more on corruption

Doug Henwood dhenwood at panix.com
Fri Oct 29 08:39:15 PDT 1999


[More from the World Bank's clipping service on corruption.]

WORLD BANK DEBARS FIVE FIRMS FOR CORRUPTION.

The World Bank said yesterday it had declared five Japanese and US consulting firms ineligible for Bank contracts for having engaged in corrupt practices, reports AFP. Two Japanese firms, All Nippon Engineering Corporation and Penmacs, are barred indefinitely from doing business with the Bank, while three other companies, Niko Research Center Limited of Japan and Niko Research Center and International Access Corporation of the US were ruled ineligible for five years.

A Bank statement said Niko Research Center, which was liquidated earlier this year, was a wholly owned subsidiary of Niko Research Center Limited of Japan. World Bank President James Wolfensohn approved the measures on the recommendation of the Bank's sanctions committee, "which found that the five firms had engaged in corrupt practices as defined by the Bank's consultants' guidelines," the statement said.

All five companies have challenged the charges, which according to the Bank were linked to the termination of two World Bank staff members in September 1998 for misuse of funds, notes the story. Since the sanctions committee was established in 1998, the Bank has debarred 12 companies. Dow Jones also reports.

Meanwhile, in an Economist article (p. 86) entitled "A guide to graft" notes ttacking corruption, or at least appearing to, is a priority for almost every emerging economy. As academic evidence mounts that graft deters investment and economic growth, aid agencies tie their largesse more directly to clean government, and citizens from Argentina to Indonesia demand less venal politicians, no country can afford to ignore its reputation for corruption. That means no country can ignore Transparency International (TI).

By ranking countries individually, TI's results invariably generate a splash, particularly in countries that have done poorly.

These statistical issues have caused some academics to question the credibility of TI's index. New papers by Daniel Kaufmann, Aart Kraay and Pablo Zoido, three experts on corruption statistics who work at the World Bank, argue that individual rankings convey spurious accuracy. Their research <http://www.worldbank.org/wbi/gac> suggests that today's statistics are only good enough to divide countries into three groups: the 20 or so least corrupt, the 20 or so most corrupt, and the vast majority in between. Luis Moreno Ocampo, head of the Latin American chapter of TI, agrees, and to prove the point has published a separate version of the TI rankings for Latin America, where countries are grouped in this way, the article adds.

Despite months of internal squabbling, TI's bosses in Berlin refuse to give up its ranking system, though they concede that some numbers are pretty meaningless. They point out that individual ranking has brought the project publicity, that TI is open about the statistics' limitations, and that creating three groups could also involve arbitrary statistics. True, but beside the point. A group dedicated to transparency should be the very last to publish misleading conclusions.



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