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Speeches & Transcripts March 28, 2018

Intergovernmental Organizations' Role and Vision in the Fight Against Corruption

Thank you, and good morning ladies and gentlemen. I would like to thank the OECD for its leadership, and for convening us here today.

I remember when the scourge of corruption hit home for me. It was a project in South Asia, and we were trying to build a school.

One fraudulent vendor stole the bright future of an education from hundreds of little children.

This issue matters.  So, I’m glad to be here to discuss how we can fight for a world free of corruption—and especially how we can deliver better development outcomes.

Throughout my career in development, and in my current capacity as Managing Director and Chief Administrative Officer of the World Bank Group, I have witnessed the evolution of how we confront corruption in our campaign to help the poorest.

Let me be clear: Corruption has been—and always will be—an obstacle to development.

Over the last two decades, we’ve moved from simply acknowledging corruption as a “cost of doing business” to active sanctioning, prevention, and capacity building programs in our partner countries.

In fact, tackling corruption is now a worldwide priority: UN Sustainable Development Goal 16, Target number 5, promises to “substantially reduce corruption and bribery in all their forms.”

The voice of the global community on this issue has never been louder. The challenge before us now is to harness this momentum and deliver lasting results.

This challenge goes to the very core of the World Bank Group’s mandate. We know that corruption is closely linked with poverty. Ultimately, the poor pay for corruption—and they pay for it twice. One: the vulnerable communities we pledge to protect never receive the resources they need. Two: the sub-standard services they endure affect their lives for years to come. It’s a vicious cycle.

As World Bank Group President Jim Kim reminds us, “Each dollar lost to corruption is a dollar diverted from a pregnant woman who needs health care; or, from a girl or a boy who deserves an education; or, from communities that need roads and clean water.”

To put those dollars into perspective, it is estimated that between $1.5-2 trillion is lost to bribery alone each year—and that’s just one subset of corruption! This translates into 2% of global GDP.

How do we confront the scourge of corruption at the World Bank Group? The answer is: on all fronts. We are a global Bank and it is our responsibility to lead on global issues.

One of our founding principles is that our donors’ dollars are applied to their intended purpose, and not misdirected or misappropriated in any way.

Our Integrity Vice Presidency, or INT, was one of the first investigative units founded in the international community to confront corruption in our projects.

Through INT we investigate World Bank financed projects for sanctionable practices. We identify integrity risks and draw lessons learned for future operations. We determine if debarred firms have implemented satisfactory measures to allow them to properly conduct business with the World Bank Group again. And finally, INT leverages the WBG’s convening power to maintain close relationships with national law enforcement agencies worldwide, to strengthen communication and cooperation across jurisdictions.

We also have an Office of Suspension and Debarment and an external Sanctions Board. Together with counterparts in IFC and MIGA, they review sanctions cases brought by INT against accused firms and individuals; suspend or debar those who engaged in misconduct; and set precedent for World Bank Group partners and clients.

This robust adjudicative system aims to fight corruption at its source; protect victims of sanctionable practices; and provide due process to suspected parties.

Last year alone, INT’s investigations issued reports detailing findings of corruption or other misconduct related to 68 IBRD projects and IFC investments. This included the review of more than 150 contracts and agreements, totaling approximately $818 million—and our adjudicative system imposed 60 sanctions. While luckily this represents only a small portion of our overall portfolio, the geographic scope is wide enough to demonstrate how far the tentacles of corruption reach.

All of us though—the entire international community—still need to do more to stop corruption before it occurs.

This is where our Governance Global Practice Group steps in, to directly support countries in building the government systems and checks and balances that help prevent corruption. We work with governments to support access to information legislation, anti-corruption commissions, income and asset disclosures, and to strengthen verification systems.

We also work to identify and address corruption risks in our operations across the WBG. We embed anticorruption approaches in our policy advice, in our analytics, in our institutional and development policy, and in our investment projects.

Indeed, from the time we first begin conceptualizing a new project, to the time we actually implement it on the ground, we are laser-focused on good governance.

Our procurement experts utilize data analytics to help governments identify patterns of collusion in contracts. Together with the OECD, IMF, and UN, we help governments tackle tax evasion, tax base erosion, and profit shifting. And we also assist governments build transparency into fiscal systems, to ensure that these systems are accessible and accountable to citizens and oversight entities.

Our partnership with the United Nations Office on Drugs and Crime (UNODC) resulted in the Stolen Asset Recovery Initiative, so that even if corruption still occurs, we can turn back the clock on fraudulent schemes, and return resources to countries. In fact, just this past December, we hosted the Global Forum on Asset Recovery, where we brought together prosecutors, journalists, and civil society organizations for the first time to discuss new and innovative solutions.

Going forward, we see two paths to reinforce this essential work. First, technology will help us identify and stamp out corruption.

In Egypt and Iraq, we’re using biometric data to eradicate ghost workers from public payrolls.

In Northeast Brazil, we’re using smartphones to track bribe payments on crucial services like healthcare.

When we can’t be on the ground to monitor implementation of infrastructure projects day-to-day, we draw on satellite technology.

And by collaborating with artificial intelligence tools in procurement, we can build “Smart Fiduciary” systems to cut out the middleman and reduce possibilities for corrupt behavior.

All of these efforts comprise one of the WBG’s most valued and exported public goods: the idea that clean business is good for business.

Even with this progress, our current attempts to address what former World Bank Group President Wolfensohn described as “the cancer of corruption” are not sufficient.

The good news is that we do not fight this battle alone. We will only eradicate this global epidemic through true global partnership.

When we combine our resources, intelligence, experience, and networks—just as we’re doing here today at the OECD—we can learn from each other and make our own systems more effective.

We’ve already seen the productive effects of this through what we call cross-debarment.

Now when one multilateral development bank party to our agreement sanctions a firm or individual, we all agree to debar them. In the last six years alone, the World Bank has recognized at least 255 debarments from other banks—and more than 300 of our own debarments were recognized by our partners.

But these sanctions are not a life sentence—no, they’re an opportunity.  

Being sanctioned doesn’t end with debarment. In fact, we give companies a second chance. We actively engage them in integrity compliance programs, so we can work to prevent, detect, and reduce fraud and corruption in the future.

We’ve already seen previously debarred firms even go on to mentor their own competitors.

When you think about it, it’s very intuitive. If you’re playing by the rules, you want everyone else to do the same.

But we can still do more to help our clients develop faster and sustainably.

The World Bank Group’s new funding strategy Maximizing Finance for Development, or MFD is also an opportunity area in the fight against corruption. By crowding-in private sector financing, we aim to maximize each development dollar. We help countries ensure that scarce government money goes where it’s needed most.

But for this to work—for the billions of development dollars to become trillions—we need clean business.

Without a clean business environment, the Bank Group’s private sector and political risk insurance arms in IFC and MIGA would impose a risk premium at a direct cost to the host country—or worse, not have the confidence to invest at all. In the end, this impedes poverty reduction—hurting the poor the most. This reality is unacceptable, especially in states torn apart by fragility, conflict, and violence.

Success in all these efforts will rely on collaboration and trust, and putting our global partnerships in action as never before.

This is the World Bank Group’s vision: a world free of corruption is fundamental to a world free of poverty.

We are more committed than ever, and look forward to engaging closely with you in the months and years to come.

This future is finally within our reach—if we only have the courage to seize it.

Thank you.