BRETTON WOODS INSTITUTIONS ARE LIMITED IN THE FIGHT AGAINST INSTITUTIONAL CORRUPTION OF COUNTRY CUSTOMERS.
GuyChristian AGBOR, LLM/GCIT, PhD.
Independent Pracademic/ Research Professor ESGTT/AIFFs/ABC/AML, Global Social Justice Advocate/ Podcaster/ Private Prosecutor
Independent Research Professor/AIFFs/ABC/AML, Social Justice Advocate/ Podcaster/ Private Prosecutor.
In this article, I will attempt to define the anti-corruption policy of the Bretton Woods Institutions (BWI) according to themselves, appreciate their prowess, and describe their voluntary limitations while arguing how their philosophical choices or policies do not help the populations of developing countries.
The World Bank Group (WBG) and the International Monetary Fund (IMF) consider corruption a major challenge for their two objectives, which are to end extreme poverty by 2030 and stimulate shared prosperity for the poorest 40% of developing countries with regard to the WBG[1]?and for the IMF, Corruption (abuse of a public office for personal purposes) harms state activity and compromises the chances of others often end up paying more. Loss of revenue can also hinder the state's ability to make social expenditures. In addition, the quality of public services and infrastructure is reduced when public authorities' decisions are driven by bribes or nepotism. In addition, corruption erodes trust in the state and can cause social and political instability.[?2]
According to these two institutions, corruption has a disproportionate impact on the poor and most vulnerable, increasing costs and reducing access to services, including health, education, and justice. Corruption in the supply of medicines and medical equipment increases costs and can lead to inferior or harmful products. The human costs of counterfeit drugs and vaccinations on health outcomes and lifelong impacts on children far exceed the financial costs. Unofficial payments for services can have a particularly pernicious effect on the poor.[?3]
Empirical studies have shown that the poor pay the highest percentage of their income in bribes. Some studies have suggested that the poor can even be the prey because they are considered powerless to complain. Every dollar, euro, peso, yuan, rupee, or ruble stolen or misdirected deprives the poor of equal opportunities in life and prevents governments from investing in their human capital.[?4]
We all agree that corruption erodes trust in the government and underweights the social contract and we are all worried about it, but even more particularly in contexts of fragility and violence, because corruption is the food and perpetual root of inequalities leading to violent socio-religious extremism and armed conflicts.
Therefore, we all know that corruption hinders investment, with significant effects on growth and employment. Countries capable of dealing with corruption use their human and financial resources more effectively, attract more investment and develop faster, this is the case of Rwanda, Cape Verde, Benin, and Botswana with different subjective analyses related to the Rules of Law, and Democracy that will be the subject of other articles.
SALUTARY BUT INCOMPLETE EFFORTS
According to the WBG, when allegations of fraud and corruption are substantiated, companies involved in fraud are excluded and sanctioned (pecuniary) publicly with a ban on engaging in any new activity financed by the World Bank Group. The governments concerned receive the conclusions of the World Bank Group's investigations but are never sanctioned or excluded from group programs. To date, the WBG has publicly excluded or sanctioned more than 1,000 companies and individuals (consultants and natural persons) and during fiscal year 2020, the WBG would have sanctioned and excluded 49 companies and individuals and would have recognized 72 cross-exclusions from other multilateral development banks. At the end of the fiscal year 2020, 372 entities were penalized with conditional release, a process by which companies have the opportunity to improve their Ethics and internal compliance programs as part of their sanctions.[?5]??One of the problems here is that several of these sanctioned natural and legal persons do not often have the financial means to defend themselves before the WBG sanctions court or do not have the means to pay for an ethics and compliance consultant or at the most there are very few qualified professionals for this work and monitor the application of the changes. Further, the total amount of sanctions more precisely the total sum of all the sanctions pronounced and applied by the WBG should be published and used, for example, as a pro bono service for those who do not have the means to be represented before the WBG court or to offer the services of consultants for training (I am preparing another article in support of this proposal).
According to the famous and late Pr. Adebayo Adedeji, if there was a referendum in Africa today, an overwhelming majority of the population would vote against the fact that their governments have something to do with the BWI because these populations know too well that there has certainly been a considerable net loss of well-being for them because of the way these two agencies have functioned in their country over the last decade with negative results. There is a virtual consensus among the general public, expressed vocally in the local media, as well as among officials, who naturally prefer to express their point of view in more private contexts, that the relationship between developing countries and BWI has been detrimental to the continent, that far from helping it become economically viable, these two institutions have capitalized, it is not of structural adjustment (PAS), the parade horses of the BWI.[?6]
What has happened in Africa during the pandemic deserves to dwell on the failures of the BWI in the context of the fight against corruption. According to the African Development Bank (AfDB), the GDP of African countries had contracted by 2.1% in 2020, and the expected loss of export earnings for fuel alone amounted to about $101 billion that year.[?7]?The decline in revenues combined with the increase in expenditure has had the effect of doubling budget deficits, which have reached the historically high level of 8.4% of GDP.[?8]
The cost of recovery plans alone ranged between 0.02% of GDP in South Sudan and about 10.4% in South Africa. As a result, Africa's debt burden increased by 10 to 15 percentage points in 2021. Many countries have been allowed to suspend the repayment of their foreign debt, while interest rates have been raised in order to curb inflation in advanced countries.
