The Multilateralist

World Bank Debars Chinese Company

World Bank Debars Chinese Company

The World Bank has announced a new step in its continuing campaign to crack down on corruption associated with Bank projects. The target in this case was a Chinese company involved in a recently concluded project. The case is just the latest in the lender’s newly aggressive pursuit of fraud connected with its projects. According to the Bank, more than 400 entities have been sanctioned since 2001. You can find the complete list of sanctioned firms and individuals here.

For all the Bank’s efforts at deterring fraud, the problem will likely remain daunting, particularly for the arm of the Bank that engages in concessional lending to the poorest states (the International Development Association). As several large and relatively well-run developing countries "graduate" from eligibility for these loans, IDA will be left lending to a group of fragile states where corruption is endemic. As the Center for Global Development pointed out in a recent report:

IDA’s current operational and allocation model focuses explicitly on high-performing countries. IDA addresses postconflict, poorly performing, and fragile states through special side facili-ties. Countries coming out of conflict are financed through carve-outs that bypass the normal performance-based allocation system; nonconflict poorly performing and fragile states are allocated modest funds. Worryingly, the World Bank has long struggled with the challenges of working in and providing staffing for fragile states.