World Bank 'shouldn't penalise poor for corruption of leaders'

Fighting corruption is an essential part of overcoming poverty, World Bank President Paul Wolfowitz said today, but he acknowledged that donors should not penalise poor people for the abuses of their leaders by withholding aid.

Fighting corruption is an essential part of overcoming poverty, World Bank President Paul Wolfowitz said today, but he acknowledged that donors should not penalise poor people for the abuses of their leaders by withholding aid.

“We cannot abandon the poor because their governments or institutions are weak,” he said in comments to the World Bank’s policy-planning committee. “That would mean they would be penalised twice,” he said.

Wolfowitz, who has championed fighting corruption since becoming chief of the bank last year, has come under fire from Britain and several African nations for blocking more than £500million in aid to either countries believed to be involved in illegal activities or such projects where there reports of graft.

In apparent recognition of that criticism, Wolfowitz’s statement today said the bank “must find solutions which are innovative and flexible and which respect the unique constituents and conditions in each country.”

But Wolfowitz, the former US deputy defence secretary, stressed that transparency was critical to fighting poverty, which is the World Bank’s stated purpose.

“Sound principles of accountability and transparency not only assure funds are spent as intended, but also are essential to accelerating economic growth, helping poor to escape poverty,” he said.

The Washington-based World Bank says that it has resumed funding for projects after recipient countries promised to bring safeguards against corruption.

But Kenyan Finance Minister Amos Kimunya said Sunday that although Kenya has met all conditions for World Bank loans, disbursals have been delayed because the allegations have yet to be investigated.

“There is this belief that we are not doing enough. But nobody has told us what that ’enough’ means,” Kimunya said. “Nobody has added any item to what we are already doing.”

Speaking on behalf of 21 African countries, Kenya’s Kimunya said yesterday that every country has its own way to deal with corruption and that there cannot be a uniform prescription to deal with the problem.

At today’s meeting, members agreed there should be more consultations while framing strategy on corruption and that there were concerns over the speed and approach of the bank in investigating the graft charges, said Hilary Ben, Britain’s Development Secretary.

According to the World Bank, £500billion in bribes change hands worldwide every year.

The bank itself has uncovered 2,000 cases of alleged fraud, corruption and other misconduct related to its projects since 1999 and has sanctioned more than 330 companies and people, it says.

Activists, meanwhile, accused the bank of seeking to impose conditions on its lending that are not directly related to corruption.

“As part of their aid and debt relief, the World Bank and IMF insist that countries satisfy all sorts of economic conditions, such as forced privatisation, trade liberalisation, fiscal reforms,” said Trisha Roberts, director of the Jubilee Debt Campaign, a British-based coalition of groups working for the cancellation of poor country debts.

“We think these should not be imposed by unelected bureaucrats in Washington,” she said.

The World Bank’s policy-setting development committee met Monday to discuss a strategy paper on anti-graft efforts in countries receiving the bank’s loans. The bank and its sister institution, the International Monetary Fund, wraps up its annual meeting on Wednesday.

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