World Bank blacklists more than 100 firms and individuals for fraud and corruption
WASHINGTON: World Bank investigators blacklisted more than 100 firms and individuals for fraud and corruption in projects financed by the development agency over the past two years, a new report said Tuesday.
The report by the Institutional Integrity Department, the bank’s investigative arm that looks into abuse of development funding, said it had investigated and closed 441 cases involving fraud and corruption in projects in 2005 and 2006.
This compares with the more than 300 companies and people barred from doing business with the bank between 1999 and 2004 for corrupt practices.
The bank provides about $20 billion a year for projects in developing countries and has about 1,400 projects on its books, each one involving multiple contracts. It is the only institution that publishes the names of companies and individuals sanctioned for corrupt practices.
Suzanne Rich Folsom, director of the department, said more people and firms were reporting allegations of fraud and corruption in projects funded by the bank. Kickbacks, bribes or overcharging for work were involved.
Still, it was unclear how widespread the problem of corruption was in bank projects, she said.
“We don’t know,” Folsom said in an interview. “Our investigations have shown that there are similar schemes that are being orchestrated around the world.”
She added that two investigations currently under way showed one cartel operating in two countries on different continents in the same sector.
“We are seeing much more complex schemes that have no boundaries,” Folsom said.
The report is the first since Paul Wolfowitz took the helm of the World Bank in 2005 and made fighting corruption a priority, arguing that corruption is one of the main threats to reducing poverty.
“When we find that scarce development dollars have been wrongly diverted from their intended purpose of benefiting the poor, we have a responsibility to take action,” Wolfowitz said in a statement.
According to the report, the bank’s anti-corruption unit investigated 227 cases involving World Bank staff misconduct in 2005 and 2006. Of these, the department substantiated allegations in 77 of the cases involving 78 staff members.
Folsom said there were 83 internal cases under investigation, of which 43 were for fraud and corruption, while others involved allegations of misconduct and sexual harassment.
“As with any institution, you are always going to have a small handful of people who are doing things they are not meant to be doing,” she added.
The report said that most complaints about corruption and fraud in projects were reported by bank staff members (32 percent) and contractors (22 percent) last year.
It said the largest number of new cases were in East Asia and the Pacific, followed by South Asia, but Folsom cautioned that this did not reflect the extent of corruption but rather was an indication of where cases had been reported.
She said the department had introduced new tools to better gauge the scope and depth of corruption in bank projects.
One of these, the Voluntary Disclosure Program, encourages companies that have worked on bank-funded projects to report or own up to corruption or fraud in return for keeping their identities secret.
“Through these diagnostic tools we think we will be able to have a greater development impact,” Folsom said.