Tag Archives: World Bank

The World Bank’s Office of Suspension and Debarment Is a Model of Transparency–But I Still Want More!

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As many readers of this blog are likely aware, the World Bank (and the other multinational development banks) have their own procedures for identifying and sanctioning firms that engage in unethical behavior (corruption, but also fraud, collusion, etc.) in Bank projects.  At the World Bank, responsibility for addressing corruption and other unethical practices by Bank contractors and partners is handled by the Integrity Vice Presidency (INT), which has investigative and quasi-prosecutorial functions, and the Office of Suspension and Debarment (OSD), an independent adjudicative body, as well as the Sanctions Board, an appellate body.

A few weeks ago, the OSD released a comprehensive report on its office’s activities and performance over its first seven years in operation (fiscal years 2007-2013).  It’s a very useful report, and well worth reading.  It includes a clear, succinct summary of the World Bank’s sanctions and procedures (including both their history and current structure), and also–most notably–a great deal of descriptive quantitative data about the OSD’s activities.  In many ways, the report is a model of transparency, allowing observers both inside and outside the Bank to understand the activities of OSD (and, to a lesser extent, INT and the Sanctions Board), and perhaps to identify weaknesses and areas for improvement.

But because no good deed goes unpunished, my main initial reaction to the report is to wish there were even more data provided!  Here are a few open questions that the data in the OSD report does not address, but that OSD might consider providing in future reports:

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The New Chinese-Backed Infrastructure Bank: Will it Tame the Corruption Dragon?

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Asian governments are welcoming China’s recent decision to establish a bank to finance infrastructure across Asia.  As Devex reported June 2, China plans to capitalize it with an initial $50 billion with the possibility of increasing it by an additional $100 billion.  For China, the bank is one more way to assert leadership in the Asian region.  For Asian states leery of relying on the Western-led World Bank and Asian Development Bank for financing public works, the bank is a chance to diversify.  For both the lender and borrowers alike, the bank offers the chance to profit from Asia’s economic dynamism.

The Chinese-led bank will have to overcome many challenges to realize these objectives, the most difficult of which may well be preventing corruption from infecting the projects it finances.  Infrastructure corruption produces half-built roads, dilapidated ports, and white elephants of all kinds.  It leaves borrowing governments indebted for under-performing, over-priced assets while stirring a backlash against the lender.  Will the new bank and its principal backer be able to keep the corruption dragon at bay?   There are at least three reasons to worry that it won’t.  Continue reading →

What the World Bank Can Do About Bid Rigging

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I took the World Bank to task last week for its failure to tackle bid rigging and other forms of collusion in its new procurement framework.  Despite mounting evidence that prices on many Bank-financed projects are jacked up 25%, 50%, or even more thanks to bidder cartels, the new framework does not even mention the problem let alone recommend steps to combat it.  The omission is all the worse because developing country governments and other donor agencies generally follow the Bank’s lead on procurement policy.  With upwards of $1 trillion likely to be spent on power plants, water works, and other big-ticket items in developing nations over the next decade, if the rest of the development community, like the Bank, remains blind to the risk of collusion, the potential losses could be staggering.

What might the Bank do were it to decide to amend the new framework to confront the risk of collusion in public procurement? Continue reading →

Ignoring Corruption in Procurement: The World Bank’s New Procurement Policy

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In a recent post Matthew spotlighted a handful of academics that are in denial about the extent of corruption in developing countries.  As bad as it is for armchair analysts to ignore the facts about corruption, it is far worse when a leading development policy maker does.  Yet that is what the World Bank is on the verge of doing as it puts the finishing touches on its new procurement policy. Continue reading →

Yes, Corruption Is Bad for Development. No, Corruption Is Not a Western Obsession

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Recently there has been a spate of commentary in the blogosphere that revives a set of tired old canards about corruption and development — the related claims (1) that the focus on corruption and governance in the development discourse is misplaced, because there isn’t a lot of evidence that corruption matters much for development, poverty reduction, etc.; and (2) that anticorruption is a fixation of wealthy, mostly Western countries, because it enables people in those countries congratulate themselves about their moral virtue and to look down on habits and practices in the poor, benighted South. Recent examples include Chris Blattman’s posts on his blog (here, here, and here), Michael Dowdle’s contributions to the Law & Development blog (here and here), and Jason Hickel’s post on Al Jazeera English, though there are others as well.

Sigh. Do we really need to go through this again? OK, look: Yes, there are still lots of unanswered questions about corruption’s causes and consequences, and its significance for various aspects of economic development. And yes, some anticorruption zealots have sometimes over-hyped the role of corruption relative to other factors. But the overwhelming weight of the evidence supports the claim that corruption is a big problem with significant adverse consequences for a range of development outcomes. And the evidence is also quite clear that the focus on corruption as a significant obstacle to development comes as much or more from poor people in poor countries as it does from wealthy Western/Northern elites.

A blog post is not the best format for delving into a very large academic literature on the adverse impacts of corruption. And so the posts to which I’m responding might be forgiven for generally failing to provide much evidence in support of their claims that corruption is relatively unimportant for development, and largely a Western obsession. But, let me at least take a stab at trying to move the conversation beyond unsubstantiated declarations to some assessment of the actual evidence, starting with the impact of corruption on development.

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The Source of the $1 Trillion in Annual Bribes Figure

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In my last post, I discussed my unsuccessful attempts to track down the source for the widely-cited “$1 trillion in annual bribe payments” figure (other than a 2004 World Bank press release, which referenced an unpublished study without further citation).  Several readers were kind enough to direct me to the best published source on the $1 trillion figure: the appendix in a chapter by Daniel Kaufmann in the World Economic Forum’s 2005-2006 Global Competitiveness Report.  The chapter addresses most—though perhaps not all—of my concerns.

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Where Does the “$1 Trillion in Annual Bribes” Number Come From?

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Given the generally accepted view that bribery is widespread around the world, it probably doesn’t make sense to get too hung up over the specific numbers. That said, I’ve seen the figure of (approximately) $1 trillion in annual bribe payments thrown around quite a bit, and I was curious where that number came from.  It seems to me it would be very difficult for even the most intrepid researcher to come up with a plausible ballpark estimate of the total dollar amount of annual bribe transactions. After poking around a bit on the web and in some of the relevant literature, I’m coming up empty. Here’s what I can tell so far: Continue reading →

The Scandal of Corruption in Development Aid

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For all the effort development agencies invest to help developing states combat corruption, recent reports of corruption in Japanese and Norwegian development aid projects along with an earlier paper on corruption in World Bank projects remind that the development community does little to attack corruption in the one area where it has the most control: the projects it funds. Continue reading →

Going After the Bribe Takers: The World Bank Program

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Two weeks ago I wrote about the growing disparity between transnational prosecutions for paying bribes and those for receiving bribes.  The number of cases where OECD countries have prosecuted their nationals or firms subject to their jurisdiction for bribing developing country officials has been growing steadily, but there are disappointingly few cases where a developing state has gone after its nationals for accepting bribes.  Last week I suggested one way to increase the number of cases against bribe-taking officials is to publicize whenever a firm or individual has been convicted of paying a bribe in a developing state.  For every payer, there is a taker, and if the details of the case are widely publicized, my contention was that civil society, the media, and the political opposition would then press the authorities to prosecute the taker.

The World Bank has tried something similar when an investigation reveals corruption in one of its projects, and the experience suggests that, though not a silver bullet, the effort is worthwhile.

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