Magazine article Insight on the News

Is There a Plan to Clean Up the IDB? after Many Months of Denial That Anything Was Amiss, Officials at Latin America's Key Development Bank Have Established Procedures for Greater Accountability. (the World: Inter-American Development Bank)

Magazine article Insight on the News

Is There a Plan to Clean Up the IDB? after Many Months of Denial That Anything Was Amiss, Officials at Latin America's Key Development Bank Have Established Procedures for Greater Accountability. (the World: Inter-American Development Bank)

Article excerpt

The stakes had grown increasingly high, but the speaker knew his subject. In an address kicking off the annual meeting of the U.S. taxpayer-financed Inter-American Development Bank (IDB), held this year in Milan, IDB President Enrique Iglesias declared: "Corruption is a concern in the public and private sectors alike, distorting economies and finances and creating incentives that impact every level of society. It puts democratic institutions in peril, holds up countries' socioeconomic advancement and, if allowed to take root, can undermine the credibility of democratic institutions and systems."

The event was less well-attended by international luminaries than those held in previous years. However, Iglesias, elected late last year to his fourth five-year term, stressed to the gathering that a series of measures would be implemented to help create accountability in the bank--Latin America's largest source of investment capital--as well as in the programs it finances abroad. The IDB, Iglesias added, was determined "to ensure that bank employees act ethically and with absolute integrity, ensure that there are effective controls and oversight arrangements in place, and equip the bank to support the member countries' anticorruption efforts."

"To that end," he announced, "we have launched a review of internal controls and procedures, with a view to bolstering transparency rules and requirements already in place in the bank. We are instituting zero-tolerance policies for purposes of the bank's projects and programs, prompted by the need to ensure that our activities are free from fraud and corruption and taking appropriate disciplinary measures in the event of confirmed instances of unethical conduct."

Iglesias' unveiling of the reform agenda followed a series of investigative articles published by INSIGHT and INSIGHT Online that uncovered a wide pattern of high-level cronyism and other misconduct at the bank, in some cases so severe that it is believed to have contributed to an attempted suicide by a distraught bank supervisor. The series already has led to at least one criminal referral of an IDB auditor in an alleged jobs-for-money kickback scheme and, according to more than a dozen sources, has created a situation of near revolt among bank employees who say they are fed up with the alleged institutionalized corruption within management.

The promised reform also came as U.S. congressional investigators began to probe the Inter-American Investment Corp. …

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