1. Strengthening World Bank Group Engagement on Governance & Anticorruption
The World Bank
December 2006

2. Consultation Process
Objective: indepth consultations with a broad set of stakeholders, to help chart the Bank’s next steps in governance and anticorruption
Outputs: a report to Executive Board, guidance notes for staff, and related products
Target participants: governments, parliamentarians, civil society, private sector, donors; multi-stakeholder events like IACC
Other instruments: web-based survey [
Timeframe: Report to Executive Board in February and to WB/IMF Spring Meetings in April
Ongoing, iterative process for learning, listening, and feedback
Key messages:
to clarify the purpose of the consultations
to reassure the participants that the information they provide will inform Bank policy and products

3. Strengthening World Bank Group Engagement on Governance & Anticorruption
Topics
1. Governance, Corruption and Development
2. Strategy
3. Questions for Consultation

4. The World Bank’s Mission & Governance
Poor governance and corruption undermine the Bank’s core mission of poverty reduction
The poor are unable to access critical services because public delivery systems fail, or they will not or cannot pay bribes
Research – in the long term, there is a major development dividend from good governance and controlling corruption
Key messages:
to reassure participants that poverty reduction is still the main mission of the Bank
to explain why governance matters for development
Stakeholders in recipient and donor countries are demanding better governance and corruption control
Prospect of significant scaling up of aid – requires strengthening governance systems

5. Strengthening World Bank Group Engagement on Governance & Anticorruption
Topics
1. Governance, Corruption and Development
2. Strategy
3. Questions for Consultation

6. Governance & Anticorruption Key Elements of World Bank Strategy
Country Level
Deepening support to countries to strengthen governance
Global Level
Working with development partners, sharing experience & addressing transnational issues
Project Level
Combating corruption in
World Bank Group operations

7. Strengthening World Bank Group Engagement on Governance & Anticorruption
Topics
1. Governance, Corruption and Development
2. Strategy: Country Level
3. Questions for Consultation

8. … the Bank will seek to ensure basic services reach the poor, but …
A Customized Approach
A systematic and disciplined approach to governance and corruption in all Country Assistance Strategies, tailored to country context
Different country
situations
Different Approaches
For example, in countries where weak governance and widespread corruption block development:
Where government leadership has demonstrated clear willingness to tackle these problems …
… the Bank will scale up technical and financial assistance on the ground and provide public recognition of progress
Where some government leaders have demonstrated willingness to tackle some of these problems …
… the Bank will seek entry points for governance reform appropriate to country context
Key messages: to clarify that
the strategy is not a one-size-fits-all approach
the principle is ‘engagement’ even when government leaders are not interested in governance reforms
country ownership is not exogenous – it must be built through solid analytical work and dialogue
Where government leadership has not demonstrated willingness to tackle these problems …
… the Bank will seek to ensure basic services reach the poor, but …
…if no agreement can be reached, then lending to central government may be restricted or stopped

9. WBG helping countries to improve governance through various ‘entry-points’
Civil Society, Media & Oversight Institutions
State oversight institutions (parliament, judiciary, SAI)
Transparency & participation (FOI, asset declaration, user participation & oversight)
Civil society & media
Public Management
Public financial management & procurement, monitored by PEFA
Administrative & civil service reform
Private Sector Development
Competitive investment climate
Responsible private sector
Key messages: to clarify that
there are many entry points for governance reform, and the choice depends on country context
while there are many examples of good work in all these areas, the Bank has historically focused within governance primarily on public management and local governance
the Bank wants to scale up work in the other three areas, as appropriate and in partnership with other donors
Building multistakeholder constituencies for reform are a critical aspect of managing the reform process
Local Governance
Community-driven development
Local government transparency
Downward accountability
Governance in Sectors
Transparency & participation
Competition in service provision
Sector-level corruption issues (EITI, forestry)
Coalition building across stakeholders

10. Monitoring Progress
Use aggregate governance indicators to indicate of extent and mix of governance problems
Use actionable & outcome indicators to monitor progress in implementing priority governance and anticorruption reforms
Frontier challenge: improve menu of actionable and outcome indicators

11. Strengthening World Bank Group Engagement on Governance & Anticorruption
Topics
1. Governance, Corruption and Development
2. Strategy: Project Level
3. Questions for Consultation

12. Strengthened Measures for Combating Corruption in Bank Operations
Prevention
Identify high-risk operations, mitigate risk upstream
Create anticorruption teams composed of field staff to review project design & rate risk
Prepare project anticorruption action plans
Increased disclosure & transparency
Oversight by civil society organizations
Focus on corruption in portfolio review
Continue to underpin budget support (DPOs) with broad fiduciary risk assessments
IFC-MIGA to strengthen ethical corporate practices across their operations
Enforcement
Strengthen Department of Institutional Integrity (INT) investigation of corruption in projects
Continue to publicly sanction corrupt firms
Implement the Voluntary Disclosure Program (VDP)
Key messages:
preventing corruption by limiting opportunities and incentives for corruption is more cost-efficient and effective than enforcement actions, but …
2) both are critical

13. Strengthening World Bank Group Engagement on Governance & Anticorruption
Topics
1. Governance, Corruption and Development
2. Strategy: Global Level
3. Questions for Consultation

