World Bank Steps Up Attack on Global Corruption

World Bank President James Wolfensohn, beefing up his attack on global corruption, vowed Thursday to pull out of any project funded by his institution that proves to be tainted by wrongdoing.

“Where there are projects to which we are involved and we find evidence of corruption we will cancel the project,” he told reporters. “We are anxious to put teeth into what we’re doing over issues in which we have control.”

Both Wolfensohn and International Monetary Fund Managing Director Michel Camdessus have focused a bright light on corruption during the annual meetings of the IMF and World Bank that ended Thursday in Washington.

On a separate matter, Wolfensohn said the United States has agreed to a formula for eliminating America’s arrears to the bank.

U.S. companies are banned from participating in aid projects for countries the agency finances until the United States brings its payment schedule up to date. It owes $935 million.

Congress, which has sharply cut U.S. contributions to international lending institutions such as the World Bank, has demanded that Treasury Secretary Robert Rubin report regularly on his efforts to have the ban lifted.

Wolfensohn told a news conference that a U.S. decision to pay $700 million of the $935 million it owes the bank’s lending arm--the International Development Assn.--means its account will soon be current.

The World Bank chief said graft and other practices are a major barrier to economic progress in developing nations.

Moreover, corruption threatens to rob the bank of support in industrial countries as governments question whether their contributions are ending up in the pockets of corrupt officials.

Wolfensohn argued that governments that fight corruption will find that their economies will become more attractive to vital foreign investment.

Camdessus also took aim at those practices during an earlier speech, saying governments must demonstrate that they have no tolerance for corruption in any form.

But at a closing news conference, he stopped short of saying that the IMF will move to include corruption as part of the macroeconomic targets it sets on such things as inflation and growth for countries.