chapter  13
19 Pages

Corruption in World Bank–financed development projects

A phenomenon-focused examination
WithCostantino Grasso

Multilateral development banks (MDBs) are supranational institutions set up by sovereign states, which are their shareholders. Traditionally, the term ‘MDB’ referred to the World Bank, which operates at the global level, and four other institutions acting at the regional level: the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development and the Inter-American Development Bank. The use of World Bank’s funds for illicit purposes, including allocations for cronyism and politically driven investments has been a longstanding and contentious issue. However, for a long time, World Bank officials consciously avoided any use of the word ‘corruption’. As regards the measures that aim at countering corrupt activities through general and specific deterrence, the World Bank has introduced an independent sanctions system through which it may impose sanctions on individuals and legal entities that are involved in illicit practices within its development projects.