World Bank to beat the cheats with corruption crackdown
Friday, 23 September 2005
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Banks that harbour money pilfered by developing country dictators will be forced to return the cash under a crackdown on corruption unveiled yesterday.
The World Bank said it would ratchet up pressure on governments to pull down banking secrecy laws that allow financiers to retain cash stolen from poor countries. Paul Wolfowitz, the bank's president, said recovering stolen money would form a central plank of the fight against corruption he has made as a mainstay of his five-year term.
Speaking at the outset of the lender's annual meetings in Washington, he said: "This is hard but it has to be done. It is a way to ensure that developed countries help developing countries." He hailed a decision by Switzerland to engineer the return of almost $500m (£279m) of money to Nigeria stolen by the former dictator Sani Abacha.
"This is an example of what can be done," he said. "There are lots of cases where there are claims on assets that have been taken and it should be possible to simplify these claims."
The World Bank played a key role in brokering a deal between the two countries by ensuring the money would be pumped into health, education and infrastructure. The move is likely to rattle the heads of major global banking institutions that have branches in countries known for their banking secrecy.
Mr Wolfowitz said the bank was working on a specific plan but declined to give details. His advisers said it would focus on the Financial Action Task Force, a global body, tasked with cracking down on money laundering. One said: "The Abacha case represents a breakthrough. We hope the contribution by Switzerland can be repeated in future efforts - certainly the World Bank will play a major part."
He said that the $460m represented just one-third of the total loot plundered by Abacha. The former president ruled Nigeria from 1993 to 1998 and is thought to have siphoned off billions of dollars into personal bank accounts. Although Swiss authorities froze the funds in 1999, they refused to return it until they were given guarantees about how the money would be used.
Meanwhile, Mr Wolfowitz played down hopes that a deal brokered by the Chancellor at the G8 summit in Gleneagles to wipe out $40bn of debt owed by 18 of the poorest countries would be approved this weekend.
