10 June 2015, Washington — The World Bank wants all corporate bidders on bank-funded projects to publicly reveal their true owners as a way of tackling fraud and cronyism in government contracts, a senior official said.
A key player in development finance with a $42 billion portfolio, the move would put the World Bank in the forefront of G20 proposals to unmask beneficial owners of shell companies, which often are used to hide illicit funds from crime and corruption.
The proposal is part of sweeping reforms to modernise contracting at World Bank for the first time in roughly 50 years, which are due for board consideration next month, Chris Browne, chief procurement officer at the bank, told the Thomson Reuters Foundation in an interview on Monday.
“We are very committed to transparency and integrity. We are very keen to take this to the next level,” Browne said.
The World Bank makes between $15 billion and $20 billion new loans annually, accounting for only a fraction of the hundreds of billions of dollars in government contracts issued worldwide.
But its procurement procedures can have an outsized impact on developing countries because they often adopt its standards. Currently the World Bank does not publish information about who bids on contracts, only who won.
It has developed a new online system called STEP to make bidding procedures more transparent and make projects easier to track. The beneficial ownership information could be included in that database, said Browne.
Anti-corruption campaigners support the move. Over 100 advocacy groups sent a letter on Monday to the World Bank’s board of directors urging them to include revealing the ownership of bidding companies in the procurement overhaul.
“We are asking the World Bank to take a leadership role to prevent the corruption and cronyism that exists in government contracting when politically-connected officials and companies are able to hide their connections behind the screen of an anonymous company,” said Shruti Shah of Transparency International-USA.
Browne said he was working on the precise mechanism, which would be a change for many countries that currently allow shell companies to remain anonymous.
Other proposed reforms include allowing countries to consider quality along with price in selecting a contractor and a more flexible approach tailored to the specific country and project rather than a one-size-fits-all procurement procedure.
The proposals also include provisions for more technical support to help countries develop contracting skills and improve their abilities to detect fraud, bribery and collusion.
*Stella Dawson; Ros Russell – Thomson Reuters Foundation