Bribery in the World Bank’s lending methods is as rampant as ever, says a former Bank official who has written a book on this corruption.

Steve Berkman contends that Indian IT majors Satyam [Get Quote] and Wipro [Get Quote], who were barred from World Bank projects for offering their stock to Bank officials, represent a miniscule problem compared to the kickbacks and commissions that go to government officials for approval of Bank projects.

Berkman, who was an advisor to various project teams within the Bank on human resource issues and capacity building, retired from the Bank in 2002. He is the author of an expose on corruption in this multilateral institution titled, The World Bank and the Gods of Lending, based on his 16-year experience auditing Bank projects, including the $800 million loan to health sector projects in India.

While most of his experiences were in Africa and Latin America, he said the corruption “I’ve seen there (in India) is no different than what I’ve seen in Africa and other places.”

In an interview with rediff India Abroad, Berkman said he strongly believes that Paul Wolfowitz was pushed out of his position as World Bank president after an entrenched bureaucracy at the Bank disliked his anti-corruption campaign and not because of the mini-scandal about his girlfriend, which “was more of a side-show.”

The problems for Wolfowitz — a former Bush administration official — began in July 2005 when Berkman said he suspended the massive Bank loan for health sector projects in India because of allegations of corruption.

“My experience has been that — and again, one of the things I was trying to shed some light on in my book — is that almost always (corruption) emanated from government officials in these developing countries. In my experience, they have always been the catalysts for the corruption and the fraud.”

Berkman, now 75 and living a retired life in Leesburg, Virginia, near Washington, DC, says the gods of lending are the international bureaucrats who run the Bank and are the ones who conspired to nail Wolfowitz using the mini-scandal with his girlfriend to call for his ouster.

“Quite often,” he argued, “everybody seems to be talking about the companies that bribe these officials, but what never seems to come out is that in fact, it is the officials who are the catalysts for this and they are the ones that are more of less coercing the business. That if you want a contract you have to pay us — that kind of thing.”

In most developing countries, Berkman said, “the spectre of corruption throughout the governments in these countries — I mean nothing is done in some countries at all for the benefit of the people. It is merely for the benefit of the people who are running the show.”

“But as far as the Bank staff goes,” Berkman said, “for many years, I would have never believed that the Bank staff were also corrupt, but since the early 1990s, I think it has become obvious that we have some bad apples too.”

In his book, in a scathing castigation of senior Bank managers and board members — the so-called gods of lending — he writes that ‘they have created the myth that they are the “cutting edge” of development, while they hide the appalling number of failures within the Bank’s portfolio — failures that enrich the government elites of the Third World while creating mounds of debt that cannot be repaid.’

According to Berkman, ‘It is this single truth that exposes the hypocrisy of the whole business: The Bank pretends it is lending for noble purposes, while the borrowers pretend they will put the money to good use.’

Instead, he writes, how Bank funds are regularly ‘placed in the hands of officials with a history of looting national treasures.’

In the case of the $800 million loan to health sector projects in India, a team of investigators found dummy companies that were paid by the Bank for products and services that were never delivered and a plethora of bribes and kickbacks that went into the pockets of senior government officials. This was the basis of Wolfowitz’s suspension of the loan to India.

In the wake of allegations that by holding up a follow-up loan until the discrepancies in the earlier loan had been fully investigated and fixed he was ‘depriving the poor of needed health care,’ and that his actions smacked of political considerations, Wolfowitz told Newsmax that ‘The India example is particularly interesting because it refutes many of the objections that were commonly raised against the anti-corruption efforts.’

While acknowledging that India was indeed a close strategic partner of the US and a shining example of a successful developing democracy, Wolfowitz told Newsmax that it ‘didn’t make it right to turn a blind eye to corruption in World Bank health loans that were actually making people sick,’ because tainted pharmaceuticals had been bought by Bank funds and distributed to the public.

At the time a senior Bank official told rediff India Abroad that when Wolfowitz had written to then Indian finance minister Palaniappan Chidambaram about the alleged corruption and the Bank’s concern over corruption in India projects, an angry Chidambaram, irritated by what he believed was the Bank president’s patronising tone, had curtly responded that India was as concerned or more about corruption and implying that New Delhi did not need lessons about fighting corruption from ‘a holier than thou’ Wolfowitz.

India is the largest beneficiary of World Bank lending.

In the interview, Berkman acknowledged that since he left the Bank, it had “done a lot in terms of fighting corruption and dealing with it, but at the end of the day, I remain convinced that as much money is being stolen now through bribes and kickbacks and embezzlement as there was 10, 15 years ago.”

He said he did not believe “there has been any change although the Bank now talks openly about corruption and has taken some steps to deal with it.”

“I would be willing to bet that there is more money being stolen now than was stolen 10, 15 years ago,” he added.

In the wake of the Bank banning Satyam, Wipro and Megasoft Consultants Ltd for ‘providing improper benefits to bank staff,’ Berkman acknowledged that firms vying for Bank contracts may have devised new ways of bribing Bank officials through the offering of shares during Initial Public Offers and such.

“There are always ways to get around the system, but I don’t see any big fish being caught and that’s troublesome,” he said.

Berkman said the IPO offerings to Bank officials were “the least of the Bank’s problems. At the end of the day, whatever they may have gotten with stock options or whatever, I think is nothing compared to the rampant corruption that is being practiced on the Bank’s lending operations.”

