World Bank muddled in corruption once more
1 October 2007
Whistleblowers have found evidence of large scale fraud in Armenia, but the World Bank's Institutional Integrity Department (INT) has deemed the case to be of only "medium priority," and is holding off inquiries into the allegations.
According to an article in The Observer, whistleblowers have found evidence of large scale fraud in a $35 million dollar project to improve the water supply in the Armenian capital Yerevan.
Bruce Tasker, a British engineer appointed by an Armenian parliamentary commission investigating the project, claims that the project's purpose shifted from repair of pipelines in order to improve household water supply, to installation of water meters after money had been distributed. Further, contractors have been profiting as much as $10 per water meter installed, with an average of 1.5 meters installed per customer. The aggregate corruption amounts to tens of millions of dollars, he says.
Tasker urged the World Bank to carry out an investigation of the project, but the Bank's Institutional Integrity Department (INT), its internal, anti-corruption unit charged with investigating corruption and fraud claims, has deemed the case to be of only "medium priority." As a result, it is holding off inquiries into allegations. The British Ambassador in Armenia has written to the institution urging it to take action.
The Government Accountability Project (GAP) says that this case would set an important precedent in identifying potential problems in the implementation of other World Bank projects, particularly in the former Soviet Union.
This case underlines the findings of the recent Volcker Panel Report which reviewed the performance of the INT. The Panel found that "...frictions in operating relationships, management issues, and failures to coordinate effective responses to investigative findings,” have impaired the potential value of INT’s work. Further, the panel said the World Bank needs to put more emphasis on prevention of corruption alongside investigation.
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