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Friday, September 15, 2006Our web site is www.OdiousDebts.org
Wolfowitz to push anti-corruption program at World Bank meeting by Odious Debts Online, September 15, 2006 World Bank president Paul Wolfowitz said he expects the Bank's 184 member countries to approve his anti-corruption framework at the annual meeting of the World Bank and International Monetary Fund this September in Singapore. Aimed at curbing corruption in developing countries and in Bank-funded projects, the World Bank campaign, entitled Strengthening Bank group engagement on governance and anti-corruption, is part of Mr. Wolfowitz's ongoing drive to push the fight against graft to the center of the Bank's global development work. At the centerpiece of the Bank's anti-corruption strategy is a new Voluntary Disclosure Program (VDP), announced last month. Under the program, firms, NGOs or individuals who work as contractors on Bank projects are encouraged to perform their own internal investigations and report their corrupt acts regarding Bank projects for the last five years, as well as pledge to follow the rules on future projects. Although they are then subject to a three-year monitoring program managed by the Bank's Department of Institutional Integrity, participants secure confidentiality in exchange and the right to continue bidding on bank-funded projects. The pardon, however, is not available to anyone already under active investigation by the Bank and once firms come on board with the program, any deviation from the VDP's non-negotiable contract renders them ineligible for Bank work for 10 years. Concerns that the Bank's framework would tie development aid to anti-corruption reforms were rejected by Mr. Wolfowitz, who argued that the two issues complemented one another. "Our priority is development," Mr. Wolfowitz said, adding that donor countries also needed reassurance that the Bank was looking after their money. Meanwhile, reaction to the Bank's new framework amongst civil society groups have varied widely, reports IFI watchdog, the Bretton Woods Project: Huguette Labelle, chair of NGO Transparency International, said that "the more tools we have like the VDP, the more we will be able to reduce corruption in a substantial way." Patricia Adams of NGO Probe International fears that the program "immunises bribers from debarment, allows the Bank to cover-up its own negligence or complicity, and undermines the administration of justice in countries where it is a criminal offence to bribe a foreign official." If the program protects the Bank from odious debt challenges: "This is bad for developing country citizens and taxpayers, and the rule of law." The Bretton Woods' report highlights the Bank program's conciliatory tone and notes the Bank's admissions that there are "no one-size fits all reforms," and that "modesty is warranted as we embark on a strengthened approach." Ms. Adams believes the new framework amounts to "a lot of rhetoric and arm-waving, perhaps to divert attention from the single most effective anti-corruption measure in its arsenal which is to audit all of its existing loans to determine which funds have been used corruptly, get the money back, and debar the guilty parties." Writing about the landmark Lesotho corruption trials in southern Africa, which resulted in the prosecution of corrupt officials and bribe-paying corporations involved in the World Bank-funded Lesotho Highlands Water Project – Africa's largest infrastructure scheme – Hennie van Vuuren, the head of the corruption and governance program at the Institute for Security Studies in Cape Town, South Africa, points out that the World Bank has 'consistently erred toward caution' when it comes to graft: "Despite promises as far back as a 1999 closed-door meeting that it would provide financial support to the Lesotho prosecutors – no assistance has been forthcoming leaving a poor state to foot the multi-million dollar legal bill. Equally the bank was slow in applying its policy to exclude corrupt companies from future World Bank contracts, eventually debarring the Canadian multinational Acres in March 2004 for three years. This came over thirty months after an internal Bank probe concluded that Acres had paid for influence – reportedly allowing the company to commence big-ticket Bank funded projects in Uganda, Palestine and Sri Lanka in the interim." According to van Vuuren, it is 'precisely' the issues of prosecution and debarment that the Bank needs to pay more attention to in its new draft strategy. The Lesotho case, said van Vuuren, makes clear the need for support to be made available quickly in the form of both money and technical assistance to the investigation and prosecution