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World Bank

Volume 460: debated on Wednesday 9 May 2007

5. What representations he has made to the World Bank on the conduct of the bank’s president; and if he will make a statement. (136209)

I discussed the issue with my fellow governors of the World Bank at the spring meetings on 15 April. We agreed that we have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation, as well as the motivation of its staff, and that the current situation is of great concern. We endorsed the bank’s actions in looking into this matter, and we asked it to complete its investigation, which is continuing.

The bank’s credibility in fighting corruption was severely undermined by the president’s decision to increase his partner’s salary. The corrupt leaders of many countries now say, “If it’s okay for the bank, it’s okay for me to channel public funds to my own family.” The bank would start to repair its reputation if the president admitted that he had made a mistake and changed the bank’s policies so that no bank employee in future will ever again reward a member of his family or a close friend. Will my right hon. Friend tell the president that if he showed a bit of humility and changed the bank’s policy there would be fewer people arguing for a change in the bank’s leadership?

The president of the World Bank said on 12 April:

“I made a mistake, for which I am sorry…I take full responsibility for the details.”

A process is investigating what went on. We should let the bank board get on with its work. We will consider its report when it is published.

How can the World Bank demand an end to corruption in developing countries when many staff in the World Bank feel that there is corruption at the very top of their own organisation?

It is very important that all institutions maintain the highest standards. It is for that reason that, as governors, we expressed concern about what has gone on. It must be brought to an end, and to a satisfactory conclusion that maintains the credibility and the reputation of the bank.