The World Bank Group considers corruption a major challenge to its twin goals of ending extreme poverty by 2030 and boosting shared prosperity for the poorest 40 percent of people in developing countries. In addition, reducing corruption is at the heart of the Sustainable Development Goals and achieving the ambitious targets set for Financing for Development.
Corruption has a disproportionate impact on the poor and most vulnerable, increasing costs and reducing access to services, including health, education and justice. Think, for example, of the effect of counterfeit drugs or vaccinations on the health outcomes of children and the life-long impacts that may have on them.
Empirical studies have shown that the poor pay the highest percentage of their income in bribes. For example, in Paraguay, the poor pay 12.6 percent of their income to bribes while high-income households pay 6.4 percent. The comparable numbers in Sierra Leone are 13 percent and 3.8 percent respectively. Every stolen dollar, euro, peso, yuan, rupee, or ruble robs the poor of an equal opportunity in life and prevents governments from investing in their human capital.
Corruption erodes trust in government and undermines the social contract. This is cause for concern across the globe, but particularly in contexts of fragility and violence, as corruption fuels and perpetuates the inequalities and discontent that lead to fragility, violent extremism, and conflict.
Corruption impedes investment, with consequent effects on growth and jobs. Countries capable of confronting corruption use their human and financial resources more efficiently, attract more investment, and grow more rapidly.
The Bank Group recognizes that corruption comes in different forms. It might impact service delivery, such as when police officers ask for bribes to perform routine services. Corruption might unfairly determine the winners of government contracts, with awards favoring friends or relatives of government officials. Or it might affect more fundamental issues of capture, such as how institutions work and who controls them, a form of corruption that is often the costliest in terms of overall economic impact. Each type of corruption is important and tackling all of them is critical to achieving progress and sustainable change.
Successful anti-corruption efforts are often led by a 'coalition of concerned' – politicians and senior government officials, the private sector, and by citizens, communities, and civil society organizations. Increasingly, successfully addressing corruption will require the concerted attention of both governments and businesses, as well as the use of the latest advanced technologies to capture, analyze, and share data to prevent, detect, and deter corrupt behavior.
The Bank Group leverages innovative technologies to strengthen public sector performance and productivity, confront corruption and to help foster greater trust and accountability, particularly in more fragile and conflict environments.
Much of the world's costliest forms of corruption could not happen without institutions in wealthy nations: the private sector firms that give large bribes, the financial institutions that accept corrupt proceeds, and the lawyers and accountants who facilitate corrupt transactions. Data on international financial flows shows that money is moving from poor to wealthy countries in ways that fundamentally undermine development.
Corruption is a global problem that requires global solutions. The Bank Group has been working to mitigate the pernicious effects of corruption in its client countries for more than 20 years. To reaffirm the Bank’s leadership, President Kim joined leaders from 40 countries at the 2016 Anti-Corruption Summit hosted by the United Kingdom, committing a range of steps to confront corruption.
The Bank Group works at the country, regional, and global levels to help its clients build capable, transparent, and accountable institutions and design and implement anticorruption programs relying on the latest discourse and innovations. The Bank Group’s work revolves around sustainability and changing outcomes by helping both state and non-state actors establish the competencies needed to implement policies and practices that improve results and strengthen public integrity.
Additionally, the Bank Group works with the public and private sectors as well as civil society to support efforts to prevent corruption, improve remedies to address wrongdoing when it occurs as well as work towards improving behaviors, norms, and standards needed to sustain anti-corruption efforts.
The Bank Group has included Governance and Institutions as a theme in IDA18 – its Fund for the Poorest Countries – in order to focus global attention on the issue.
Fighting corruption within World Bank Group-financed projects:
The World Bank Group has a zero-tolerance policy toward corruption in its projects. The Bank Group's approach to fighting corruption combines a proactive policy of anticipating and avoiding risks in its own projects. The Bank Group subjects all potential projects to rigorous scrutiny and works with clients to reduce possible corruption risks that have been identified. The Bank Group’s independent Sanctions System includes the Integrity Vice Presidency, which is responsible for investigating allegations of fraud and corruption in World Bank-funded projects. Public complaint mechanisms are built into projects to encourage and empower oversight, and projects are actively supervised during implementation.
