Banjul,The Gambia Journal
Senior officials at the World Bank have admitted that the firing of former Bush administration official Paul Wolfowitz as World Bank president was a scheme to block an unpopular anti-corruption campaign he had championed, wrote Kenneth R. Timmerman of Newsmax , citing a former World Bank official . Quoting former World Bank official Steve Berkman, Timmerman wrote on August 8th 2008, “The stuff about his girlfriend was all contrived, It was a mini-scandal people at the Bank used to nail him.”
Senior World Bank managers and board members “didn’t like this guy from the get-go,” Berkman said. “He was going counter-current to the World Bank bureaucracy.”
Berkman had just published an expose of corruption, “The World Bank and the Gods of Lending,” based on his 16-year experience auditing World Bank projects, particularly in Africa. The “gods of lending” in the title is a reference to the international bureaucrats who run the Bank, and believe “they can do no wrong,” Timmerman again quoted Berkman as writing. Berkman was also cited as wring that , “They have created the myth that they are at the ‘cutting edge’ of development, while they hide the appalling number of failures within the Bank’s portfolio — failures that enrich the government elites of the Third World while creating mounds of debt that cannot be repaid. It is this single truth that exposes the hypocrisy of the whole business: the Bank pretends it is lending for noble purposes, while the borrowers pretend they will put the money to good use.”
Instead, Berkman writes, World Bank funds are regularly “placed in the hands of officials with a history of looting national treasuries.” Before, I had read numerous critiques of the World Bank and its sister organization, the International Monetary Fund, IMF, on its neo-liberal policies, its-one-size-fit–all prescription, its clumsy bureaucracy and undemocratic making, but never for ills as low and base as the ones alleged by Mr. Berkman as portrayed by Timmerman. But somehow it was like I have heard this before but never really taken seriously. That many of the country reports written on he Gambia by IMF and world bank missions might have been influenced by corruption was to me unlikely. I took it was the naivety or perhaps ignorance, blind diplomatic respect for state authorities or over-schematic view of economic systems that might have laid behind the often flawed reports.
A standard background picture of the reports will often be formulated this way: ”Overall, growth has been robust over the past decade. Economic developments are encouraging. The real GDP growth recovered from a drought-induced decline in 2002, to average about 6 percent a year during 2003-2006. Foreign direct investment in 2003-2005 averaged more than 10 percent of GDP. The IMF has approved a new PRGF.” The above excerpt was extracted from 2006 country report on The Gambia. If you lived in the country at the time you would think the report was on an entirely different country. The country’s agriculture was in unmistakable decline, and the sub-sector of the one and only cash crop, groundnut, had been in disarray and for almost four years before 2006, no significant export of the crop had been done. By the middle of 2006 the re-export trade had been plunged in disarray and had declined to about half the volume of the previous year. But all the same I thought the IMF visiting staff had just erred, but not because they had been bribed with gifts, whisky and women.
But according to Timmerman, corruption is so rampant, it swallows a minimum of 10 percent of the more than $20 billion the Bank disperses every year, and probably as much as 25 percent to 35 percent of total lending, according to internal Bank estimates. He wrote further that as soon as Wolfowitz came in on June 1st 2005 as Bank president, he attempted to tackle corruption in World Bank projects. In July 2005, Wolfowitz suspended an $800 million loan to health sector projects in India because of allegations of corruption. “That was the beginning of his downfall,” Timmerman wrote, citing Berkman. Wolfowitz was responding to a 600-page internal World Bank report on the India loans, the product of a year-long effort by a 75-member team of investigators, many of whom interviewed suppliers and project managers in India . “What they found was rampant corruption in all five projects they investigated,” Berkman was quoted as saying.
The report found shell companies that were paid by the Bank for goods and services that were never delivered. They found tainted pharmaceuticals bought by the Bank and distributed to the public, as well as bribes and kickbacks being paid at the most senior levels of government.
But instead of attempting to rectify these problems, Bank management “went on the attack when somebody came to us with information,” Timmerma wrote a former World Bank official involved in the India corruption investigation had said in a separate interview. “For example, there was a doctor who came to us because the AIDS testing kits the Bank was buying were faulty and producing bad results. Rather than address the issue, the Bank staff issued a fierce denunciation of the doctor’s personal credibility and went on the offense” against him, the source was quoted as saying.
In another egregious example, Bank officials certified that a hospital built with Bank funds had achieved all the benchmark results. But when the investigators went to visit the project, all they found was a hole in the ground. At the time, India was the Bank’s largest customer. When Wolfowitz ordered the suspension of the health sector loans to India , senior Bank officials showed “no inclination to take appropriate steps to safeguard resources,” the former official who was involved with the India loan suspension said according to Timmerman. Instead, they practiced “denial, denunciation, and eventually collusion in the effort to stop any investigation.” The World Bank country director for India at the time, Mr. Michael Carter, was said to have told National Public Radio that the loan suspension took him by “complete surprise,” and that Wolfowitz’s approach to dealing with the corruption allegations in India was “seriously flawed.”
“The India example is particularly interesting because it refutes many of the objections that were commonly raised against the anti-corruption efforts,” Wolfowitz told Newsmax in response to questions about the loan suspension.
Wolfowitz said that his critics claimed that by holding up a follow-on loan until problems in an earlier loan program had been fixed, he was “depriving the poor of needed health care.” They also accused him of basing the loan suspension on U.S. political considerations. India was indeed a close strategic partner of the U.S. and a great example of a successfully developing democracy, Wolfowitz said. “But that didn’t make it right to turn a blind eye to corruption in World Bank “health” loans that were actually making people sick.”
India was not the only country whose World Bank-funded projects were rife with corruption. “There was a pattern,” another former World Bank official told Newsmax. “It was Kenya , Uzbekistan , Chad , and others.” During his tenure, Wolfowitz suspended loans to these countries, as well as other projects in Bangladesh , Yemen , Congo and Argentina , because of allegations of widespread corruption.
Because his hands were seen as soiled with the blood of Iraqis the appointment of Wolfowitz angered the NGO community as well as World Bank employees, Mr. Timmerman noted. Some 1650 non-governmental organizations voiced “strong opposition” to his nomination, while a survey of World Bank staff conducted in April 2005, shortly before the Board approved his nomination, found that nearly 90% were opposed to his appointment.
Timmerman wrote that in the book on the World Bank, Berkman provides dozens of examples where high-minded development projects turn into a “feeding frenzy” for “rent-seeking” government officials and their cronies in the Third World .
