* Abstract *
I became interested in the World Bank activities and in the World Bank history after reading several articles about the corruption in the World Bank. The World Bank was set up in 1945 with the ultimate goals of developing the underdeveloped nations. The World Bank helps developing countries governments, in reducing poverty. Paul Wolfowitz is the new president of the World Bank. There is still so much poverty after many years of the World Bank’s existence, and that might show that the World Bank failed to solve the poverty problem. There are many aspects of corruption that exist in the World Bank. Now, this paper argues what kind of corruption does World Bank have? Also, in this paper I have found many articles that can give good background about these problems in the World Bank, and gives four suggestions for the World Bank administrations.
I became interested in the World Bank activities and in the World Bank history after reading several articles about it. The World Bank was set up in 1945 with the ultimate goals of developing the underdeveloped nations. What does the World Bank do? The World Bank helps governments in developing countries, and also reduces poverty by providing them with money and technical expertise such as building schools, health services and government services. The World Bank works for a world free from poverty. Nowadays, according to World Bank Takes, “ the World Bank today released its first annual report on investigations into allegations of fraud and corruption” (The World Bank Group, 2005, par. 2) which is good idea when the World Bank made an annual report to look for the bank business.
Paul Wolfowitz is the new president of the World Bank. He is chairman of the Bank’s board of executive directors and president of five interrelated organizations. The president of the Bank is a United States national. Paul Wolfowitz was unanimously approved as president number 10 of the World Bank Group by the institution’s Board of executive directors on March 31, 2005. According to J. Bush, (2005), Mr. Wolfowitz spent more than three decades as a public servant, ambassador and educator, including 24 years in government service under seven U.S. presidents. His practical experience in the developing world includes three years in Indonesia as U.S.
I think the World Bank will change its system and work very well for developing countries, and help the poverty in the world if the Bank used different kinds of solutions and suggestions to help the World Bank from different kind of corruptions. For example, employees should not keep accepting money from certain people. Also, employees should not keep stealing money from the World Bank. Moreover, the allegations of staff misconduct in the Bank should be solved, product substitutions, and fraud in contact performance. That is because if the World Bank did not solve there problems, that means the poor people are starving without any help.
In this research paper, there are four corruption problems and four solutions that should be done about the World Bank system.
In the last 10 years, the World Bank has had many corruption problems in the Bank. That’s way the World Bank so far has been unable to make successful development countries in Africa and in most poor countries. One of these kinds of corruption is product substitutions. According to the Republic of Lithuania, “AB Hidrostatyba, three of its employees and the former Director and Deputy Director of AB Panevezio Statybos Trestas were debarred for a period of three years for serious misconduct, in contravention of World Bank procurement guidelines. AB Panevezio Statybos Trestas and two of its employees were debarred for one year. The two companies engaged in collusion in order to guarantee the success of AB Hidrostatyba in obtaining a US$3.28 million contract for the expansion of water supply and wastewater networks in Klaipeda” (The World Bank group, 2005, par. 3). This is one example of product substitutions corruption which is more common with companies. I believe the most important thing in this case is the poor people, not the corruption problems, but if we want to help the poor people we must find some solutions to this corruption. If we use the product substitutions for giving the products to the poor people, that means we will not find any solutions to this poverty in the world and we all are now looking for solutions to this crisis.
Second, at a higher level, corruption of some high employees negatively affects the work at the World Bank and the loan system. Some employees accept bribes from certain people to make easy loans for them which they are really not eligible for. In fact, many people and countries pay money by taxes to the World Bank to help the poverty in the world. But not all this money is used for poor people; we don't know where this big part of this money is used. According to World Bank Takes, “Nine staff members were found to have engaged in fraudulent or corrupt practices, and were terminated and barred from rehire. Three staff members found to have engaged in other forms of misconduct received other disciplinary action consistent with Bank rules and procedures” (The World Bank Group, 2005, par. 10). So if the employees keep accepting money from certain people and employees keep stealing money, this means the poor people are starving without any help. In fact, this is also big problem when the employees are stealing World Bank money. Some employees may think it is not such a big deal that they use a little money for their stuff. The human is greedy. Sometimes they can’t control their mind in front of a lot of money. But they have to keep in mind that money is just for poor countries. However, if the World Bank does not solve this problem, the poor people will have less to eat.
