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World Bank Calls in Fraud Team

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By Martin Kettle

The Guardian
July 17, 1998
The head of the World Bank has hired a team of investigators to examine allegations of corruption and embezzlement against bank officials in Washington. James Wolfensohn has confirmed that he has established a special internal fraud team to look into the allegations, and that accountants Price Waterhouse are among three outside teams now combing some of the bank's books.

Among the projects under scrutiny are World Bank-funded schemes in Russia, Japan and Indonesia, countries at the centre of the international financial crisis.
Two unnamed individuals have been notified that they are under suspicion. A third, a former World Bank official named Fritz Rodriguez, is being sued by the bank in connection with a water utility project in Algeria.

The Australian-born Mr Wolfensohn has built a reputation as a scourge of corrupt dealings since he became the bank's president in 1995. He said this week the inquiries were because "if the bank were going to campaign against corruption in our borrowing countries, we had to be absolutely certain that we held ourselves to the highest standards on the inside".

The World Bank is an agency of the United Nations which lends money to governments and to private bodies for development projects. It gets its money from loans from more than 180 UN member states and by borrowing on the money markets. Its current annual spending totals $25 billion (£15 billion).

In a statement Mr Wolfensohn said: "While I have no reason to believe there is a widespread problem in the bank, even one case is one too many." Law suits could result from the investigations, he said.
"The question is, 'Are we clean?' and it's not clear," said the bank's vice-president for external affairs, Mark Malloch Brown. "There are a number of ongoing investigations where there is alarming information on the face of it and it needs full investigation." The bank had received tip-offs about corruption from its own employees and from government officials in countries with bank-funded projects, Mr Malloch Brown said.

The allegations come as the Republican majority in the United States Congress is refusing to authorise increased payments to the bank and its sister International Monetary Fund unless President Clinton stipulates the money will not go to countries with liberal abortion laws.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.