Doing Business report issued annually by the International Finance Corporation and global governance indicators. In addition, the Bank will continue to work closely with Civil Society to enable these groups to provide checks and balances and promote accountability in their governments.?

"Fighting corruption is a long-term commitment and we cannot expect results overnight," continued Wolfowitz. "It requires a long-term strategy that systematically and progressively attacks the problem, and it requires the commitment and participation of government, citizens and the private sector."

In projects, the Bank is implementing a new system for minimizing the risk of corruption in World Bank-funded projects. Anti-corruption teams will be deployed in country offices to work with local government institutions, such as audit units and anti-corruption commissions, to protect Bank-supported projects and strengthen public procurement systems. Anticorruption strategies are being developed for World Bank projects and will be published on the Internet to enable stakeholders to see what steps are being taken to ensure resources are not diverted.

The Bank is strengthening its own investigation unit with the necessary staff, skills and resources to detect fraud and to follow up on allegations of corruption in Bank-financed projects, particularly on high-risk projects.

"We are changing the way we design our projects, so that they address the incentives and opportunities to fight corruption right from the start," said Wolfowitz. "Enforcement alone will not cure corruption. How much we do, and how much progress we make, depends on the desire of both governments and civil society to create the right setting for sound, strong, sustainable development."

The Bank will also expand partnerships with various groups that have a stake in improving governance. The Bank will work with rich countries to seek ways to prevent stolen cash from being moved to foreign bank accounts and to hold private firms accountable for exporting corruption to emerging economies. Wolfowitz is working with the heads of multilateral development banks (MDBs) on a common approach to fighting corruption and on a common strategy for "blacklisting" firms that engage in corruption in MDB Bank projects and for sharing information on these firms. The Bank will also partner with the private sector, which experiences enormous losses when corruption is pervasive and the rule of law is not respected.

(China.org.cn April 12, 2006)