There is still so much poverty after many years of the World Bank’s existence, and that shows it’s failed in its mission to free the world from poverty. As we know the World Bank is working for a world free of poverty, but we are still wondering why there is still so much poverty in the world. Moreover, we are still wondering where all these millions of dollars went? We know every year the World Bank has millions of dollars to help fight poverty in the world, but we still do not see much change. There is also one case of corruption in the World Bank, which is fraud in contact performance. In this kind of corruption the World Bank has lost a big part of Bank’s money, which is very big problem in the Bank? Also it could affect the treasury secretary, and put him in a big problem for a long time. According to J. Finer, “Corruption can take many forms, but it is usually defined as the misuse of public office or money for private gain. In the 1980s and early 1990s, most academic literature on economic development argued that corruption could help "grease the wheels" of a fledgling economy. But after several studies showed that corruption impedes development, many foreign aid programs began advocating ‘zero tolerance’ toward corruption” (Global Policy Forum, 2003, par. 9). I think the World Bank is needed for helping poor countries but they did what they must not do. According to the article, the World Bank hasn’t accepted the facts yet, but definitely they lost trust after they were revealed. In my opinion, if the World Bank didn’t do such a fraud, this thing wouldn’t have become a big problem.
After this big description about the corruption problems in the World Bank, I would like to give some solutions and suggestions to the Word Bank administrations. First, more researchers and investigators from different countries governments should work hard, especially at the World Bank building, to look carefully into every poverty project. I think researchers just can make the World Bank open up its cost files and help poor people to have what they need in money and food. In fact, if this problem in the World Bank isn't solved by researchers, it means many poor people will lose their lives each day. But I feel researchers and investigators will make a big difference in the World Bank business and improve it. According to Corruption: How the World Bank fights Corruption, “The Bank today spends $10 million a year on investigations and sanctions, more than all other multilateral development banks combined” (The World Bank Group, 2005, Par. 5)This is a good step from the World Bank administration for fighting the corruption in the bank. However, $10 million a year, it’s such a big amount of money just used to protect the World Bank money. Moreover, according to Corruption: How the World Bank fights Corruption, “As of the end of June 2005, the Integrity Department had 244 open cases, and since 1999 has investigated and closed 2,500 cases of alleged fraud or corruption, such as theft, bid-rigging, bribes, kickbacks, collusion or coercion by bidders, fraud in contract performance, product substitutions, email or fax scams, and misuse of World Bank funds. As a result, the World Bank has sanctioned more than 330 companies and individuals. The INT team is comprised of over 50 professionals from a range of disciplines and a diversity of countries. It includes financial analysts, researchers, investigators, lawyers, former prosecutors, forensic accountants, and experienced operational Bank staff” (The World Bank Group, 2005, par. 13)
One of the World Bank suggestions is to impose sanctions, for anyone or any company that made any kind of corruption in the World Bank, so the other companies or people who are planning to steal from World Bank money will be afraid of there big imposed sanctions. Moreover, the World Bank starts to make a hotline for any corruption. According to Corruption: How the World Bank fights Corruption, “The Bank’s anti-corruption initiatives related to its own lending portfolio are spearheaded by the Department of Institutional Integrity (INT), an independent unit reporting to the President. INT investigates allegations of fraud and corruption in Bank financed projects, and allegations of staff misconduct, and then refers its findings to decision makers such as the Sanctions Committee for action. Together with PREM and WBI, INT also contributes to prevention by training staff to detect and deter fraud and corruption in Bank operations. The Bank maintains an international hotline (1-800-831-0463) for anyone to report incidents of corruption and reports also can be made to the INT team online” (The World Bank Group, 2005, par. 10). The last solution is change the bank loan system; because I think it has not really worked very well so far.
The further of the World Bank will be very grateful, if the World Bank look carefully at the solutions in this paper. According to J. Simpson, (2005) in the BBC interview, “Do you think that by the end of the year there can be any real progress on making trade fairer? I think there needs to be and I very much hope there will be. My sense is that a lot of real work has got to come together between now and Hong Kong to make that happen. But the opportunities that will come from opening up trade - and not just trade between developed countries and developing countries that is appropriately the subject of a lot of focus, but developing countries themselves have got to reduce the barriers to trade among themselves and to what we call inter-regional trade. Developing countries in Africa have often more barriers to trading between themselves than they do to trade with Europe” (The World Bank group, 2005, par. 8). The new president of the World Bank said in an interview with BBC news that he will stand against corruption in the Bank and will fight it. In fact I believe he will do very much improvement in the next few years.
Bush, J. (2005, March 27) Janet Bush: for all talk about making poverty history, the result is still genocide-by numbers. Independent on Sunday (London). Retrieved on 8/31/05 from Lexis Nexis.
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