Hold the World Bank to Account

By Christopher B. Burnham, an acting under secretary of state in the George W. Bush administration.. He was under secretary general for management of the United Nations from 2005 to 2006 (THE NEW YORK TIMES, 21/05/07):

THE resignation of Paul D. Wolfowitz last week as president of the World Bank may have solved one problem, but it’s possible that it has created another.

When Mr. Wolfowitz took over the bank in 2005, he preached the anti-corruption gospel with a zeal that alarmed many career bank staff members and more than a few of its 185 member countries. With his departure, it is eminently possible that his laser-like focus on corruption will go with him.

In its first 50 years, the bank lent hundreds of billions of dollars to countries without ever publicly conceding or addressing the reality that some of the money ended up in the pockets of corrupt officials and companies. It is impossible to put a figure on the amount, but there is no question that funds went missing.

It took the leadership of Mr. Wolfowitz’s predecessor, James Wolfensohn, to declare that corruption was a cancer and to prod the change-averse bank into taking action.

I became under secretary general for management at the United Nations in 2005, just a few days before Mr. Wolfowitz was to take over the bank. We both admired Mr. Wolfensohn’s anti-corruption efforts, but we also knew that there was a lot more to be done at our respective institutions.

In my case, I was about to wade into the scandal surrounding the oil-for-food program. That program, which started as the largest and most ambitious humanitarian project ever undertaken by the United Nations, sadly ended as the largest single account of corruption and fraud in international development assistance.

In the wake of the oil-for-food affair, and a subsequent scandal in its procurement office, the United Nations quickly embarked on a number of reforms, including introducing powerful whistleblower-protection policies, an ethics office and new accounting and disclosure standards.

These were important advances. New reforms proposed by Secretary General Kofi Annan and his successor, Ban Ki-moon, await approval from the General Assembly. Why hasn’t more been done? Claims of politicization — a common excuse for inaction — have prevented the organization from making all the changes it should.

My fear is that a reform agenda at the World Bank, absent Mr. Wolfowitz, faces a similar fate.

At the bank, Mr. Wolfowitz met with early resistance to his corruption fight, largely out of a similar suspicion of political motives. When he gave the bank’s marginalized investigations unit new, stronger leadership and a bigger budget, his actions were met with skepticism and accusations of politicization. His most heretical move — to slow lending in a lending institution — was greeted with further dismay. Perhaps Mr. Wolfowitz could have been more diplomatic in his approach. But the goal of trying to make sure the money goes where it’s supposed to go is the right and ethical one.

If it intends to continue to have international legitimacy, a global development institution like the World Bank — which depends in part on donor contributions and therefore the faith of governments and taxpayers — needs to carry on with strong executive leadership on anti-corruption measures. This means effective administration and controls, a pervasive culture of ethics inside and out and sufficient financing and staffing levels for oversight. To lose this would be a death knell for the bank’s mission.

One of the key reasons the oil-for-food scandal occurred was because the investigations division of the United Nations’ oversight office was undermined in the past by pathetic management and lack of staff. This is a mistake the World Bank needs to avoid. A rigorous independent investigations office is critical.

As Mr. Wolfowitz leaves the bank, every initiative he championed will be in danger. His fall has the elements of classical tragedy. Yet what will really be tragic is if the bank’s board allows any retrenchment or retreat by whomever takes Mr. Wolfowitz’s place at the head of the table.