Corruption issue gets short shrift

by Eric Johnston

KYOTO — The four-day Asian Development Bank meeting addressed a host of general issues related to the bank’s future. But one that got little in the way of detailed discussion is also one of the most politically contentious: corruption.

In his closing statement, ADB President Haruhiko Kuroda said the ADB governors emphasized that the bank should continue to promote good governance and anticorruption activities. But no specific proposals for doing so came out of the meeting.

The ADB has long been attacked by both international nongovernmental organizations and former ADB officials as an institution that turns a blind eye to corruption. International economists, lawyers and NGOs keeping track of ADB funding estimate that, on average, 30 percent of all ADB loans, amounting to billions of dollars, cannot be accounted for. The ADB itself has no accurate record of how much money has been siphoned off.

“I, too, have heard 30 percent of the ADB’s loans have gone down a black hole. But I’ve also heard that, for specific projects, sometimes up to 50 percent of the funds cannot be accounted for,” ADB Auditor General Peter Egens Pedersen admitted.

But Kuroda strongly denied that 30 percent of ADB’s loans had disappeared due to corruption. “That figure is wrong,” he told a wrap-up news conference.

The ADB’s two largest donor countries are Japan and the United States, which each hold a 12.8 percent voting share in the bank. In the U.S., concerns about corrupt practices at the ADB prompted an investigation by the Senate Foreign Relations Committee in 2004.

“There are indications that the ADB, through both its organizational deficiencies and its external lending environment, is more susceptible to corruption than the World Bank. The external lending environment of the ADB is extremely corruption-prone and calls for an extraordinary level of due diligence,” Bruce Rich, an attorney with the NGO Environmental Defense, told the Senate.

Since the 2004 Senate hearings, the ADB has enacted anticorruption mechanisms and reforms. Pedersen credited international NGOs monitoring the bank with forcing its board of directors to deal with the issue.