14 September 2007
A review of the World Bank's Department of Institutional Integrity and its Governance and Anti-corruption strategy finds that weak management, employee resistance and internal distrust is contributing to the Bank's ineffectiveness in combating corruption in its operations.
The Independent Review Panel, created to review the World Bank's the Department of Institutional Integrity (INT), released its long awaited report today. The panel, headed by Paul A. Volcker, former chairman of the U.S. Federal Reserve, found that INT faces "serious operational issues and severe strains in relations with some Operations units," and this has at times contributed "to counterproductive relations between the Bank and borrowers and funding partners."
In an interview with the New York Times, Volcker noted that, "By far the most important thing is getting the entire bank on board with the importance of an anti-corruption effort. This goes against decades of grain in the other direction. There’s been outright conflict in the bank as to whether to have an anti-corruption function.”
The INT is the Bank's internal, anti-corruption unit responsible for investigating allegations of fraud and corruption in World Bank Group operations as well as allegations of staff misconduct. INT reports its findings to senior management, who in turn decide what measures should be taken.
The official report comes a few days after Government Accountability Project (GAP) released a report on its review of the INT. Unlike the Volcker review, the GAP found that the INT is "inefficient, politically biased and reluctant to cooperate with audits."
However, the Volcker report does reach some of the same conclusions as the GAP report, most significantly that the dual role held by Suzanne Folsom, as both head of the INT and Counselor to the Bank president, is a conflict of interest. The Independent Review Panel recommends that "the head of INT should have the rank of Vice President, and the line of direct responsibility to the President should be maintained. The current role as Counselor to the President should be dropped in the interest of clarifying the purpose and independence of the INT function."
Other key recommendations include:
- creation of a small external Advisory Oversight Board of experts to monitor and advise Bank management about INT’s practices and performance;
- the need for broader disclosure of INT’s investigative findings, without disclosing information and names that must be kept confidential;
- developing clear procedures to ensure that the Bank will take and coordinate appropriate action upon INT findings of fraud and corruption;
- encourage prevention of fraud and corruption rather than only investigation;
- ensuring more diversity in INT staff, consistent with the need to recruit investigators of the highest technical competence.
- how INT should handle investigations of misconduct by Bank staff.
World Bank President, Robert Zoellick welcomed the report saying that it made "clear the serious challenges ahead in overcoming the cancer of corruption in operations supported by the Bank." Though he said that the Panel has made "constructive recommendations," Zoellick has requested that the Bank establish an internal working group from across the institution to consider the panel’s recommendations before acting. The World Bank Group has also made several proposals to improve INT’s effectiveness. The Bank is now soliciting public comments on the report and its proposals for improving the effectiveness of the INT until October 31, 2007, which will be considered by the working group.
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