World Bank member countries from East and West turned up the heat yesterday on president Paul Wolfowitz over his controversial anti-corruption policy. The bank was lambasted by Indonesia for acting as a “preacher and not a partner” on tackling corruption, and by France for threatening to withdraw from lending as a way of coercing governments into making governance reforms.
The strongest onslaught came from Bank of Indonesia governor Mulyani Indrawati who told Wolfowitz during the plenary meeting of governors, “in Indonesia we need no convincing that good governance and the fight against corruption are central to achieving our goals. We’ve got a lot of attention for the large numbers of high-level corruptors that we have prosecuted.
“We are tackling the incentives and the opportunities to engage in corruption by introducing new systems to manage public funds, reduce burdensome regulations and build public-private partnerships based on transparent competition. And we want to address the real incentives that shape the behaviour of our civil servants.”
Indrawati challenged Wolfowitz to “back up your words with real financial support when we need it. Governments that are trying to undertake difficult governance reforms are fighting all sorts of interests. Financial assistance can make a difference but only when it comes at the right time. The World Bank needs to stay engaged financially with countries to make a difference, even in the most difficult cases.”
The World Bank recently asked the Indonesian government to pay back $4.7 million in loans after an internal investigation found that a contractor allegedly paid more than $300,000 in kickbacks. Indrawati reacted sharply: “If you want us to be open about corruption, the World Bank needs to be more open with us about your own corruption investigations.
“ When corruption is found in Bank-financed projects, let us use this as an opportunity to target the systems that give rise to corruption. To do this, we need to work together on joint investigations and solutions. We need to work together on asset tracing and asset recovery.”
The politics of development are “messy, especially in newly democratic societies like Indonesia,” Indrawati declared. “Please assess our commitment to reform in a consistent and transparent manner. Don’t tie support to narrowly defined conditions from an ideal plan.”
Bank of France governor Christian Noyer also chastised Wolfowitz on the corruption issue. “The Bank must combat corruption more effectively, guided by a clear, consistent strategy in support of development,” he said.”The World Bank is first and foremost a development bank whose priority must be to reduce poverty and promote growth in the developing countries. It is designed specifically to intervene in difficult circumstances and yet despite this it must never diminish its involvement.”