The Poison of Corruption

Corruption needs secrecy to flourish. And generally, only those who bribe public officials or embezzle public funds understand how it works. But international lending institutions like the World Bank and the International Monetary Fund know all about high-level corruption, and they intend to do more about it, for it is corruption that drains the value of their programs in the developing world.

Both institutions have adopted new guidelines that require them to abandon programs for governments tainted by graft.

This is a sensible stick-and-carrot approach. If recipient governments demonstrate an eagerness to run clean programs, the big international lending agencies will deliver both funds and the expertise to guard them from corruption.

This is a significant policy change for two institutions that determinedly chose not to interfere in the internal affairs of a recipient country, oftentimes when it required holding their respective noses in the furtherance of Western political interests. The first paradigmatic case was a a $220 million IMF loan to Kenya, suspended in the wake of a corruption scandal in the gold and diamond trade.

A private organization called Transparency International publishes an annual Corruption Perception Index naming and ranking countries where official corruption seems to have put down roots. The scourge is not, evidently, just a product of developing nations. As Dr. Peter Eigen, chairman of Transparency International points out, the public has failed to recognize that “a large share of the corruption is the explicit product of multinational corporations headquartered in leading industrialized countries, using massive bribery and kickbacks to buy contracts in the developing world and the countries in transition.”

It will not be an easy task for the World Bank and the IMF to implement their new policy guidelines. If they were to be implemented in a more strategic country than Kenya, for instance, a loan refusal could carry devastating consequences, undermining the value of the currency, for instance, which could in turn destabilize an entire region.

But even considering the possible negative effects, the new policy of the IMF and World Bank should be imposed without hesitation. Corruption poisons national economies. It kills initiative, drives up costs, hinders foreign investment and saps the national character. And now is the time to begin tearing it down.