World Bank opens its contracts

by Stella Dawson | | Thomson Reuters Foundation
Friday, 17 April 2015 15:33 GMT

World Bank President Jim Yong Kim takes his seat as he arrives to brief the press at the opening of the IMF and World Bank's 2015 Annual Spring Meetings, in Washington, April 16, 2015. REUTERS/Mike Theiler

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The World Bank makes new loans worth about $20 billion each year - how does it keep track of them?

How do you track billions of dollars of development money handed out via World Bank contracts for everything from school books to bridges?

It's no easy task for the global development lender.

The World Bank has $154 billion in outstanding loans for projects it has agreed to fund in its 188 member countries, and it makes new loans worth about $20 billion each year.

Checking up on which companies the countries awarded the money and why, whether the contracting was truly competitive or fraudulent, and whether the winning company delivered the goods or millions of dollars got lost is a very difficult task.

In 2013, the World Bank's Integrity Vice Presidency, a unit which investigates corruption relating to Bank projects, opened 89 new investigations into possible fraud and graft in Bank-financed projects. It found evidence of wrongdoing in 49 cases -- small compared with the number of projects worldwide.

Enter STEP, an online tool the World Bank is launching this month to lift the veil on public procurement. Part of a drive to revamp contracting at the Bank, the tool is meant to make the contracting process easier and more transparent, while helping the development bank to tackle corruption.

The database is designed in a way that would allow citizens' groups to monitor the progress of contracts in healthcare, education or infrastructure in their communities and report back if they see problems, said Robert Hunja, director of public integrity in the World Bank's Governance Practice.

Coming soon will be a system of red flags to trigger World Bank internal alerts when contracts looks suspicious. This will help the Integrity investigators know where to focus, he said. Now they largely rely on whistleblowers.

Globally, government purchases of goods and services is a roughly $10 trillion business. In the 34 advanced and developing countries that are OECD members, public procurement accounts for 13 percent of economic output.

In many developing countries, estimates show that 20 to 25 percent of public procurement money disappears to corruption.

Activists are already promoting the idea of publishing contracts for all to see through the Open Contracting platform.

The World Bank's step to bring its contracting out into the open can only make the system fairer, more efficient and lessen opportunities for graft.


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