A key US senator, aiming to stamp out corruption in international development projects, on Thursday introduced legislation that would tie multilateral development bank reforms to 3,7 billion US dollar in new aid, the World Bank press review reported Friday.
The bill proposed by Republican Richard Lugar, chairman of the Senate Foreign Relations Committee, encourages independent auditing and transparency and would set up a trust fund to help poor countries combat corruption on their own.
– Far too often, projects intended to boost economic development are derailed by corruption, and the poor suffer, unable to realize projected benefits in quality health care, clean water and education, Lugar said. It was unclear how quickly the bill would move forward, but initially it would be discussed in Lugars committee.
Lugar has conducted a long investigation into allegations of corruption in projects funded by the multilateral banks – the World Bank, the African Development Bank, the Inter-American Bank, the Asian Development Bank and the European Bank for Reconstruction and Development.
Since receiving information about alleged corruption from various sources in 2003, Lugar and his aides have visited overseas projects, held public hearings and privately interviewed bank employees, non-profit groups and academics to examine the banks operations.
The legislation says “significant multilateral development bank funding has been lost to corruption” and while the banks were taking action to address this problem, “additional measures need to be carried out.”
The United States cannot dictate to the banks, but as the banks dominant shareholder, it has considerable clout in what goes on there. The legislation takes the form of instructions to the US representative on the banks boards.
The legislation aims to have the World Bank establish a pilot program to assist poor countries in investigating and prosecution fraud and corruption related to bank loans and grants, with the idea that if successful, the program later could be expanded to other banks.
It would promote public accountability by having the US executive director of each bank publicly explain his votes on the US treasury website and disclose statements on controversial projects. The bill would have the banks distribute funding documents to the public, require mandatory financial disclosure of employees and set up independent auditing procedures.
In addition, the legislation proposes changes in what has been called the “pressure to lend” incentive structure and aims to direct loans on the basis of “rigorous scientific evidence” rather than on the “easiest loan to rush in the door.” Strict reporting requirements to keep track of the reforms are also called for.
The legislation would provide 3,7 billion dollar in US funding to three of the banks: 2,85 billion for the World Bank; 407 million for the African Development Bank; and 461 million to the Asian Development Bank.
The senator, who has chaired several hearings on corruption at multilateral development banks called for other donor countries to join the United States in pressing for greater transparency and accountability at the banks.
Kilde: www.worldbank.org
