Financial Daily
from THE HINDU group of publications

Wednesday, April 25, 2001



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B. S. Raghavan

CORRUPTION never fails to grip the mind. Its hold on public imagination is such that even the 2000-year-old Arthashastra of Chanakya has referred to its pervasive, penetrating quality. The first thing that Mr James Wolfensohn did after assuming charge as President of the World Bank in 1995, was to build its eradication into the scheme of the Bank's priorities.

In his address to the Ninth International Anti-Corruption Conference held in October 1999 in Durban, South Africa, after declaring how for the Bank, there was nothing more important than the issue of corruption, he explained the rationale thus: ``At the core of the incidence of poverty is the issue of equity. And at the core of the issue of equity is the issue of corruption''. Since the Bank is committed to the eradication of poverty, it stands to reason that it should give top priority to the task of f ighting the cancer of corruption.

The Bank's anti-corruption effort is founded on four immutable postulates: In all its forms, it is a crippling tax on the poor, diverting public services from those who need them most, while strangling private sector growth; it undermines public support for development aid by creating a false perception that all assistance is tainted by corruption; it scares away foreign investors; and the Bank has ``a fiduciary duty'' to member-countries to ensure that financial support reaches the poor without being s iphoned off by the corrupt along the way.

An Oversight Committee on Fraud and Corruption has been functioning in the Bank since May 1998 to investigate allegations of corruption involving the Bank staff. Besides, the Business Ethics and Integrity Department was strengthened and an international hotline set up to receive, record and pursue information about corrupt practices within the Bank or in connection with Bank-financed contracts for various projects. In the matter of grant of aid or credit, it assesses the prevalence of corruption in coun tries receiving aid or loan and the standards of financial management.

To free procurement process from corruption, the Bank enforces anti-corruption guidelines which are now part of its drive. As a result, upto June 2000, 48 firms and individuals have been permanently blacklisted, and banned from participation in Bank cont racts and procurement. It is not India's Chief Vigilance Commissioner, Mr N. Vittal, but the World Bank President, Mr Wolfensohn, who was the first to publish in a special section of its external web page the names of firms and individuals found to have committed some form of fraud and corruption.

Corruption has been figuring in all gatherings organised by IMF-World Bank and a hot topic in other international forums, such as meetings of G-7. Adoption of the strategy for combating it is one of the items of the agenda before 34 Presidents attending the meeting of the Summit of the Americas held in Quebec City on April 20-22. For, to quote the Bank's note on the subject: ``The first step in the fight against corruption is to win over high-level political support, without which an anti-corruption cam paign is unlikely to succeed.''

This is what is lacking in most countries. While paying lip service, governments everywhere connive at it when they actually encounter it in the political and governing classes. How else does one explain the stalling of the Lok Pal Bill by all the Govern ments, or its acrobatics of the Vajpayee Government over the follow-up of Tehelka revelations?

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