Outside editorial: Yet another fight against corruption

Posted: Tuesday, September 18, 2007

Paul D. Wolfowitz is long gone as president of the World Bank, but the job of restoring a sense of mission and morale at the venerable poverty-fighting organization goes on. No doubt many of Wolfowitz's former enemies at the bank saw his ouster (over accusations that he had shown favoritism to his girlfriend) as a general vindication of their traditional ways of doing business, which Wolfowitz had aggressively, and, to some extent, ham-handedly, attacked. But a piece of leftover business from the Wolfowitz era has just been wrapped up, in a way that demonstrates pretty clearly that, even if Wolfowitz was miscast as the manager of 10,000 entrenched World Bank staffers, he had a point about the institution's lax attitude toward the issue of corruption.

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A five-month investigation led by former Federal Reserve chairman Paul A. Volcker has culminated in a report, issued Thursday, on the World Bank's controversial anti-corruption agency, the Institutional Integrity Department. The INT, as it is known, has been the focus of intense criticism from bank insiders who regard the fight against corruption as a sideshow in the struggle to reduce poverty and who accuse the current head of the INT, Suzanne Rich Folsom, of being Wolfowitz's hatchet woman, even though she was brought to the bank by his predecessor, Clinton appointee James D. Wolfensohn. More specific accusations included alleged excessive INT secrecy; alleged inconsistencies in how the INT treated similar cases from different countries; and a conflict of interest stemming from Folsom's holding the twin titles of INT director and counselor to the president.

While it recommended some tweaks in the INT's practices and procedures, Volcker's panel essentially concluded that, under Folsom, the office is doing a vitally important job reasonably well. It recommended that she be promoted to vice president, with a direct line to the president, even as she sheds the counselor label. Indeed, the Volcker report reserved its toughest language for the bank bureaucracy itself. "For much of the Bank's history, the impact of corruption on development generally, and on the Bank's lending operations in particular, was not faced squarely. There was then, and remains now, resistance among important parts of the Bank staff and some of its leadership to the work of INT."

It is unconscionable that anyone on the staff of an international institution devoted to bettering the lot of the poor should "resist" - Volcker's word - the work of an office that has no powers of subpoena or arrest but seeks mainly to expose corrupt entities and ban them from working with the bank. It is especially so now that the bank's own research shows that good "governance" is a key factor in development. Robert B. Zoellick, the bank's new president, gets this. He declared that the Volcker report was "excellent" and that "stealing from the poor is not acceptable." Nothing Zoellick does during his tenure will be more important than converting those welcome words into action.

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