14. Corruption is not just a developing country problem
Percentage of firms that pay public procurement kickbacks by country of origin of foreign direct investment (2000)
Key messages:
corruption is a transnational problem, and must be addressed through global collective action
donor countries bear responsibility for ensuring that businesses originating in their countries do not undermine governments in aid recipient countries by engaging in corruption
Source: “Are Foreign Investors and Multinationals Engaging in Corrupt Practices in Transition Economies?” by Kaufmann, Hellman, Jones, in Transition, May-June Note: Survey Question was “How often nowadays do firms like yours need to make extra, unofficial payments to public officials to gain government contracts?” Firms responding “sometimes” or “more frequently” were classified as paying kickbacks. These figures are subject to significant margins of error and thus should be regarded as approximate.

15. Global Collective Action Against Corruption
Donor Collaboration
MDB harmonization in high-risk settings to avoid ‘mixed-signals’;
coordinated donor action to support demand-side initiatives
Global & Regional Conventions (UNCAC, OECD, AU, OAS, Asia-Pacific Action Plan)
need to be enforced to curb transnational corruption & facilitate asset recovery
Coalitions
with civil society, private sector, parliamentarians, and others to combat entrenched corruption networks
Key messages:
donor coordination is vital, especially in more challenging settings, so that donors do not undermine progress in governance at the country level; the MBD harmonization is presently focusing on harmonizing investigative procedures to facilitate cross-debarment, but this is not enough; venues such as the OECD-DAC GovNet, where bilateral and multilateral donors come together to share practice and coordinate approaches, are critical
global conventions, such as the OECD Anti-bribery Convention and the UN Convention Against Corruption, are important, but to have impact they also need to be implemented; the OECD ABC is largely unimplemented and UNCAC is too new to assess; the Bank is very open to helping countries that request assistance in implementing UNCAC
multi-stakeholder coalitions in support of reform are critical for battling entrenched networks of corruption – leaders in government, civil society, and private sector need to be connected up and empowered
The regional dimension of the multi-partner, multi-country collaboration strategy is also of high importance, such as working closely with New Partnership for Africa's Development (NEPAD), the African Union, the UN Economic Commission for Africa (UNECA), regional bodies under the FATF, the Asia-Pacific Economic Cooperation Forum (APEC), and the Organization of American States (OAS), (in particular, in their regional peer review and related anticorruption and good governance mechanisms and initiatives).
For a list of global and regional conventions, see: International anti-corruption conventions and selected instruments include the following: At the global and inter-regional level: i) UN Convention against Corruption (UNCAC); ii) United Nations Convention against Transnational Organized Crime (UNTOC); iii) OECD Convention on the Bribery of Foreign Public Officials in International Business Transactions (OECD Convention); iv) Revised Recommendation of the Council of the OECD on Combating Bribery in International Business Transactions. In Africa: i) AU Convention on Preventing and Combating Corruption (AU Convention); ii) SADC Protocol against Corruption (SADC Protocol); iii) ECOWAS Protocol on the Fight against Corruption (ECOWAS Protocol); in the Americas: i) The Inter-American Convention against Corruption (OAS Convention); in Asia: i) ADB-OECD Action Plan for Asia-Pacific (Action Plan); and in Europe: i) Council of Europe Criminal Law Convention; ii) Council of Europe Civil Law Convention; iii) Resolution (99) 5 of the Committee of Ministers of the Council of Europe: Agreement Establishing the Group of States against Corruption; iv) Resolution (97) 24 of the Committee of Ministers of the Council of Europe: Twenty Guiding Principles for the Fight against Corruption; v) European Union Convention on the Protection of the Communities' Financial Interests and the Fight against Corruption and two Protocols; and vi) European Union Convention on the Fight against Corruption involving officials of the European Communities or officials of Member States.

16. Strengthening World Bank Group Engagement on Governance & Anticorruption
Topics
1. Governance, Corruption and Development
2. Strategy: Global Level
3. Questions for Consultation

17. Country-Specific Questions
What are the most pressing governance challenges in your country?
What are the main entry points and obstacles to governance reforms in your country?
How can the Bank better assist your country on governance reforms? What further actions would you like to see from the Bank and in the GAC strategy?
Country-specific questions can be added, as appropriate

18. Global Questions
Engagement Strategy: What should the Bank do in countries with weak governance and severe corruption, where government leadership is not consistent in tackling these problems? In such circumstances, how should the Bank remain engaged to help reduce poverty? Are there circumstances under which the Bank should restrict or stop lending? How can the Bank ensure consistent treatment across countries?
A Multistakeholder Approach: While government is the key counterpart of the Bank, how can the World Bank Group better engage non-governmental stakeholders, including civil society, media, and the private sector?
Mitigating Fiduciary Risk: How can the Bank ensure that its grant and loan proceeds are used for their intended purposes, while helping countries build their own systems and capacity?
Global Collective Action: Should donors have a more common approach? How can mixed signals by donors be avoided? How can the role of multinationals from industrialized countries in corruption be addressed?
Tracking Change: How should progress be monitored?

19. Discussion & Feedback
The World Bank 1818 H Street, NW Washington, D.C USA
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