Cleaning Up The World Bank
Its mission: to end global poverty. But corruption has cost it billions. How to weed out the crooks and grifters
Back in the early 1980s, Leslie Jean-Robert Pean was in a heap of trouble. Flat broke, in bankruptcy court, he had $10 in a savings account and a whole lot more debts than assets. Over the next half-dozen years, he scratched out a living in a variety of jobs. But in 1989, Pean, an economist, landed a job at the headquarters of the World Bank, in Washington, D.C. By the early 1990s, Pean and his family had bought a big house on 3 acres of manicured grounds outside Washington, and he was passing around $100 bills like so much chump change.
"Our dream," the World Bank's mission statement says, "is a world free of poverty," something Pean really understood. The only trouble, bank investigators say, is that he wasn't focusing so much on helping the poor as he was on helping himself. Pean admitted to bank investigators that he had some $2.5 million salted away in a Swiss bank account, but he says it was family money.
The "C" word. Pean's activities are now under investigation by federal prosecutors, but to bank investigators the case is far more important than the alleged misdeeds of a midlevel manager whose bank salary never exceeded $166,000 a year. Kickbacks, payoffs, bribery, embezzlement, and collusive bidding plague bank-funded projects around the world, a U.S. News analysis shows. The scale of the problem is enormous: Knowledgeable analysts believe corrupt practices of one type or another may be associated with more than 20 percent of the funds disbursed by the bank each year.
The World Bank, controlled by 184 member countries, was involved at last count in more than 1,800 projects worldwide--everything from infrastructure improvement to efforts intended to enhance health, nutrition, education, and agriculture. The bank provides loans and grants of more than $20 billion a year, the money raised primarily through the sale of bank-issued bonds and member contributions. Over the past 60 years, the bank has approved loans of more than $550 billion. It is, quite simply, the largest and most influential antipoverty institution operating in developing countries.
For most of its history, World Bank officials ignored complaints about corruption. The "C" word wasn't uttered in the hallways of the bank's opulent headquarters in Washington; bank managers worried that confronting those involved in graft would be an improper intrusion into domestic affairs of sovereign states. That silence ended a decade ago, when the bank launched a campaign against corruption. It was an inspired idea by the bank's swashbuckling president at the time, James Wolfensohn, who denounced the "cancer of corruption'' and went on to create an internal rackets squad and a sanctions committee to investigate and punish wrongdoers.
Wolfensohn left the bank last year and was replaced by Paul Wolfowitz, the former No. 2 official in the Defense Department, who was a leading advocate for invading Iraq and removing Saddam Hussein from power. Wolfowitz quickly picked up the anticorruption torch. In his 10 months at the helm, he has made it clear that those who cheat and steal from the bank will be caught and punished, both on bank-funded projects overseas and among its workforce of 26,000 staffers and consultants. Sub-Saharan Africa, Wolfowitz says, is his primary target. Corruption "is an incredibly crippling factor on countries' efforts to develop,'' Wolfowitz says, diverting valuable resources from those the bank is trying to help--the world's desperately poor. Some 300 million people in sub-Saharan Africa live on less than $1 a day, Wolfowitz notes, adding that across the globe, that number is a staggering 1.2 billion.
advertisement
