Golden opportunity for World Bank reform

By the middle of this year the World Bank, prime source of funds for international reconstruction and development, should have a new leader at its helm.

By the middle of this year the World Bank, prime source of funds for international reconstruction and development, should have a new leader at its helm.

James D.

Wolfensohn's tenure as the Bank's president over the past decade is coming to a close, earning as he goes the plaudits of the head of the U.S.

Treasury, John Snow, who regards his accomplishments in creating a more dynamic funding agency as an historic achievement.

When Mr Wolfensohn came into office in 1995 he inherited an institution in crisis, under attack over both policy and financing disasters.

Under his predecessor an auditing task force found the root of management weakness lay in its ingrained attitude towards loan approval, chiefly blamed for the decline in performance and quality of the Bank's operations which spurred the investigation.

The task force produced recommendations that could have cured the malaise.

But since then the Bank has according to its critics failed to close with the key question of accountability.

Mr Wolfensohn's time at the Bank will be principally remembered for the considerable machinery he set up to minimise if not eliminate corruption as a fund-consuming ancillary to international finance.

Under this overall guidance, the ruling idea became established that nothing is more important than the fight against corruption.

The strength of this resolution was tested by the World Bank's response to the charges made against one of the construction companies employed on the Lesotho Highlands water project.

Having been advised that there was sufficient evidence to warrant prosecution, the Bank decided against disciplinary action.

That decision had to be reversed last year when the facts came to the notice of the U.S.

Senate Foreign Relations Committee whose chairman observed that how the World Bank dealt with the news of this conviction would be a powerful indication of the seriousness of its anti-corruption efforts.

This dealt a serious blow to the Wolfensohn doctrine, not helped by his refusal to appear before the committee.

So he retires having missed an opportunity for real reform.

In this respect, much will depend on the calibre of the incoming president.

The U.S.

Government is now facing a challenge to persistence in the old ways, huge sums poured out on questionable projects and little being done about the $100 billion said to be lost to waste, fraud and corruption over the past 50 years.

The situation presents the Bush administration with a golden opportunity for reform, but it needs to be radical in order to work.

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