The productive time lost in 2020 due to COVID-19 was estimated at about 112 million jobs. In Nigeria, 20% of households lost their jobs in June 2021, while in South Africa, three million jobs were lost during the lockdown. The pandemic has cost more than 700,000 jobs in Kenya and Ghana.[?9]?WB surveys reveal that 82% of households in Malawi and 80% of them in Nigeria reported income losses. Similarly, 76% of households in Uganda and 46% in Ethiopia said their income had fallen.[?10]
In addition, about 30 million additional Africans fell into extreme poverty (living on less than $1.90 per day) in 2020, and it is?estimated?that this figure rose to 39 million in 2021. In total, it is estimated that 465.3 million people, or 34.4% of the African population, were in extreme poverty in 2021.[?11]?The equipment necessary for COVID-19 would have been purchased under the blank of the emergency, thus escaping any public scrutiny and the devastating economic effects were aggravated by the great corruption associated with COVID-19 spending, some of which have allocated the funds of multilateral organizations, including IBWs. In response to the pandemic, several donor agencies supported African governments through various financial arrangements. Together, the IMF and the WBG provided about $57 billion to help Africa. But accountability measures to control the use of these funds have been relaxed to accelerate the purchase of personal protective equipment, essential goods and services, and vaccines. Most of these expenses were made under the blank cheque of the emergency, thus escaping any public examination and accountability.
Throughout Africa, cases of corruption related to COVID-19 have been reported, mainly in purchasing and supply.[?12]?In Cameroon, an audit carried out in 2021 revealed the misappropriation of about $333 million intended to respond to the pandemic in 2020. The South African Minister of Health at the time was temporarily on leave for the duration of the investigation into irregular contracts for an amount of $10 million. South African public opinion has also been angry with the alleged swelling of public contracts for the purchase of medical supplies worth $900 million.
The government of Malawi revealed that some of its officials had agreed with the private sector to divert $1.3 million in COVID-19 funds through irregularities in purchases and compensation. The Kenya Medical Supply Authority reportedly stole about $400 million for the purchase of medical equipment, and the country's Ethics and Anti-Corruption Commission revealed other irregular expenses amounting to about $71.96 million. The Auditor General's report on COVID-19 expenses revealed the misappropriation of more than $69 million. In Nigeria, the Federal Ministry of Health reportedly bought 1,808 protective masks for $96,000. In Uganda, four senior officials were arrested for overcharging food aid products under COVID-19, resulting in a loss of $528,000. The Minister of Health of Zimbabwe was removed from office for inflating the cost of medical equipment by illegally awarding a multi-million-dollar contract. It was discovered that his Ghanaian counterpart had bought the Russian Sputnik V vaccine at a unit price of $19 instead of the factory price of $10 per dose. This may only be the tip of the iceberg because most of the expenses incurred during the COVID-19 pandemic in Africa have not yet been audited.
Despite the purchase of more than 714 million doses of vaccine, only 15% of adults in Africa were fully vaccinated in March, and 15 countries have not yet reached the goal of fully vaccinating 10% of their population.[?13]To revive the African economy, COVID-19 restrictions have been relaxed and economic recovery programs have been launched. But the continent has not made real progress in the fight against corruption through appropriate audits of public and Parastatal spending on COVID-19. However, these audits are essential and must be followed by investigations and prosecutions in order to allow the States concerned to recover public money.
