World Bank president Jim Yong Kim gave a major speech on corruption yesterday. He touted the Bank's relatively recent (post-Cold War) attention to the issue and cited the decision to back out of a bridge project in Bangladesh as evidence of a zero-tolerance policy:
[S]ometimes things go wrong and then we need to stand firm. This is what happened in the case of the Padma Bridge Project where insufficient response by the authorities to the evidence of corruption at the time made us terminate a $1.2 billion credit in June last year...Until certain conditions are met to heighten oversight in the project and give assurance that a complete and fair criminal investigation is under way, we cannot consider financing the bridge.
But Kim also grappled with an important reality for the Bank: the societies most in need of Bank financing are often the most corrupt. This dilemma is particularly acute for the arm of the World Bank that gives concessional loans to poor countries. Kim insisted that vigilance on corruption need not mean abandoning projects in those countries:
Our willingness to work in difficult situations and an appetite for measured risk should never be confused with a willingness to tolerate corruption in Bank projects and activities. Let me say it loud and clear: When corruption is discovered in our projects and activities, we have zero tolerance for it within the World Bank Group.
So where does this leave us? Should we shy away from high-risk interventions and forgo the potentially massive benefits to the poor or should we rather take a calculated risk, design appropriate safeguards and move forward with them? My answer is that we need to take risks for development results but we have to do so with our eyes open and try to mitigate those risks as much as we can.