A Question of Integrity – The World Bank’s Fight Against Corruption

“You don’t always need a million people to win a war”

You’ve been the Integrity Vice President of the World Bank Group since June 2008. Looking back at your World Bank career to date, is there anything you would have done differently?

You know, I hope it doesn’t sound arrogant when I say “nothing”. Maybe we’ve just been lucky that we had an excellent script and a good strategy. The environment was conducive for doing the things we wanted to do, accelerating initiatives, putting new things in place, and working with others. And the time was right for the Bank. The appetite was there, the political will was there, and the world was also looking at what we were going to do. So I wouldn’t change anything.

And how does the way forward look?

There are two things I think we should do at the Bank as we move forward. The first – and I hear this a lot when I speak to people, including when I was at IACA – is to really develop a greater ground presence and look at whether we are making maximum impact in the way we operate. Second, I like Einstein’s thinking that intellectuals solve problems and geniuses prevent them. When I look at some of the patterns and schemes we’ve encountered, one often asks “couldn’t we have anticipated this?” so that any top team going forward could write some precautions and checklists into these mega-projects to prevent fraud and corruption.

Has the nature of corruption in development projects changed since 2008? What patterns and trends do you see, and what lessons has the World Bank learned?

Yes, it has been evolving. Corruption in my view is like an amoeba, an organism that’s capable of changing its shape. What we’ve seen in the last year is that the misconduct we look into is more intercontinental, more multijurisdictional. It’s more crossfunctional, both across countries and contracts. The sectors where we’ve opened most cases in the last two to three years are transport, health, agriculture, and water. This says, I think, that a lot of corruption is tied up with infrastructure, and it’s clearly an area that will require additional due diligence.

The preventive services unit here at the World Bank analyzed about 300 investigations and 3,600 complaints about corruption between 2009 and 2014. We learned three things in particular. First, the corruption equation is two sides of the same coin, with equal roles for the demand and supply side. This is something that the public and the private sectors need to look at. Second, we found that 63% of the 3,600 complaints highlighted the critical role of government officials. Third, we found that fraud during the project implementation phase can often fund corruption.

The World Bank has reached several settlements in which companies admit wrongdoing in return for shorter debarment periods. Is the Bank’s current debarment practice enough of a deterrent to companies out there?

We’ve entered into 53 settlements over the past seven years. And we’ve had debarments coming out of settlements in cases like Siemens, Alstom, Oxford University Press, and SNC Lavalin. This demonstrates the Bank’s ability to get to the bottom of things, and hold its own in dealing with complex issues.

In my view, settlement achieves two objectives. First, it serves as a deterrent. When I speak to people in the private sector, one of the things they ask the most is “what is the risk of a debarment?” I still maintain that this is one of the best antidotes to corruption. Second, companies start adjusting the way they contract, anticipate risk, and take precautions in a way that things actually get better.

When I came here, some of these cases were languishing in the system and the world was waiting to move forward. I think settlement is a pragmatic way of solving something that’s beneficial to both sides and we can still all go home and sleep at night. And there are cases where the settlement was as equitable and imposing and effective as the outcome of litigation. So I have no reservations about it. I think it’s one of the best things we could have done.

You have often said that the private sector could be a huge force for good in the fight against corruption. What should be the top priority for corporate CEOs here? Is self-reporting the key to success?

It’s about more than just self-reporting, compliance, monitoring, due diligence, and the like. Many companies that we’ve investigated had the best ethics and compliance charts on the wall, but then we got to a can of worms and said “what happened here?”

I think we need to see more activist CEOs. These are captains of industry bringing about transformational change in the fight against corruption by making a philosophical argument to capture the minds of the business community. It involves conveying to intelligent people that clean business makes both economic and financial sense. I think if you look at the things
happening in the private sector in the last five years in the aftermath of the financial crisis, it’s clearly something that they need to address head on. And we’re working with them on many fronts and are obviously happy to assist, cajole, and convene as much as we can.

The World Bank’s investigations often involve tracing flows of money across borders. What are the biggest challenges when dealing with multinational investigations? How can your office help to make mutual legal assistance (MLA ) more efficient?

It’s an interesting question. In 2009, we created the International Corruption Hunters Alliance, which brings together about 380 senior officials from regulatory authorities in 130 countries. We advocate new ways of thinking as we target corrupt entities, and we do a lot to develop cutting-edge investigative solutions.

But when it comes to transnational, multinational crime, the architecture of financial flows, and illegal traffic, I think we need another script to get ahead of the game. Criminal organizations can move money at the push of a button from here to Hong Kong to the Cayman Islands to Nigeria and vice versa. And we’re still locked in an MLA system that was designed between 1960 and 2003.

There have been advances by the US authorities, the UN, and the OECD. That’s great, but I think it’s time we start defining something new and find a new energy.

Given the large size of the World Bank’s loan portfolio, and the potential corruption risks to which this is exposed, how can the Integrity Vice Presidency (INT) deploy its relatively limited resources most effectively?

It’s always a balancing act. The results we have had at the Bank in the last seven years are largely because the people I work with here at INT have really been punching above their weight. And I have every reason to believe they’ll continue to do so. I think it helped that we created seven divisions. One does analysis, a second one does large investigations, and a third deals with all legal issues, like a litigation unit. We also have our own version of internal affairs, about ten people who investigate serious fraud and corruption involving Bank staff, because we have 15,000 people and we have to keep our house clean.

Fifth, we have the preventive services unit, a group of very smart systems thinkers that works with the operational arm of the Bank to try and safeguard our projects. We also have a forensic services unit to help deal with investigations that are rich in transactions and paper. Finally, the compliance office also falls within INT.

So with a bit of design and a bit of fortitude we have several disciplines fairly well synchronized and led by people who are effective in what they do. I subscribe to the view that you don’t always need a million people to win a war. Everyone has to economize and live within their means these days. I think in that environment we’re doing quite well.

During your most recent visit to IACA in July 2015, you met the participants from our fifth annual Summer Academy. What did you learn from your session with them?

The fact that you have that programme and were able to convene such a large group of people from around the world was impressive, and I found it quite exhilarating. I found the engagement and the intellectual traffic in the room quite thought-provoking. That hour and a half there, as exciting as it was, tired me out. It made me intellectually and emotionally drained.

What struck me clearly was a generational shift. I thought that there was much greater awareness among the group than when I was at a similar stage of development. The nice thing is that I left the session with hope for the future. If we could take that group and replicate similar-minded people around the world, we can make this world a better place. I think

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