GOVERNANCE
The World Bank plays a key role in helping the governments of its client countries become more efficient, transparent, and accountable. In doing so, the Bank has designed and helped implement anticorruption strategies and has strengthened its work in public sector institutional reform.

Rather than simply providing advice, the Bank is helping governments reform policies and strengthen institutions all around the world, lending $5 billion per year for institutional reform. Examples of reforms that have had an impact on levels of corruption and the quality of governance include:

• Institutional reform programs that support the liberalization of markets, prices, and trade and exchange regimes
• Public sector reforms that privatize state-owned enterprises, making them more responsive and accountable
• Reforms in service delivery and infrastructure programs to decentralize government and bring services closer to the people.

THE BANK'S ANTI-CORRUPTION STRATEGY
Addressing the problem of corruption in client countries has increasingly been at the heart of the World Bank's development agenda. Over the last few years, the Bank's concern about corruption has dramatically changed the way the organization tackles the problem, both as a developmental issue in its client countries and from a fiduciary standpoint in Bank-financed projects.

The Bank has taken a leading role in the fight against corruption because:

• Corruption hurts the poor: it diverts public services from those who need them most and strangles private sector growth.
• Corruption undermines public support for development assistance by creating an erroneous perception that all assistance is affected by corruption.
• Corruption can impede developing countries' access to private capital.
• The Bank has a duty to its member countries to ensure that financial support reaches its intended targets.

Since the fall of 1997, the Bank has been implementing an anticorruption strategy that laid out four key focus area endorsed by its Board of Executive Directors.

1. Minimizing Fraud and Corruption in Bank-Supported Projects:
By placing great emphasis on the problem of corruption, the Bank now has a set of established protocols aimed at ensuring that it takes only reasonable risks throughout project development and implementation.

As part of the loan approval process, the Bank has:

• improved and tightened the way it assesses borrower procurement and financial management capacity and corruption risks;
• intensified the supervision of smaller procurement contracts through special ex-post audits conducted by specialized firms on behalf of the Bank.
• added new anticorruption provisions to the procurement guidelines; and
• significantly increased the number of its financial management and procurement staff.

These and other changes have led to a Bank that is more client-oriented, with improved quality of services and portfolio.

2. Helping Countries that Request Assistance
The Bank views corruption as a symptom of institutional dysfunction and thus employs a proactive and holistic approach that attempts to help clients strengthen governance and public sector management, improve economic policies and legal/judicial systems, and develop and implement specific anticorruption measures.

To combat corruption, the Bank has developed the following multi-pronged strategy that can be tailored as needed to individual country situations.

3. Mainstreaming Corruption Considerations into the Bank's Operational Work
Today, the Bank explicitly considers in its lending decisions the extent to which the quality of governance and the magnitude of corruption affect a borrowing country's economy.

Governance concerns are also being mainstreamed into the preparation of Poverty Reduction Strategy Papers (PRSP). In addition, the Public Sector Board has prepared analytic toolkits to highlight the links between governance and poverty and to help guide analysis in individual country settings.

4. Supporting International Efforts to Address Corruption
Since 1996, when the World Bank President, James D. Wolfensohn made a public commitment to "fight the cancer of corruption", there has been improved coordination among the international financial institutions in sharing information on all aspects of corruption.

For example, the five largest multilateral development banks (MDBs) have established a joint working group to help coordinate policies and share information, and the Bank has strengthened its working relationships with the UNDP and bilateral donors.

In addition, the Bank works closely with a number of NGOs, including important human rights groups, to develop a better understanding of how corruption undermines development and to improve the Bank's strategy of fighting corruption at its source.

Progress so far:
While the decision to target corruption is relatively new in the Bank's history, the institution has a long history of promoting reforms that effectively improve the management of public resources and reduce opportunities for corruption.

To date, the World Bank has undertaken more than 600 specific anti-corruption programs and governance initiatives in 95 borrower countries.

• Recent examples of anti-corruption projects include tax administration in Latvia; judicial reform in Albania, Guatemala and Morocco; administrative and civil service reform in Bolivia and Ghana; regulatory reform in Georgia; and support for the Ombudsman in Peru.
• Four of every five Country Assistance Strategy documents now discuss how governance and corruption affect borrowing countries' economies and what governments and the World Bank are doing to address these challenges.

Governance Resources:
Governance and Public Sector Reform
Anticorruption
WBI Governance and Anti-Corruption

TRANSPARENCY AND GOVERNANCE
Good governance and transparency are important elements of sustained economic growth, which is key to reducing poverty and the vulnerability of the poor. Good corporate governance is also an important factor in ensuring a more transparent, fair and just society.

The information revolution has transformed the way organizations look at transparency and openness. Technological advances, including the internet, have made it possible for vital information to be readily available to the public. It is no longer possible for companies, institutions or countries to act in isolation.

The World Bank and bilateral donors have placed transparency and governance at the heart of their development agenda because it relates to the government's ability to create a more open and flexible society that gives voice to the people and benefits all.

Transparency Resources:
Working Papers & Articles on Transparency
Fiscal Transparency
Transparency International

BUILDING JUSTICE SYSTEMS
As part of its anti-corruption strategy, the Bank places great emphasis on assisting countries to reform their legal and judicial systems. Most World Bank projects involve some form of legal reform. An effective and transparent judiciary system promotes development by assuring the basic security of persons and property, allowing for the peaceful resolution of disputes, facilitating economic exchange and permitting citizens to hold their government accountable.

Building Justices Systems Resources:
Web Links on Law, Legal Reform, and Development Role of Law
in Development
Role of Law in Development
Legal Institutions of the Market Economy