“If one would just take 10 percent as the rate of corruption on Bank-funded projects — I think last year they disbursed almost $25 billion — then 10 percent is $2.5 billion,” Berkman said, “and in many countries the figure is much higher. When I worked in Nigeria, it was closer to 40 percent and most likely still is. That’s an awful lot of money.”

“So, in terms of where the Bank has come in the last 10 years, I feel that they have made some progress, but they still have a very long way to go — people are still robbing them blind.”

While senior Bank officials declare that things have changed and corruption is not as rampant as it was, Berkman said, “my observations lead me to conclude that things haven’t changed at all. In fact, in private conversations with a number of people who are still there, the general consensus is that things are worse — I mean worse in the sense that they still circle the wagons and they are more concerned with appearing to fight corruption than in doing anything about it.”

Although making the case that Wolfowitz was forced out because he came up against the ‘gods of lending’ with his anti-corruption efforts, Berkman said, “Wolfowitz was a bad choice anyway. I mean he came to the Bank with a lot of baggage. Let uss face it. He was not popular to begin with and then he touched a very sensitive nerve at the Bank.”

Corruption hurts everyone, and it harms the poor the most. Sometimes its devastating impact is obvious:

• · A father who must do without shoes because his meagre wages are used to pay a bribe to get his child into a supposedly free school.
• · The unsuspecting sick person who buys useless counterfeit drugs, putting their health in grave danger.
• · A small shop owner whose weekly bribe to the local inspector cuts severely into his modest earnings.
• · The family trapped for generations in poverty because a corrupt and autocratic leadership has systematically siphoned off a nation’s riches.

Other times corruption’s impact is less visible:

• · The prosperous multinational corporation that secured a contract by buying an unfair advantage in a competitive market through illegal kickbacks to corrupt government officials, at the expense of the honest companies who didn’t.
• · Post-disaster donations provided by compassionate people, directly or through their governments, that never reach the victims, callously diverted instead into the bank accounts of criminals.
• · The faulty buildings, built to lower safety standards because a bribe passed under the table in the construction process that collapse in an earthquake or hurricane.

Corruption has dire global consequences, trapping millions in poverty and misery and breeding social, economic and political unrest.

Corruption is both a cause of poverty, and a barrier to overcoming it. It is one of the most serious obstacles to reducing poverty.

Corruption denies poor people the basic means of survival, forcing them to spend more of their income on bribes. Human rights are denied where corruption is rife, because a fair trial comes with a hefty price tag where courts are corrupted.

Corruption undermines democracy and the rule of law.

Corruption distorts national and international trade.

Corruption jeopardises sound governance and ethics in the private sector.

Corruption threatens domestic and international security and the sustainability of natural resources.

Those with less power are particularly disadvantaged in corrupt systems, which typically reinforce gender discrimination.

Corruption compounds political exclusion: if votes can be bought, there is little incentive to change the system that sustains poverty.

The conclusion – Corruption hurts everyone.

Indian nurses are applying in huge numbers to work in Denmark, but consultants cloud the issue

The number of Indian nurses wanting to work in Denmark has increased dramatically this summer – possibly in part to some shady recruiting companies in their homeland.

Between June and August, 4,507 Indian nurses applied for authorisation to work in Denmark, up from only 30 last year.

The Association of Danish Regions, which administrates the nation’s hospitals, said it welcomed the news that so many had applied, but added it was unlikely that all applicants would be successful.
‘We are always happy to take on well-educated labour if the authorisation is approved. But of course we can’t take 4,500 at once even if they are qualified, because it’s a huge task for hospitals to integrate foreign employees,’ said the chairman for the regions’ health committee, Ulla Astman.

It is estimated that between 1,500 and 2,500 extra nurses are needed to cover the labour shortage in Danish hospitals.

However, it appears that some Indian consultancy companies are making a quick buck off the news that Denmark needs more nursing staff.

Last year, a Danish company targeted India to train and attract nursing staff to Denmark. Jobikon trains nurses in India and cooperates with Danish hospitals looking to recruit foreign staff.
Jobikon director Niels Prip told The Copenhagen Post that the latest surge in applicants was not down to his company – which is currently training 10 nurses in India to work in Denmark – but due to unscrupulous Indian firms making money from local nurses.

The Danish Foreign Ministry set up a local Work in Denmark office in New Delhi last October to assist in recruiting specialists to Denmark and, according to Prip, word spread that there was a shortage of skilled workers in Scandinavia.

‘Work in Denmark has done a great job, but the side-effect was that a few companies in the south of India picked up on the fact there was a shortage and advertised in local papers for nurses to work in Denmark,’ said Prip.

According to the director, these companies charge a fee of several hundred dollars to process the application for authorisation.

However, Prip said applicants were only granted temporary authorisation if they secured a job offer in Denmark, which the Indian companies did not facilitate.

‘These nurses have a good reputation, but they probably won’t get jobs because they need someone here [in Denmark] to represent them. So there are a couple of companies that make a lot of money and a lot of disappointed nurses,’ Prip said.

The head of the Work in Denmark Centre at the embassy in New Delhi, Per Asp Larsen, confirmed there had been a proliferation of businesses for middlemen consultants in the Asian country.

‘At least half of all the applications we get come through consulting companies that often advertise far-reaching promises, such as shorter processing times.’

Larsen said the latest wave of nursing authorisation applications had not been processed through his centre, but were sent straight to the National Board of Health by companies who sometimes ‘do not provide their clients with all the necessary information’.