Curbing Corruption Around the Globe:
The World Banks Department of Institutional Integrity
As a specialized agency of the United Nations, the World Banks chief
mission is to eradicate global poverty by funding projects in developing
countries to build bridges, construct hospitals, distribute pharmaceuticals,
and other worthy causes. But with corruption running rampant in the form
of $2.7 billion being paid in bribes per day, that mission is at serious
risk, as are projects funded by the Bank worldwide.
Glenn T. Ware, chief investigative counselor for the World Bank, discussed
the problem and ongoing tactics to curb corruption at a recent meeting
of the Business and Organizational Ethics Partnership. In his talk, Doing
Business with Integrity: The World Banks Department of Institutional
Integrity, Ware outlined how loaned money is distributed to worldwide
projects, how bribery puts those projects at risk, and how efforts are
underway to ensure that money lent by the Bank goes to its intended purpose.
The most serious impediment to effective development anywhere in
the world is corruption, he said.
An international organization, the Bank is owned by governments, including
the United States government. Typically, in investment lending, the Bank
will lend money to the government of a developing country for a specific
project. The recipient country will often co-mingle that money with revenue
from other sources, such as taxes, private financing, and bilateral donors.
The government then distributes the funds to the appropriate ministry
for the project, such as the ministry of roads for a highway project.
The ministry in turn sets up a procurement operation for the project,
bidding out contracts for the needed supplies and work.
Unfortunately, Ware said, the system can be corrupted, with bidding companies
paying kickbacks to government officials for a share in lucrative contracts.
If you think about bribery as in, We had to pay some commission
to get the contract, but we otherwise performed the work and we do good
workthats not whats going on, he stressed.
Bribery is also being paid by companies who also dont do the
work, or grossly under perform.
But, he emphasized, the kickback amount itself does not represent the
true damage. The real loss can be measured by shoddy workmanship, shortcuts
taken to finance the bribes, or completely sham projects. Ultimately,
the corruption shortchanges the people in developing countries whom the
projects were intended to help. It can lead to real social decay,
One key elements of the World Banks strategy to combat corruption
in Bank-financed projects is the investigative unit, which began in 1999.
Investigation helps strengthen risk mitigation measures and deter malfeasance
by promulgating sanctions. We seek to determine who is paying those
government officials, colluding, or defrauding the projects, and then
seek remedyeither contractual remedy from our loan agreements, or
law enforcement remedy from a law enforcement organization somewhere in
the world who will take jurisdiction and prosecute that case, he
An investigation that reveals corruption typically leads to one or more
of the following: a criminal referral to authorities in the host country;
sanctions against the bribing company; or remedial action on the loan.
Its a very big deal to be blacklisted from being eligible
to receive World Bank financing, Ware said. Repercussions of the
sanctions can ripple throughout a companys business contracts.
Initially, investigations proceeded slowly and seek to leverage information
to build a case to uproot corruption on a larger scale.
One thing that we wanted to do was to get this information from
the private sector in a meaningful, cross-cutting way, instead of digging
it out case by case, Ware said. If they could get one big multinational
corruption that had worked on numerous Bank infrastructure contracts across
multiple countries to tell the Bank whom they paid, where and when, this
would allow the investigators to make an asymmetrical leap.
To encourage that, the Bank launched a new anti-corruption tool called
the Voluntary Disclosure Program in August 2006 after piloting it for
two years. The program allows companies to tell the Bank about improper
conduct in exchange for confidentiality and no debarment.
We can take the fruits of that information to launch other investigations,
Ware said. Our big incentive is confidentiality. Its always
been our belief that the business and private sector knows exactly the
anatomy of corruptionwho gets paid, the modalities of transmission.
In return, the disclosing firms agree to cease misconduct, launch an internal
investigation, engage a monitor for three years, and pay the associated
costs. Failure to do so results in a 10-year debarment. Why would
a company come into our program? Because if they dont come in and
we find them out, then they dont get the protection, he explained.
Using the disclosed information, the Bank can target known corruption,
rather than digging it out. We know exactly where to look, we just
exercise our audit rights, and we can go right to the file drawer and
say, We want to see the contracts you have with so-and-so subcontractor.
On average, they get about 30 calls a month from all over the world on
the hotline. Sources of information include the business community, private
citizens, journalists, project or government officials. We get the
small fry complaint to the grand corruption complaint. We triage them
and try to work on the complaints that [will] have the biggest impact,
The investigative efforts are beginning to pay off. Weve
been going at it for six years now, and weve publicly sanctioned
over 330 firms and individuals. We have 25 criminal convictions,
he said. This is our agenda. This is what we do.
Anne Federwisch is a freelance journalist.