Speeches & Transcripts

World Bank Group Managing Director and Chief Administrative Officer Shaolin Yang’s remarks to “Tracking Corruption – The Way Forward"

June 14, 2016

Shaolin Yang, World Bank Group Managing Director and Chief Administrative Officer Tracking Corruption – The Way Forward Paris, France

As Prepared for Delivery

On behalf of the World Bank Group, I thank the Government of France and President François Hollande for this important, timely event. Gathering here now gives us an important opportunity to take meaningful action to be carried forward long after this conference is over.

Corruption poses an enormous obstacle to international development and the global goal of ending extreme poverty. Using public power for undue private gain is unjust. It denies resources to the poor. It undermines services to the vulnerable. It weakens the social contract. This then leads to exclusion, instability and conflict.

We fight corruption because it is the right thing to do.

We also fight it because corruption has severe economic impacts.  

Minimizing corruption and its pernicious side effects is critical to achieving the World Bank Group’s twin goals of ending extreme poverty by 2030 and boosting shared prosperity for the poorest 40%.  

It is essential if we are to meet our commitments for the Sustainable Development Goals (SDGs).

The World Bank Group has been addressing corruption with solid results for decades. We work with countries everywhere to strengthen government systems, improve transparency, and recover stolen assets. In the past year, the World Bank Group made grants and loans of  $56 billion.

This covers a wide range of critical areas --- health, education, transport, and natural resource management. It is a core value of the institution to assure that our resources are used for their intended purposes --- ultimately serving the poor.

Working with our member countries, we assess project and loan plans for corruption risk. We closely supervise activities and build in monitoring systems including hotlines to report misconduct.

If allegations of wrongdoing arise, we have a strong investigation system lead by our Integrity Group and, if allegations of fraud and corruption are validated, our sanctions system steps in. And when we debar a company, our system of cross-debarment with other multilateral Banks assures that our work to prevent corruption is leveraged across the world. This way we exclude proven wrongdoers from World Bank financed operations. At the same time we ensure accused parties are treated fairly and given a chance to make a defense.   

To give you a snapshot of the scope of what we do, just last year the World Bank’si nvestigation and sanctions system rooted out misconduct in connection with sixty-one projects worth over five hundred million dollars.  Today the World Bank has publicly debarred or otherwise sanctioned more than 700 firms and individuals. These sanctions are powerful – companies know the World Bank takes fraud and corruption seriously.  And we plan to more broadly share our experience in this area.  

Still, the cost of corruption remains astonishing. According to the best estimates businesses and individuals pay one point five trillion dollars in bribes alone each year. This is about 2% of global GDP—and 10 times the value of overseas development assistance. The cost of corruption in human lives is equally distressing. Infant mortality rates and low birth weights are twice as high in places where corruption is rampant; school drop- out rates are five times as high. The inequality reinforced by corruption often is visible in the most stark terms – children not receiving proper vaccinations due to counterfeit pharmaceuticals, for example. Or buildings or roadworks collapsing because they were not built to standard.  

We often say that with corruption the poor pay twice – first with the resources that never reach their intended purpose, and, second, through the resulting substandard services that affect their lives in the long term.

So for the World Bank, reducing corruption goes well beyond addressing corruption in our projects, it is a global and systemic issue. How then can we think in a new and fresh way about how to address it more effectively?  What has changed in the world is advances in technology and the availability of information and these give us important new tools in the fight against corruption.

First and at the most basic level, we know that rule-based and competent institutions are the foundation forpreventing corruption. Government leadership is required to establish and enforce rules and systems to prevent corruption. We need this to change behaviors and strengthen public integrity.

Second, clarity and transparency of public programs and their intended results – often developed in a way that involves citizens -- can go a long way in reducing corruption.

Transparency in budget processes – so it is clear how resources are meant to be used is one part.   A simple example is how publishing in newspapers the amount of designated resources to local schools in Uganda helped make sure the money went to the right place.  Another important aspect is technology.  In Brazil, the well-known Bolsa Familia program instituted the use of debit cards for the delivery of conditional cash transfers.  This removed the middle-men that in the past could take a cut – now we have one of the most effectively targeted social programs in the world.  In India, holders of specially issued smart cards received thirty-five percent more money for a public jobs program compared to other program beneficiaries and got their payments faster. Such tools can make sure that resources are used for their intended purposes and get to their destination faster. Across the globe, improving budgetary systems and service delivery are core components of the World Bank’s work. And we are partnering with other organizations such as the IMF and OECD to strengthen fiscal transparency around the world.