According to Transparency International, corruption in the?health?sector?leads to losses of more than US$500 billion each year (a very modest estimate since you can only measure what you can see or know of !!!), even in ordinary times. World Bank surveys show that up?to 80% of non-wage health funds?never reach local institutions. According to OECD estimates, up?to US$2 trillion in?public procurement could be lost due to corruption. The Global Corruption Barometer in 2019 revealed that corruption rates in hospitals and health centers reached up to 14%. Obviously, the question arises for me and other researchers and observers why the BWI continue to provide their financial support without ever applying sanctions to countries in which the embezzlement takes place, we must not forget that in corruption it takes two or more for the facts to be consumed, and according to Professor Ransford Yaw Gyampo (Professor of Political Science at the University of Ghana),??commented substantial help to check for leaks and slips." Mr. Gyampo believes that the IMF is no longer disturbed by the fight against corruption in a country and cannot be taken seriously. They lied "Indeed, in the fight against corruption, the discourse on the continuous implementation of a national anti-corruption action plan (NACAP) that exists only in the name of the document, shows that the IMF may no longer be a serious institution". "This is?because it does not seem that there will ever be serious efforts to implement NACAP and an IMF that does not know that it is false," he said. He also indicated that the current IMF has lost its audacity and courage unlike previous times and believes that the IMF lately only tactically encourages African dependence on the West. "Otherwise, how and why were very low and serious recommendations that would help us quickly reverse things neglected? Is the IMF unaware that we only earn about 5% of the royalties on our gold? “Does the IMF not know that we produce oil and that we only earn about 13% of oil revenues? Why didn't they talk about taxing the extractive sector adequately to generate more income for ourselves? "Why did they remain silent about what we must do to stop illicit financial flows? Do they come from countries whose government size is as inflated as ours? Were they forced to remain silent about local and international calls to reduce the size of our government? Mr. Gyampo questioned. He continued that if the conditionalities do not answer the above questions, they are only propaganda and are only intended to inflict difficulties on the poor. "To make Africans dependent on the West; and to cover the incompetence of leadership and the reluctance to sacrifice themselves," he lamented. He finally warned the government of Ghana that Labor would resist any unnecessary imposition of difficulties on the poor without an obvious demonstration of sacrifice from political leaders. "The IMF must know that the Ghanaian is smart enough to know when a cycle of dependence continues and we will soon resist.?"If the IMF really wants to help us, then it must be bold by telling us nothing but the truth so that we can get out of our imposed and self-imposed difficulties," he said. The dismay of my colleague is found among several other researchers, activists, and alert populations in all IBW client countries, who would have received loans very recently without being able to Demonstrate how they fight or would have fought or will fight the corruption of the allocated funds.
The laxity of BWI in terms of corruption is also explained by the geopolitical pressure that some developing countries are exerting on BWI, including, for example, the announcement to join the BRICS by a large number of African countries (13) that have officially submitted applications for membership in this block bringing together five emerging countries (Brazil, Russia, India, China and South Africa), and However today, its members have only 15% of the voting rights at the World Bank and the International Monetary Fund (IMF). A possible expansion of the bloc of emerging economies could increase its influence and weight in global governance bodies.[?14]?Or is this the challenge posed by the American dollar, we all know that in recent years, many countries and their multinationals, widely using the American dollar in international transactions, have faced the problem of the extraterritoriality of American law.[?15]
Indeed, some analysts and researchers maintain that the United States is increasingly using the dollar as a "weapon" or a legal judicial base of diplomacy according to Washington's foreign policy. Thus, for example, the United States was able to globally force other states to comply with a law passed in 2017 in the U.S. Congress?"Countering America's Adversaries Through Sanctions Act",[16]?which strengthens the already existing sanctions against Iran, North Korea, and Russia.
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However, according to this philosophical school, this "blackmail" of the dollar exasperates countries, especially those of the BRICS, and encourages them to implement alternatives to ensure their commercial transactions beyond Washington's control. So far, despite exchange rate fluctuations, the position of the U.S. dollar against other reserve currencies has remained fairly stable, according to the IMF. I simply note that among all these countries that want to join or those already members, there are 98% are only autocratic dictatorships. The irony in my analysis is that if the BWI were not in the logic of domination and economic control of poor countries (In his?opening speech at the Ambassadors' Conference in August 2019,?French President Emmanuel Macron mentioned that "we are probably experiencing the end of Western hegemony over the world",?[17]?and rather applied strict rules of good governance as a borrowing condition, African populations would not be?1999 to 59% in May 2021, its lowest level in 25 years, in favor of other currencies such as the euro, ruble, yuan (or Renminbi) or even gold. In December 2022, the greenback again lost a percentage point to 58% in the official holdings of the world's central banks.[?18]
In conclusion, we must certainly understand that although the BWI are not institutions specialized in the fight against corruption whose objective is not to fight corruption but "to assist the world community in its efforts to promote economic growth and development and fight against malnutrition, environmental degradation, and social divisions" instead of continuously imposing its economic hegemony against developing countries, a theory that is widely rejected by poor populations, these populations paradoxically realize what the BWI represent, no developing country has developed with the help provided by these BWI, it is probably time that these developing countries refrain from relying on the BWI or limit as much as possible the impact "of the support of the said institutions (this is ideal) but also and above all that these countries become serious about the fight against corruption, I can guarantee a positive way out by “the Singaporean way”.
[8]?https://www.un.org/africarenewal/news/coronavirus/eca-estimates-billions-worth-losses-africa-due-covid-19-impact
[16]?https://www.dhs.gov/news/2021/02/11/countering-america-s-adversaries-through-sanctions-act-faqs