Corruption? World Bank has a solution

On the heels of the World Bank suspending funding to a health and transport project in India suspecting fraud, its President Paul Wolfowitz has said the lending institution would team up with developing countries to weed out corruption.

"Corruption is often at the very root of why governments don't work. It weakens the systems and distorts the markets. In the end, governments and citizens will pay a price, in lower incomes, lower investments and more volatile economic swings," a World Bank statement quoted Wolfowitz as saying in Jakarta on Tuesday.

Last month, the Bank suspended a $150 million assistance to the Mumbai Urban Transport Project for not complying with resettlement issues. Besides, it postponed funding to the Reproductive and Child Health Programme suspecting fraud early this month.

"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.

His strategy includes strengthening governance and anti-corruption measures in all Bank instruments, including loans, grants, research and technical assistance at the country level.

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.

"Anti-corruption 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 statement said.

Wolfowitz said investment in areas like judicial reform, civil service reform, media and freedom of information would be increased.

The Bank also intends to expand partnerships with groups that are interested in improving governance and work with rich countries to prevent stolen cash from being moved to foreign banks.

Wolfowitz, who moved to the Bank from Pentagon 10 months ago, is also working with the heads of Multilateral Development Banks to fight corruption and forge a strategy for 'blacklisting' firms that engage in corruption in MDB bank projects and sharing information on these firms.

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