Other aspects of information and transparency of public processes are critical to the path forward. One relates to beneficial ownership. Corruption is frequently the cause of the illicit flow of funds, which is facilitated by lack of information on the true owners of companies. Building information bases such as the  public registries of the beneficial owners of companies, is a vital tool in helping to reduce corruption. In the implementation of public programs and contracts, governments should insist on clarity of the true owners of companies. We applaud those countries among them the UK, France, Nigeria, Ghana, and Tanzania who have stepped up to develop public registries that reflect beneficial ownership. For its part the World Bank is providing technical assistance and capacity building to help implement improved standards. In addition, the World Bank will incorporate transparency in beneficial ownership in our own high value contracts.

Another and newer, area of concerted effort is open contracting. Information on and transparency of public contracting is potentially one of the most effective tools to help stem corruption. More information on contracts can help assure that services and projects are delivered at reasonable cost and within reasonable time frame. Open contracting can help reduce capture of the state, strengthen value for money and ultimately improve service delivery. The World Bank is a strong supporter of the Open Contracting Partnership.  So we are taking steps in our own work. This includes supporting the principals of open contracting by providing more information to the public. It also means integrating measures related to openness into the tools and methodologies for assessing public procurement performance.  We always support the adoption of open contracting principles, approaches and tools as part of our engagements around the world.

A third key way forward in addressing corruption is continued strengthening of accountability. This involves traditional tools,such as strengthening oversight institutions like internal control units and Supreme Audit Institutions. Anti-corruption authorities can also play an important role: we applaud France’s efforts towards the creation of its own new anti-corruption authority.

Accountability can also be re-enforced by strengthening the role of citizens, companies and other non-governmental agencies. In Honduras, the Participatory Anti-Corruption Initiative, which brought together public officials, citizen groups, and the private sector, succeeded in reducing spending on medicine by sixty-four percent by challenging corruption in purchasing arrangements.  In Chile, the Engels Commission served as an innovative laboratory for assessing and improving accountability on the implementation of the Government’s anti-corruption programs. Advances and technologyand information around the world suggest that it is not a question of IF governments will be held accountable, but a matter of when they will be held accountable.

Even when institutions and accountability work, we know that corruption can still occur, so it also important for us to work together to find and recover the ill-gotten gains of corruption. The UNODC and the Bank have worked with many of you for years on the Stolen Asset Recovery -- or StAR – Initiative and we have made inroads in finding and returning stolen assets. We can do more to facilitate cooperation between countries and to make these efforts more global. We are working with partners on a Global Forum for Asset Recovery to assist in these efforts. We also continue to provide technical assistance and capacity building on anti-money laundering and financial integrity units in countries around the world.  To better integrate these various efforts we are working to develop a rapid assessment tool to help countries identify the risks of illicit financial flows and to be better prepared to prevent such flows from occurring, as well as to identify them when they do occur and address the factors that may be the drivers of such flows.

Bringing together different systems of information from all these lines of work can also be a force for reducing corruption. For example, over 70 countries in the world have systems which require financial disclosure by public officials. Those systems could potentially yield much greater impact if they were linked with other information from tax officials, company registries, or real estate registries, or made public.  Properly protected, whistle-blowers can dramatically increase the ability of law enforcement officials to identify and prosecute fraudulent and corrupt behavior. New mechanisms let individuals, civil society groups, and communities participate in oversight and monitoring. This includes the geo-tagging of public assets, to open contracting, to the creation of audit processes that bring together formal and non-traditional forms of auditing.  All have shown enormous potential for identifying and reducing corruption in people’s lives and creating trustworthy institutions. Initiatives like the Extractive Industries Transparency Initiative, which bring together governments, the private sector, and civil society groups, are showing the way. We must now ensure that the information that is being created is used as effectively as it can be to fight and prevent corruption.

Success in the fight against corruption requires a renewed and coordinated global effort. With the UN Convention against Corruption at its core, a series of global agreements have established national and international commitments to act against corruption and to support others in their efforts. Complementary conventions, such as the OECD Anti-Bribery Convention, or the Financial Action Task Force, serve to reinforce the responsibilities of governments and key institutions to act to ensure public integrity and the integrity of the global financial system. These agreements are fundamental, but their promise will not be realized without a greater focus on implementation. The World Bank stands ready to partner with others around the world in this effort.

Ultimately, the success of efforts to confront corruption will depend not on what the World Bank does within its own walls but on the actions of countries, communities, and individuals. The people in this room, representing governments, law enforcement institutions and other accountability institutions, are key to making this happen.

We need to build on the work that has already been done in order to create more robust and effective mechanisms for addressing corruption. We believe that new technology, information and openness are the way forward in fighting corruption and that an agenda of what World Bank President Jim Yong Kim calls “radical transparency” can help us reduce corruption and better understand and address the drivers of corruption. I have no doubt of our ability to achieve success with our shared leadership, our commitment to working together, and our dedication to achieving results. We go forward with the benefit of our experience and with the understanding the urgency of transforming the fight against corruption.

Thank you.