ADB Anti-fraud Squad Pledges Crackdown Against Corruption
The Foreign Post
April 20 - 26, 2000
MANILA - The Asian Development Bank is toughening its drive against corruption, beefing up an elite anti-fraud squad and demanding good governance as a top condition for aid.
ADB president Tadao Chino said this week the Manila-based bank is recruiting new graft-busters to its anti-corruption unit, a strike force against shady deals involving bank assistance to the region's developing countries. He said the bank is "paying very serious attention" to problems of corruption in recipient countries where millions of dollars in aid funds aimed at easing poverty are suspected to end up in private bank accounts.
Multilateral lenders such as the ADB, the International Monetary Fund and the World Bank have turned the spotlight on good governance as a key element in the region's recovery from the financial crisis that swept the region in 1997.
Studies have pinpointed corruption in the government and private sectors as one of the causes of the crisis."This anti-corruption unit will be the initial point of contact for alleged incidents of corruption among ADB projects and ADB staff," Chino said. "This unit will ensure that ADB staff and ADB projects adhere to the highest standards of ethical conduct."
The unit, formed last year, has already investigated over 60 cases of irregularities across the region and its role is expected to further "raise awareness" of the bank's anti-corruption drive, he said.
It currently has six members and the ADB is in the process of recruiting two more.Chino said: "The establishment of the unit is expected to send a clear signal that the ADB is giving top priority to anti-corruption and good governance."
Since taking the helm from fellow Japanese Mitsuo Sato last year, Chino has engineered the consolidation of the bank's mission into one overarching goal: to reduce Asia's teeming poverty.
As part of this strategy, ADB will disburse precious resources based on how individual borrowers meet certain conditions such as economic reform measures.
"Governance, including government anti-corruption efforts, is expected to be included in the set of performance criteria," Chino said.
He warned against any slackening in reforms now that the region was rebounding faster than expected.
"We need to stress that if governments become complacent about these reforms because of the recovery, there is a risk that investor confidence will be eroded and economic recovery be stifled."
A US$75 million loan aimed at helping develop the Philippine capital markets was cancelled in December 1999 after Congress failed to pass a new securities reform act which was among the conditions stipulated in the agreement.
Chino said the bank also will get tougher in implementing
guidelines for procurement.
The guidelines allow the bank to reject proposals for awarding contracts as well
as cancel loans if it determines that corruption was involved, he said.
The bank has no data on how much money is lost to corruption.
But research by the International Monetary Fund shows that investment in corrupt countries is almost five percent less than in areas which are deemed relatively honest.
Former finance secretary Edgardo Espiritu said last year that corruption eats up "more than 50 percent" of Philippine government revenues.
By Martin Abbugao