World Bank chief says finger-pointing won't fix graft

WASHINGTON Thu Jan 31, 2013 4:11am IST

World Bank Group President Jim Yong Kim gives a keynote speech at the Center for Strategic and International Studies for a discussion on ''Anti-Corruption Efforts in Global Development: A Commitment to Act'' in Washington January 30, 2013. REUTERS/Gary Cameron

World Bank Group President Jim Yong Kim gives a keynote speech at the Center for Strategic and International Studies for a discussion on ''Anti-Corruption Efforts in Global Development: A Commitment to Act'' in Washington January 30, 2013.

Credit: Reuters/Gary Cameron

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WASHINGTON (Reuters) - The World Bank must do more than just point fingers when it uncovers corruption, it should work with countries to fix the problem by sharing experiences on effective ways to root out graft, the bank's head said on Wednesday.

Jim Yong Kim estimated that between $20 billion to $40 billion is stolen from developing countries each year. It was his first speech about the challenges of fighting corruption since he became president of the World Bank in July,

"It is not just standing back and pointing a finger, we have to call it out when we see it and stick by our guns, but we feel we also have a responsibility to do everything we can to help people build those effective systems," Kim told the Center for Strategic and International Studies.

The World Bank should not only gather and share data on fighting corruption, but should also learn from the experiences of governments that have successfully battled graft, he said.

As examples, he noted that in Brazil the government has tackled drug-infested slums and turned them into safer neighborhoods, while in Italy the authorities have exposed tax dodgers, and in India the government is grappling with anti-corruption legislation.

Corruption is a major impediment to development, he said, adding that the World Bank should not shy away from publicly naming offenders.

"We have to send a signal that if we detect corruption we will call it out and move forward, and will have to have a whole discussion again" on a lending program," he said.

The World Bank has aggressively tried to toughen up on corruption ever since former President Jim Wolfensohn condemned the "cancer of corruption" in a speech in 1996. The poverty-fighting institution has also come under pressure from major donors, like the United States and Britain, to crack down on corruption to ensure taxpayers' money does not go to waste.

Although World Bank lending is influenced by how a borrower scores on governance and fighting corruption, the bank has long wrestled over whether to suspend lending to a country when it discovers corruption in bank-financed development projects, or to keep the money flowing while fixing the problem.

Last year, Kim canceled a $1.2 billion credit for a Bangladesh bridge project after the bank found "credible evidence" of high-level corruption among Bangladeshi government officials.

While funding has not resumed for the bridge until the government addresses the problems, Kim said the Bank remained engaged in Bangladesh with commitment of about $4.3 billion in over 30 projects.

"Our willingness to work in difficult situations and appetite for measured risk should never be confused with a willingness to tolerate corruption in bank projects and activities," Kim said, adding: "When corruption is discovered in our projects and activities, we have zero tolerance for it within the World Bank." (Reporting By Lesley Wroughton; Editing by Leslie Adler and David Gregorio)

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