The Wall Street Journal (USA)
Robert Zoellick outlined a vision for the World Bank yesterday, at a speech marking his 100th day as president. His theme: "inclusive and sustainable globalization." Whatever that means.
We long ago became accustomed to the toothless catchphrases by which the bank shovels money (now more than $30 billion a year) out the door, and it remains to be seen if Mr. Zoellick's agenda will amount to more than a high gloss on the status quo. To his credit, the former U.S. Trade Rep is emphasizing the importance of free trade to economic development, still a controversial point at an institution that was once home to anti-globalization guru Joseph Stiglitz. But the real test of his tenure will be whether he can restore the bank's reputation, especially regarding the corrupt uses to which its loans are often put, and the bank staff's habit of looking the other way.
That point was brought home last month by Paul Volcker's report on the bank's anticorruption efforts, which painted a vivid picture of institutional resistance to having its projects "exposed as rife with corruption." Mr. Volcker avoided specifics, though we revealed the devastating 2005 report by the bank's internal anticorruption unit (INT) on bank funding for drug procurement in India. The losses in that one case ran into the tens of millions of dollars.
A senior operational bank source has now showed us a second set of INT reports concerning corruption in seven projects in Cambodia. The reports are so sensitive that they were never shared with Cambodia's government, lest they put the lives of whistleblowers at risk. We have therefore agreed not to publish or quote directly from the documents, as well as to obscure certain details. But take our word for it: These are remarkably specific reports that document corrupt practices and name officials and companies by the dozen. Even more astonishing, senior bank officials have essentially let the Cambodian government get away with it.
As usual, the projects have the most benign-sounding names: "Land Management and Administration"; "Provincial Rural Infrastructure"; "Flood Emergency Rehabilitation"; "Provincial and Peri-Urban Water Supply and Sanitation," and so on.
Yet in each case, evidence of extortion, bribe-taking, bid-rigging and procurement manipulation was rampant. In one or more of the projects, 75% of companies seeking project work admitted to offering bribes to government officials, some of them in the tens of thousands of dollars. In another project, investigators found that contracts for 17 out of 18 new office buildings were manipulated in favor of just one company, and that they had been built with substandard materials -- or not built at all. The jockeying for bids even led to contracts being taken out on people's lives. And so on and on, causing one to wonder what part of the World Bank's work in the country wasn't corrupted.
When INT released these reports inside the bank in May 2006, then bank-president Paul Wolfowitz immediately put the projects on hold, and demanded the Cambodian government refund the $12 million the bank estimated it had lost to corruption. Bank sources tell us Mr. Wolfowitz would have pulled the bank out of Cambodia altogether, but he was prevailed on to adopt what amounted to a "stop-go" strategy toward Cambodia.
The bank's bureaucracy had its own ideas. Within months the bank had lifted its suspension of the land management project and two others. In February, James Adams, the bank's vice president for the East Asia and Pacific Region, wrote to the Cambodian Finance Minister noting brightly that despite the INT's findings, the bank was ready to forgive: "Considering the Government's expressed commitment to improve governance and fight corruption . . . the Bank proposes to seek the immediate refund of only a portion of the [bank] funds against the misprocured contracts." We're told that not one company has been debarred, despite INT's recommendations.
In August, Mr. Zoellick visited Phnom Penh, where he announced that the bank "wants to assist the Government to enact reforms to reduce rural poverty, encourage social development, improve the business and investment climate, and strengthen the rule of law." Yet if the INT reports mean anything, it is that Cambodia's government cannot administer even the most basic projects honestly. It's far from clear that further aid won't simply generate more corruption, however many strings are attached.
We long ago became accustomed to the toothless catchphrases by which the bank shovels money (now more than $30 billion a year) out the door, and it remains to be seen if Mr. Zoellick's agenda will amount to more than a high gloss on the status quo. To his credit, the former U.S. Trade Rep is emphasizing the importance of free trade to economic development, still a controversial point at an institution that was once home to anti-globalization guru Joseph Stiglitz. But the real test of his tenure will be whether he can restore the bank's reputation, especially regarding the corrupt uses to which its loans are often put, and the bank staff's habit of looking the other way.
That point was brought home last month by Paul Volcker's report on the bank's anticorruption efforts, which painted a vivid picture of institutional resistance to having its projects "exposed as rife with corruption." Mr. Volcker avoided specifics, though we revealed the devastating 2005 report by the bank's internal anticorruption unit (INT) on bank funding for drug procurement in India. The losses in that one case ran into the tens of millions of dollars.
A senior operational bank source has now showed us a second set of INT reports concerning corruption in seven projects in Cambodia. The reports are so sensitive that they were never shared with Cambodia's government, lest they put the lives of whistleblowers at risk. We have therefore agreed not to publish or quote directly from the documents, as well as to obscure certain details. But take our word for it: These are remarkably specific reports that document corrupt practices and name officials and companies by the dozen. Even more astonishing, senior bank officials have essentially let the Cambodian government get away with it.
As usual, the projects have the most benign-sounding names: "Land Management and Administration"; "Provincial Rural Infrastructure"; "Flood Emergency Rehabilitation"; "Provincial and Peri-Urban Water Supply and Sanitation," and so on.