When allegations of fraud and corruption are substantiated, companies involved in misconduct are debarred from engaging in any new World Bank Group-financed activity. Concerned governments receive the findings of World Bank Group investigations. To date, the World Bank Group has publicly debarred or otherwise sanctioned more than 700 firms and individuals.
In fiscal year 2018, the Bank Group debarred or otherwise sanctioned 83 firms and individuals and recognized 73 cross-debarments from other multilateral development banks. 66 Bank Group debarments were eligible for recognition by other multilateral development banks in fiscal year 2018.
Helping countries fight corruption
When approaching anticorruption at the country level, the Bank frames its work in what can be thought of as an ecosystem.
First, every effort must be made to meet corruption at the gate, putting in place institutional systems and incentives to prevent corruption from occurring in the first place. This includes mitigating and detecting potential risks, as well as addressing weaknesses in the institutions critical to this effort.
Second, prevention must be built on the shoulders of credible deterrence, relying on accountability and enforcement mechanisms sufficiently strong to send a message to potential wrongdoers of the potential cost of their misconduct. Deterrence can take many forms beyond criminal consequences, including administrative and civil penalties and the Bank has created a world class sanctions and debarment mechanism to tackle corruption in its projects.
Finally, it is critical to understand and influence the evolution of norms and standards that can change incentives, strengthen public institutions, and thus move the needle towards positive perceptions of government needed for longer-term and sustainable efforts to combat corruption.
At the same time, the Bank Group is increasingly working to understand and address the power asymmetries that enable the misuse of funds and other public goods, as discussed in the 2017 World Development Report on Governance and the Law. The Bank Group is supporting reforms ranging from e-procurement to enhancing transparency that can help level the playing fields for those with less power.
Selected country examples include:
Afghanistan is making inroads to root out corruption, improve the management of its public finance, and make its procurement system more transparent. The country’s National Procurement Authority (NPA) was instrumental in developing a transparent procurement system. The early data and information on procurement processes is accessible to everyone on the NPA website. Robust oversight and monitoring have helped the government save about $270 million.
In Brazil, a data analytics trial in the northeastern state of Ceará explored how mobile surveys and scientific techniques can be used to uncover suspicious patterns of interactions between public service providers and users. In the first experiment, patient feedback provided through mobile phones was combined with administrative data from hospital services. The second experiment investigated how survey and administrative data could be used to find anomalies in the environmental licensing process. While bribery data collected through mobile phones offered inconclusive results, administrative data were used effectively to identify corruption red flags.
In Guinea, for the first time since the country gained independence in 1958, a register enrolled all of Guinea’s employed civil servants in 2015 by implementing a biometric identification system to conduct a census of civil servants to eliminate fictitious or fraudulent positions and potentially save more than 1.7 million dollars through the discontinuation of salary payments.
The Dominican Republic formed the Participatory Anti-Corruption Initiative, a forum that gives public officials, civil society, private sector leaders, and other committed citizens a unique opportunity to tackle corruption and take on powerful interest groups in many areas, including medicine and procurement. By 2014, reforms in this area had lowered drug prices, improved medication quality and reduced public spending by 64 percent.
Regional and Global initiatives:
The World Bank Group:
- Provides leadership in creating international transparency standards (Global Initiative on Financial Transparency, Open Contracting Standards, Asset Disclosure Standards) and support for the implementation of open government (through support for the Open Government Partnership).
- Actively assists in the implementation of transparency and accountability efforts such as Extractive Industries Transparency Initiative (EITI), Publish What You Pay, Fisheries Transparency, Anti-Money Laundering rules.
- Strategically supports and engages in international alliances and regional anti-corruption forums, such as the International Corruption Hunters Alliance and LAC Regional Parliamentary Network.
- Engages in international forums on anti-corruption including the G20 Anti-Corruption Working Group, the Financial Accountability Task Force, and the OECD Anti-Corruption Task Team.
- Assists countries with the coordination and mutual legal assistance required to identify and return stolen assets, through its StAR initiative in partnership with UNODC.
- Helps countries identify possible source of illicit flows and how to address them through National Risk assessments in over 50 countries at the country level.
Last Updated: Oct 04, 2018