Sunday, September 16, 2007

Volcker Report on the World Bank's Anti-Corruption Unit Released

Source: Financial Times: Volcker says World Bank lax on graft; Washington Post: World Bank Probers Need PR Help

On September 13, the Independent Panel led by Paul Volcker released its report on the Department of Institutional Integrity at the World Bank. The Panel had investigated the Department since February under the auspices of the former Bank president Paul Wolfowitz. Volcker is no stranger to such work; previously, he had investigated the United Nations Oil-for-Food Program in Iraq.

The Volcker report proposed three changes for the Department of Institutional Integrity. First, the report suggested that the Department relinquish its oversight of minor indiscretions committed by the Bank staff. Second, the report stressed the importance of the Department’s independence from the Bank president by advising that the Department head receive the rank of a Bank vice president, rather than a counselor to the president. Third, the report recommended an independent, external review of the Department, possibly by three to five individuals voicing the interests of Europe, Africa, Asia, and Latin America.

On the day before the report’s release, Volcker noted that the Department of Institutional Integrity appeared isolated from other Departments at the Bank. He suggested that this might be the result of the Bank and its top donors not vigorously pursuing an anti-corruption agenda.

While the current Bank president Robert Zoellick welcomed the Volcker report, he has made it clear that he will not act on any of its recommendations until the Bank’s internal investigation of the Department wraps up in 45 days.

More information on the Independent Panel and the full text of the Volcker report are available here.

Discussion:

How will the changes proposed by the Volcker Report affect the Bank’s borrowers in their interactions with the Bank?

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