Yet in each case, evidence of extortion, bribe-taking, bid-rigging and procurement manipulation was rampant. In one or more of the projects, 75% of companies seeking project work admitted to offering bribes to government officials, some of them in the tens of thousands of dollars. In another project, investigators found that contracts for 17 out of 18 new office buildings were manipulated in favor of just one company, and that they had been built with substandard materials -- or not built at all. The jockeying for bids even led to contracts being taken out on people's lives. And so on and on, causing one to wonder what part of the World Bank's work in the country wasn't corrupted.
When INT released these reports inside the bank in May 2006, then bank-president Paul Wolfowitz immediately put the projects on hold, and demanded the Cambodian government refund the $12 million the bank estimated it had lost to corruption. Bank sources tell us Mr. Wolfowitz would have pulled the bank out of Cambodia altogether, but he was prevailed on to adopt what amounted to a "stop-go" strategy toward Cambodia.
The bank's bureaucracy had its own ideas. Within months the bank had lifted its suspension of the land management project and two others. In February, James Adams, the bank's vice president for the East Asia and Pacific Region, wrote to the Cambodian Finance Minister noting brightly that despite the INT's findings, the bank was ready to forgive: "Considering the Government's expressed commitment to improve governance and fight corruption . . . the Bank proposes to seek the immediate refund of only a portion of the [bank] funds against the misprocured contracts." We're told that not one company has been debarred, despite INT's recommendations.
In August, Mr. Zoellick visited Phnom Penh, where he announced that the bank "wants to assist the Government to enact reforms to reduce rural poverty, encourage social development, improve the business and investment climate, and strengthen the rule of law." Yet if the INT reports mean anything, it is that Cambodia's government cannot administer even the most basic projects honestly. It's far from clear that further aid won't simply generate more corruption, however many strings are attached.
* * *
Mr. Zoellick is still new to his job, and no doubt he is eager to win over the staff that ousted his predecessor. Yet Mr. Zoellick's most basic obligations are not to them. They are to the bank's donors and to the world's poor, both of whom are cheated when corruption is tolerated. Cambodia is one country where that happens. If the bank isn't willing to act against it, then Congress should deny the bank more money until it does.
8 comments:
"Sr World Bank officials let the Cambodian gov't get away with corruption," mee chkout (Socheata)???
Cambodian Government is the world most Corruptted ever recorded in the world history. every body know that!
This Government's problems I ever seen in my life.In 2003 I went from PP to Kompong Cham, they have too many Controlers to take maney from people's Taxi, a taxi I was on was full of products from PP. I bought to gift my relatives, they stopped, and accused me as (doerk aiy vann khoss chab) at that time I know This [CROOK] I gave him $20.00 he let go. So, from PP to Kompong Cham I spended $100.00 just for the road block. I swear, I will not go to my home country again. just a bunch of [CROOK].
I call The [CROOK] country.
Well, why didn't you report it?
Anyhow, no one denied any corruption in Cambodia or anywhere else in the world. We can only do so much on a shoe string budget. It used to be worse, and we have cut most of the red tape to remove corruption, and we'll continue to fight it as we grow with time. Therefore, if you can't hack corruption at this point, I full understand.
khmer people, if you want to understand the ugly side of " world bank " .
check out this book: " Confessions of an Economic Hit Man " by John Perkin. He himself confess what he is involved with and forced to do.
So this is what really going on in the world today. Curruption is not just internally in cambodia, but what cambodia is associating with.
World Bank is corrupt, but without their money, the government would collapse, country goes into chaos. So it is up to our citizens and outspoken critics to put our government in check. Make them more responsible to the people. Can`t just rely on other countries or people to put our Government in Check. So lets keep the pressure on. We will be free.
10:11
You are right.
As sad as it is there is no other way. There is also corruption in the rich countries of the world. The only way to counter this is internally, not externally through force or the cutting off of funds.
Hello, this is Jim Adams at the World Bank and I'd like to follow up on the article from the Wall Street Journal that you reproduce in this page.
The Bank feels that the Journal left out many details regarding what happened after the investigation of those projects, and we have sent a letter to the editor where we make some clarifications. The letter will likely be posted on www.wsj.com soon, but since you're discussing this matter, I thought I'd advance the main points of the letter:
- The Bank didn't ignore those cases of corruption, it was in fact Bank staff who first raised concerns about them.
- After investigations were made, the Bank suspended the Government's access to funds for those three projects.
- The Government then agreed to new anti-corruption measures for each project and to hiring an international agent (now selected) who would manage the award of contracts for Bank-funded projects.
- Only after the Government completed the anti-corruption measures and moved ahead on hiring the agent did the Bank lift the suspension on the affected projects.
- The Bank cancelled over US$2.5 million in project funding and the Government subsequently repaid the World Bank US$2.89 million.
- The Cambodian Government agreed to incorporate anti-corruption action plans into all existing and future Bank legal agreements.
- The Bank is in the process of suspending (debarring) the firms involved in the projects where corruption was detected.
Also, the WSJ criticizes the Bank for being "ready to forgive" the Cambodian government, but that's just not what happened, as you can see from the list above.
Corruption is a sad reality in many countries --as some other posters in this blog have said-- and very difficult to address. I think it is the Bank's duty to try to remedy it to the extent that it can, not to pack up and leave the country when we see signs or evidence of it. That's what we set out to do in this case.
Best,
Jim Adams
Vice President, East Asia & Pacific Region
The World Bank
Thank you Mr. Jim Adams for clarifying this misunderstanding for all of us.
Best wishes to you too!
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