of corruption in Bank related projects. Van Vuuren also highlights the lack of specificity in the Bank's strategy on how international financial institutions should co-ordinate their efforts regarding sanctions, as well as the need for fast-tracking the inclusion of corrupt corporations and individuals on the Bank's debarment list: "The World Bank, and the home countries of the corporations implicated in corruption in the Lesotho Highlands Water Scheme have many reasons to be shame-faced for the lack of support that Lesotho has been shown in its tenacious efforts to tackle corruption," says Van Vuuren. "At the very least the epitaph on the corruption and bribery trials needs to read that the conduct of international finance institutions and corporations in Lesotho must not be allowed to be repeated over and again elsewhere. It is time the world listens to Lesotho!" Meanwhile, Steve Berkman, a former Bank investigator, who saw "all the big and small corruption" in World Bank-funded projects, argues that the often cited figure of Bank funds lost to graft – estimated at $100 billion over the past 60 years – is conservative. After reviewing an educational project in Nigeria for the UN agency watchdog Global Policy Forum, Berkman reported that, "We paid $2,200 for 18 cups of tea. The bank did nothing." Berkman places the percentage of embezzled Bank funds at between five and 25 percent and calculates that between about $27.5 billion and $137.5 billion has been lost to corruption overall (the World Bank loans $20 billion a year). In an opinion piece for Nigeria's Daily Sun, Cudjoe Kpor notes that some of the Bank's loans "were wasted as 'odious debts'" to corrupt military dictators who embezzled funds, salted them away into foreign bank accounts or diverted them into buying military weapons "to suppress their restive populations." Cudjoe also acknowledges that civil servants' low salaries also play a part in the theft of Bank funds by public officials struggling to make ends meet. Glen Ware, a former investigator with Global Policy Forum, said the GPF's internal investigation unit had found "a recurring pattern of bribery, kickbacks, front companies (and) shell companies" owned by public servants to which World Bank contracts were awarded fraudulently. Adds Cudjoe, some dicators would "fall easily without the buffer of corrupt funds." Cudjoe argues that "whether or not the loans are used judiciously or stolen," taxpayers are left on the hook to repay debts with money they could put to more beneficial use. Water project trial targets Italian giant by Carmel Rickard, Business Day, September 4, 2006 Impregilo, the last remaining company to be charged in the landmark Lesotho corruption trials and one of the world's largest construction companies, was charged on Sept. 4 with five counts of bribery involving millions of rands in connection with the Lesotho Highlands Water Project. According to the charge sheet, in October 1990 an employee of the old Impregilo (before it merged with a company also named Impregilo and Cogefar-Impresit Costruzioni Generali in 1994), who stayed on after the merger to work for the new company, made a "consultancy agreement" with Jacobus du Plooy, a South African listed as a witness for the prosecution. The prosecution claims this agreement was a bribery arrangement and argues that the Lesotho project's former chief executive, Masupha Sole, had already met the managing director of the old Impregilo in London, together with Du Plooy, acting as the go-between. Sole was to ensure that contracts were awarded to the company and would be handsomely rewarded in return. The prosecution says that, as a result of this "agreement," Impregilo paid a $1 million bribe shared by Du Plooy and Sole. The money was paid into Du Plooy's Swiss bank account and half was then paid to Sole. The charge sheet says that in his capacity as chief executive of the project, Sole was to use his influence to help Impregilo and would be paid only if it won contracts it wanted. Sole supplied an official of Impregilo with copies of tenders submitted by other companies for contracts that Impregilo wanted to win. Sole further kept his side of the agreement by asking the Lesotho Highlands Development Agency Board to award the contract to Impregilo. The prosecution says that even at the time the alleged bribery agreements were concluded, Cogefar, the company that took over Impregilo, must already have known what was happening. Cogefar had a one-third share in the old Impregilo and it placed its own directors on the board. Cogefar was in turn controlled by Fiat, and between them these two companies had "effective control of the old Impregilo." Because of staff common to the organisations, Cogefar "knew what (the old Impregilo) was doing," says the prosecution. A number of other allegations are made to substantiate the claim that Cogefar and the "new" Impregilo must have been aware of what was going on in relation to bribery and yet "recklessly associated itself" with these acts. After the merger, the new company tried to cover up the agreement with Sole and the payments made to him. This they did in a number of ways, says the prosecution, including trying to prevent the authorities in Lesotho from obtaining the Swiss bank records which would have shown the payments made to Sole. Although the company has not yet been asked to plead, it has always maintained in press statements that it was not guilty. The case is of the utmost importance for Impregilo because it is concerned to defend its reputation in connection with a massive project in Europe – the building of the world's longest single-span suspension bridge. www.businessday.co.za/articles/frontpage.aspx?ID=BD4A264169 Bring back Sh74 billion: Change Constitution to clip President’s powers by Peter Makori, Kenya Times Online, September 5, 2006 Former Kenyan Permanent Secretary for Governance and Ethics, John Githongo, has renewed his anti-corruption crusade from abroad accusing the Kenyan government of failing to recover a whopping Sh 74 billion he says he established was stashed away in foreign banks by senior people in the present and former governments, Kenya Times Online reports. Githongo told a meeting of Kenyan professionals in Washington, DC, that he had investigated and discovered a total of US$1 billion (Sh 74 billion) stashed in banks abroad and had pushed for its recovery but the government had ignored the recommendation. In order to stamp out corruption, the former permanent secretary under the presidency of Mwai Kibaki, called for the immediate enactment of a law that would strip the presidency of unnecessary executive powers which, he said, was the source of corruption in Kenya. "There is need to effect particular changes in the constitution of Kenya to ensure accountability on the part of the president and define his powers according to the law. You cannot win the war against corruption when somebody riding high on executive authority goes round the country dishing out national resources without accountability," said Mr. Githongo, who resigned his position with the Kenyan government in 2005 and later accused top ministers of large-scale fraud. Mr. Githongo said he had faced hurdles as he fought through a thick wall of corrupt mafiosa in government and wondered whether he was appointed for public relations purposes. He said many people in government, including politicians, complained to him that a section of individuals were involved in massive graft and that they were eating alone. "They told me in sincere terms that even [former president Daniel Arap] Moi was better because whatever was stolen, it trickled down to everybody. These people are so gluttonous," said Githongo, quoting a Member of Parliament who had confided in him in his former office as permanent secretary. Mr. Githongo said that after mounting pressure on those who had stolen hundreds of millions from the government, missing money began to return. "What looked funny to me was every time stolen money was returned, nobody in government celebrated. Maybe because of naivety on my part, I never read the signs of the time in good time," he said, referring to threats to his position. Dr. Alfred Mutua, a spokesman for the Kenyan government, and Nicholas Simani, principal public relations officer for the KACC (the Kenya Anti-Corruption Commission) have denied Mr. Githongo's allegations. Dr. Mutua claimed Dr. Githongo was playing cheap politics and challenged him to return to the country to table the evidence. Mr. Githongo countered that he would "move to Nairobi or anywhere in Kenya" to face the former and sitting cabinet ministers "that I had mentioned in my report on corruption." www.timesnews.co.ke/05sep06/nwsstory/topstry.html Singapore cracks down on civil society activity ahead of annual meetings Bretton Woods Project, September 12, 2006 The annual meetings of the World Bank and the IMF, being held in Singapore, are facing controversy over the participation of civil society. As well as its usual ban on outdoor demonstrations, the government of Singapore has refused entry clearance to nearly two dozen civil society representatives accredited by the World Bank, and has reportedly put pressure on police authorities on a nearby island of Indonesia to cancel a planned civil society conference on alternatives to the international financial institutions. Citing security concerns and the threat to law and order, the Singaporean authorities contacted 20 individuals