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In memory of Jim Wolfensohn and the fight against corruption

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Transparency Int'l

By Peter Eigen and Laurence Cockcroft

In the very early years of Transparency International – from 1993 to 1997 – it was an enormous challenge to get the world’s largest development institutions to take on corruption. Whilst a handful of bilateral agencies and foundations were supportive of addressing corruption the big development finance agencies hung back, reciting a mantra of non-interference on corruption issues, mainly because it would offend their member states whose companies were implementing large scale contracts which they financed. This logjam was broken on behalf of the World Bank by Jim Wolfensohn, its President from 1995 to 2003, who sadly passed away on 26 November 2020.

This did not happen overnight and the position Wolfensohn adopted, which took some courage amongst both member states of the World Bank and amongst senior staff, was the result of his own convictions and through contact with Peter Eigen shortly after he became President. A shared love of music helped this relationship and enabled Peter to introduce the concept of Transparency International to Wolfensohn in a meeting in Germany in December 1996. It led to a ‘hands-on’ Seminar with Transparency International leaders in Wolfensohn’s World Bank office in Washington in May 1997 and three months later Wolfensohn announced at the Bank’s Annual Meetings in Hong Kong that it would fight the "Cancer of Corruption". Recognising the unease in his audience he said:

Let’s face it: we need to deal with the cancer of corruption. Let me emphasise that the Bank Group will not tolerate corruption in the programmes which we support and we are taking steps to ensure that our own activities continue to meet the highest standards of probity.
Jim Wolfensohn Former President of World Bank

Needless to say, mainstreaming this into World Bank operating processes was not going to be easy. At that time only the US within the OECD had legislation which criminalised foreign bribery by its nationals, and most countries even allowed bribes to be tax deductible as business expenditure.

Although this was about to change as a result of the OECD Anti Bribery Convention (also signed in 1997) there was no clear path by which the World Bank could bring a legal action against a contractor who was found to have behaved corruptly. Even the otherwise rather strict Procurement Guidelines applicable to World Bank projects referred to “binding local court verdicts” as condition of World Bank remedies.

Wolfensohn established Task Forces for various sectors, including TI staff, to introduce the new anti-corruption policy. For instance, he supported a new recommendation of TI by which the World Bank would blacklist any contractors who could be found guilty of behaving corruptly and ‘debar’ them from future projects. Though it took some years to be effective by 2003, in a landmark case, it was sufficiently robust for the major Canadian engineering company, Acres, to be black listed for corruption on the Lesotho Highlands Water Project. The mechanism is alive today and is vested in the Integrity Vice-Presidency, which in 2020 blacklisted forty six companies and reviewed several hundred cases.

This was more than a new process specific to the World Bank. By the end of Wolfensohn’s term other key development finance institutions – the Asian Development Bank, the EBRD, the IADB and the AfDB – had not only agreed to institute a similar mechanism but also to de-bar any company on a fellow agency’s list. This process of ‘cross debarment’ was a breakthrough and has certainly contributed to an improvement in corporate behaviour in projects funded by these and other development agencies.

Meanwhile anti-corruption provisions were written into all World Bank projects and the governments who were implementing projects were held to a much higher standard than in previous years. Wolfensohn’s support for the issue extended to the work of the Bank’s Economic Development Institute – later the World Bank Institute – which embarked on a series of analyses of corruption as an impediment to development around the world. In a short time its work gave the Bank a key place amongst the best informed analysts of corruption, pioneering the phrase ‘state capture’ which has passed into common usage.

Finally, Wolfensohn’s Bank played an important role in developing in 2000 the UN Global Compact which eventually embraced the tenth Principle on fighting corruption. His commitment to this cause shows just how crucially important international collaboration is to the fight against corruption, and that a weakening of that level of collaboration would be fatal.

Transparency International has every reason to honour the memory of this great man.

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