By Kimberly Ann Elliott
A decade ago, the multilateral development banks (MDBs) were rightly subject to harsh criticism for ignoring the role of corruption in undermining growth and development. Since then, corruption and related issues of “institutional quality” have moved to the center of the
development agenda and, led by the World Bank, the MDBs have significantly beefed up internal controls to prevent corruption in projects that they finance.
These changes were driven by several factors that have fundamentally changed the environment in which the MDBs operate. Perhaps most important, major shareholders began to take corruption issues more seriously in the 1990s and members of the Organization for Economic
Cooperation and Development finally agreed in 1997 to a convention criminalizing corrupt behavior by OECD-based multinational corporations even when it occurs abroad. Second, external scrutiny of the MDBs and other international institutions has been increasing for two decades, including by Transparency International, a non-governmental organization founded by former World Bank employees that focuses on corruption issues. Finally, World Bank President James Wolfensohn personally embraced and promoted the anti-corruption agenda as the key to
development in poor countries.
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