The international community has long recognized that fraud and corruption impair development in all its dimensions. Diversion of funds from development projects through fraud, corruption, collusion, and coercion or obstruction impair the ability of governments, donors and the World Bank to achieve the goals of reducing poverty, attracting investment, and encouraging good governance.
Rooting out corruption in development assistance requires a collaborative effort among Borrowers, the Bank and its development partners. This calls for continued efforts on the part of the Borrower, other recipients of loan proceeds, and the Bank to help prevent fraud and corruption wherever they are found, while simultaneously strengthening the institutional structures.
Important steps have been taken. In 2006, the Bank embarked on a series of reforms resulting in guidelines for Borrowers on preventing and combating corruption in Bank financed projects to ensure that loan proceeds are used for the intended purpose of promoting development and reducing poverty. The Guidelines are intended to set out clearly the actions that Borrowers and other recipients of loan proceeds should take to try to prevent cases of fraud and corruption from occurring, and to address them if they do occur.
Since 1996, the World Bank's Procurement Guidelines and Consultant Guidelines have enabled the Bank to sanction firms and individuals that are found to have engaged in fraud or corruption in connection with the procurement of goods or services, the selection of consultants, or the execution of any resulting contracts. Both sets of guidelines contain definitions of the specific sanctionable offenses of fraud, corruption, collusion, coercion and obstruction. Since 1999, more than 330 firms and individuals have been sanctioned by the Bank for engaging in fraud and corruption in Bank financed projects.