April 23, 2006

Wolfowitz gets backing for anti-corruption battle

By Lesley Wroughton

WASHINGTON (Reuters) - World Bank President Paul Wolfowitz
won backing for his anti-corruption strategy from the bank's
184-member countries which called for a clearer set of
guidelines on how the problem should be tackled.

The Development Committee of the World Bank and
International Monetary Fund urged the bank to develop a broad
strategy for fighting corruption by the next meeting of member
countries in Singapore in September.

In the past few months, Wolfowitz has shown himself a bold
opponent of malfeasance, cutting off lending to Chad when the
government made a grab for oil profits meant to help the poor,
and pushing for more transparency in the Republic of Congo's
oil sector when the country sought debt relief.

He also has held back approval of World bank projects in
Kenya and India because of corruption concerns.

But while member countries agreed there was a need to step
up the fight against corruption, several cautioned that it
needed to be properly handled.

Brazilian Finance Minister Guido Mantega warned that
"policy-makers should not take the lack of governance as a
synonym for corruption."

"Corruption hinders development not only because it diverts
resources by also because it signals flaws of governance," he

British development minister Hilary Benn said building
stronger states was not something that could be imposed. He
also said that to tackle corruption, the World Bank needed to
get better at addressing problems and connecting with people in
the position to do something about corruption.

Tae-Shin Kwon, vice minister of finance for South Korea,
said engaging in countries with weak governance needed to be

"We agree that even weak general governance environments
will often have elements of strength and reform champions who
can be assisted. Pushing reform through adding to
conditionality does not work," said Kwon.

But Wolfowitz said there was an overall strong consensus
among members that corruption needs to be addressed.

"There is strong consensus among all shareholders that this
is a problem that we need to address -- it's a problem for the
poor people who are our biggest concern and it's a problem for
the taxpayers of developed countries that help to pay our
bills," he told a news conference.

"I think everyone around the room this morning said it was
a problem we need to address and I think everyone equally
agreed that it's a complex problem and one that requires a
range of instruments to deal with it and one that has to be
solved progressively over time. It's not going to be solved
overnight," he added.

Wolfowitz said efforts to improve the distribution of aid
to the poorest people could not be separated from strengthening
governance systems.

Development groups also warned that emphasis on corruption
should not be used as an excuse to add layers of unfair
conditions on countries.

"It takes two to tango," said Romilly Greenholl, senior
policy advisor for ActionAid International UK. "Rich countries
must do much more to make sure that their companies are not
exporting corruption to the developing world."

In his speech to the committee earlier in the day,
Wolfowitz said he was expanding the bank's anti-corruption
efforts in all aspects of its business, including loans,
grants, research and technical assistance.

He said the bank would focus on strengthening judicial and
civil service systems and will work with rich nations to
prevent corrupt officials from funneling stolen money into
foreign bank accounts.

He said private companies will also be held more
accountable for wrongdoing and "blacklisted" and kept from
doing business with the World Bank if they break the rules.

The World Bank is developing anti-corruption strategies for
projects and will publish those on the Internet to ensure
resources are not diverted, Wolfowitz added.