World Bank fully endorses anti-corruption strategy

By Lesley Wroughton

WASHINGTON, March 20 (Reuters) - World Bank President Paul Wolfowitz on Tuesday declared the bank's board of member countries had fully endorsed a controversial strategy for tackling corruption in developing countries.

The agreement follows months of tensions between Wolfowitz and some big European countries worried that his campaign to tackle corruption could slow World Bank lending to the poor.

The plan has been through several revisions amid wrangling behind the scenes over how to position the bank to fight corruption without imposing it as judge and jury and hurting the poor.

"We can say clearly that the board of directors unanimously endorsed the bank's new governance and anti-corruption strategy," Wolfowitz told reporters in a joint news conference with Germany's Executive Director, Eckhard Deutscher, who is also dean of the board.

Deutscher added: "Let me confirm we had a very good discussion and a broad discussion. We raised a lot of issues that were not controversial between countries, which means in our language, between industrialized and poor countries."

The strategy is set to be sent to the bank's policy-setting development committee next month.

Wolfowitz said the revised plan ensured the World Bank kept loans flowing for development projects even if countries were poorly governed. "In getting involved we bring money but we also need to work with the governments to improve their governance," he said.

Member countries like Britain, France and Germany have voiced concern that Wolfowitz's campaign was slowing the stream of lending after he halted loans to India and Kenya over graft concerns.

"We were not in a 'lets stop lending mode'," Wolfowitz said, defending his actions. "We had a couple of difficult cases, but I think it's a mistake to over-emphasize that you may find a problem with a loan and you have to take some remedial action."

Referring to Liberia, which is emerging from conflict with a new government which has aggressively sought to tackle corruption, Wolfowitz said the bank had a duty to deliver aid while the government fixed the problem.

"If you have a government where they are in a difficult situation and committed to reform, they have to show their people there are results. So we can't wait around," he said.

Wolfowitz also said the revised strategy would ensure the bank scaled up its engagement with watchdog grass-roots groups, parliamentarians and the media, while also working with the political leadership to root out corruption in all areas.

The strategy also focused on the role of the private sector as the "supply side of corruption" and the obligation by rich countries to act against Western firms for bribery and to return assets siphoned from poor countries by corrupt leaders.