Two U.S. Senators Order Anticorruption Probe for World Bank Projects

GAO study requested to help ensure better stewardship of $1 billion U.S. investment to fight global poverty

Washington, May 14, 2008 – Citing the importance of good stewardship of U.S. taxpayer dollars, Senators Dick Lugar (R, )and Evan Bayh (D, IN) are calling on the investigative arm of Congress to study whether the World Bank has taken adequate steps to combat corruption and effectively govern programs designed to fight global poverty.

Last year, Congress allocated $950 million to the World Bank’s International Development Association (IDA), the lending arm responsible for providing interest-free loans to the world’s poorest countries. For Fiscal Year 2009, the President has requested an increase to $1.27 billion.

Senators Lugar and Bayh are concerned that scarce resources are being misspent and enriching corrupt foreign regimes.

Today, they sent a letter to the Government Accountability Office (GAO) requesting a formal probe of the World Bank’s anticorruption efforts. “The use of public funds to help improve the lives of the world’s poor carries with it a responsibility to ensure that the Bank is effectively run and its efforts produce tangible results,” they wrote.

“We have been working to see that every development bank dollar reaches its intended beneficiary,” Senator Lugar said. “I chaired six Foreign Relations Committee hearings on corruption related to development bank financing and sponsored legislation, passed in 2005, to promote anti-corruption reforms at the World Bank and the other multilateral development banks. This GAO study is an important tool to determine whether the reforms are being implemented as Congress envisioned and to help us determine if additional measures are necessary.”

“World Bank officials are too willing to accept corruption as just another cost of doing business in certain countries. That has to stop,” Senator Bayh said. “This institution is tasked with the important mission of alleviating global poverty, and Congress must insist that American money allocated for this mission is well spent.”

In the letter, the senators note the findings of a recent review by a panel headed by former Federal Reserve Chairman Paul Volcker, which raised concerns that the Bank’s staff and management are not dealing with corruption in a forthright manner. This review noted resistance among Bank leadership to having allegations of corruption in the Bank’s projects investigated and “a tendency to shrink from confrontation with borrowing countries” on the issue of corruption.

The Lugar-Bayh study will examine whether the World Bank is:

  • establishing clear goals for projects financed by the International Development Association;
  • establishing clear criteria for measuring the success of IDA projects;
  • working effectively to reduce corruption within governments that receive IDA funding; and,
  • effectively implementing procedures for procurement of IDA goods and services.

Both Senator Lugar and Senator Bayh have chaired Senate hearings on World Bank anticorruption and governance. The letter they sent today to GAO Acting Comptroller Gene Dodaro was also signed by Senator Patrick Leahy (D-VT), chairman of the Senate Judiciary Committee. The call for a study follows an amendment Bayh offered in the Department of State, Foreign Operations, and Related Programs Appropriations Act of 2008, expressing the Senate’s desire to conduct such a study.

Read more …

Press Release on Senator Bayh’s Web Site

Press Release on Senator Lugar’s Web Site

Biographic Information: Senator Evan Bayh Bayh currently serves on five Senate Committees: Banking, Housing, and Urban Affairs, for which he is the Chairman of the Subcommittee on International Trade and Finance; Armed Services; the Select Committee on Intelligence; the Special Committee on Aging; and the Small Business Committee.

Biographic Information: Senator Richard Lugar The longest serving U.S. Senator in Indiana history, he is the Republican leader of the Foreign Relations Committee and a member and former chairman of the Agriculture, Nutrition and Forestry Committee. He was first elected to the U.S. Senate in 1976 and won a sixth term in 2006 with 87 percent of the vote, his fourth consecutive victory by a two-thirds majority.

Click here to download a copy of the Letter from Senators Lugar, Bayh, Leahey to GAO re Study of World Bank Anticorruption Efforts, May 14, 2008.

Source: Letter from Senators Lugar, Bayh, Leahey to GAO re Study of World Bank Anticorruption Efforts, May 14, 2008.

Letter from Senator Evan Bayh to WB President Robert Zoellick, Oct 25, 2007. On World Bank reform.

Independent Panel Report of the World Bank Group Department of Institutional Integrity, Sep 13, 2007 (Volker Panel Report)

Foreign Corrupt Practices Act (FCPA): News and Updates.