Fraud and corruption often play a major role in the expenditure of development funds and development aid; large amounts remain at stake. How exactly does this process work and why can people so often get away with corruption in developing countries? This article attempts to answer these questions; Ultimately, it turns out that corruption and fraud are very difficult to tackle when spending development aid and development funds.
Fraud and corruption
Fraud involves misrepresenting the details or circumstances of a particular situation; it does not necessarily have to do with money, but has more to do with data manipulation. The purpose and consequence of this is that other people are influenced in their decision, or that automatic decision systems are influenced.
In addition to fraud, everyone is familiar with the concept of bribery in the same context; offering money, goods or services to obtain a certain illegal act or priority position. Bribes come in two forms; a kickback is a bribe that is asked by someone for a certain service (I want a bribe for that building permit), bribery is the same as a bribe itself is offered (if I give you a bribe, will you give me that building permit?)
Developing countries and the world bank
Fraud and bribes are the biggest barrier to the proper use of development funds and development aid in developing countries. Development money is made available by governments to the World Bank to carry out projects in developing countries. This world bank is owned and run by developing countries themselves. One already sees a small problem arising here, which will be discussed later.
The World Bank spends the money through various agencies on the actual projects. Among these bodies, one should see, for example, a PIU (project implementation unit) or a loan broker. Both can of course cause problems when spending money. For example, it is possible that the bidding process for a particular project is not fair, that a PIU family or friends are biased (conflict of interest), that companies make price agreements with each other (collusion), or that poor quality is simply delivered.
Corruption and development aid
Kickback often occurs with, for example, the donor country, the contractors or subcontractors; but in fact, various forms of fraud and corruption can be encountered throughout the chain. It is not rare that the world bank itself recognizes these irregularities and can even identify some suspects in the corruption. The problem, however, is that the World Bank cannot tackle this corruption itself; the people who need to be tackled are often in government and the World Bank has no mandate to take action on this. The World Bank is also never allowed to take measures against corrupt government officials, because these governments are the same ones that own the bank. Moreover, the World Bank cannot stop providing aid to developing countries where corruption occurs; After all, providing aid is the World Bank’s right to exist. No more aid would be the end of the world bank, after all, the countries that need help the most are often also the countries with the most corruption.
Corruption and developing countries
What is missing in corrupt countries that allows this corruption to flourish so rampantly? First of all, this is a free press; If corruption cannot be exposed, it cannot be tackled. In addition, other moral values also play a role; After all, corruption can also be seen as a good way to meet the needs of the family. A good government is also important; many countries lack a good government system or the right people in the right places. Finally, a good judicial system is essential; It is precisely this lack that ensures that corruption can occur with impunity in many countries.