from five organisations on Sept. 7 to inform them that they would not be allowed to enter Singapore in advance of or during the meetings. The individuals from Europe and Asia were all issued accreditation by the World Bank to participate in the civil society seminars that occur alongside the official meetings of the Bank and Fund. Despite the individuals having been cleared by the Bank and their own governments' representatives to the Bank, the Singaporean authorities were steadfast in their refusal to allow them entry. The Bank and Fund have issued a press release saying that they are taking up the cases of the banned individuals with the Singapore government, but the question remains as to how far the Bank will go to ensure their participation. Despite reports that the memorandum of understanding between the institutions and the Singapore government indicated that the authorities would issue visas to all accredited delegates to the meetings, the Bank does not seem prepared to pursue legal redress for the violation of the agreement. www.brettonwoodsproject.org/art.shtml?x=542954 Related articles: Bank slams Singapore crackdown Singapore silences voiceless protesters Wolfowitz calls Singapore activist ban "authoritarian" Freeing the South from debt bondage by Ted Aldwin Ong, Sun Star, September 7, 2006 The Jubilee South-Asia Pacific Movement on Debt and Development will call for immediate 100 percent cancellation of multilateral debt owed by countries of the South at the upcoming International People's Forum versus the International Finance Institutions. Siding with debt campaigners, commentator Ted Aldwin Ong writing for the Philippines' Sun Star newspaper network, said the international financial institutions' emphasis on a "debt sustainability" framework for indebted countries represented a "refusal to address the more fundamental question of the illegitimacy of the debt claimed from the South." Peoples of the South, he said, "should not be made to pay for illegitimate debts," which included: debts they had not benefited from, debts that financed projects that had caused the displacement of communities and damage to the environment, debts wasted on corruption or failed projects, debts contracted through undemocratic and fraudulent means, debts with grossly unfair terms and harmful conditions, odious debts incurred by dictatorships, debt contracted in the context of exploitative international economic relations, and debts for which peoples of the South had already paid many times over. www.sunstar.com.ph/static/ilo/2006/09/07/oped/ted.aldwin.ong%3Cb%3Emisreadings.html Cancellation of USD120 billion of Iraq's debt by end of next year Kuwait News Agency (KUNA), August 13, 2006 Up to $US120 billion of Iraq's total debt is expected to be cancelled by the end of next year, the Iraqi central bank governor Dr. Snan Al-Shabibi announced last month. During a lecture to the Iraqi Foreign Ministry, the governor said it was hoped that only $US20 billion would be left to repay after the cancellation of $US120 billion of the country's debt. The accumulation of Iraq's $US146 billion debt was due in part to the financing of wars under the former Iraqi regime, including the eight-year war with Iran, said Dr. Al-Shabibi. He said the new Iraq could not carry out fresh development and construction projects if the country's debts were not cancelled. The governor noted that US$50 billion of Iraq's debt to Paris Club members had been cancelled, and that this would be of advantage to them in regard to future investment opportunities in Iraq. www.menafn.com/qn_news_story_s.asp?StoryId=1093123426 Odious Debts Online News Service: Odious Debts Online covers the latest odious debts challenges around the world. It also provides updates on important developments in the field of scholarly research and advances in the legal precedents underpinning the Doctrine of Odious Debts. Odious Debts Online is produced by Probe International, a non-profit organization based in Toronto, Canada. Probe International's book, Odious Debts: Loose Lending, Corruption, and the Third World's Environmental Legacy by Patricia Adams (Earthscan UK), popularized the odious debts concept after its publication in 1991. Probe International maintains a rapidly expanding Internet resource and electronic library on odious debts at www.odiousdebts.org. All stories written by Odious Debts Online staff may be reproduced freely, although we ask that you credit Odious Debts Online and provide a link to www.odiousdebts.org.Keep us informed. Odious Debts Online welcomes submissions. Publisher: Patricia Adams Yes! Sign me up to receive Odious Debts Online! To contact the editors, please e-mail: |
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