Fighting Corruption
Corruption jeopardizes development successes
Corruption is a widespread phenomenon in many of the countries in which KfW Entwicklungsbank finances projects under Financial Cooperation (FC). It leads to competitive distortions and disadvantages for the development of the country concerned. These can in turn seriously diminish some of the successes of development cooperation overall. For this reason KfW Entwicklungsbank works under Financial Cooperation to better exploit its possibilities to actively contribute towards combating corruption.
Measures under FC
For several years KfW Entwicklungsbank has been expanding its means to help the partner institutions to avoid corruption. Moreover, inhouse measures are to prevent opportunities for bribes to be offered or taken from arising. In 1998 a bank-wide working group "Corruption Prevention" was created. This group, which spans various departments, is responsible for analyzing corruption risks and helping to avoid them from occurring.
The working group's first result was the drafting of "Rules of conduct for the prevention of corruption" for KfW Entwicklungsbank employees. New staff members receive a copy and are given more detailed information during introductory events. The department heads must discuss the topic of corruption with their staff at least once a year at department meetings.
The awarding procedures are carried out by the project-executing agencies independently. The executing agencies are supported in this task by consultants and subject to review by the project managers at KfW Development Bank. This procedure offers diverse opportunities for preventing corruption. Additionally, an anticorruption clause has been added to all financing and loan agreements in FC since October 1, 2001:
- The borrower or recipient of the financial contribution must pledge to ensure that the persons to whom he assigns the preparation and execution of the project neither request nor accept any unlawful payments or other benefits.
- KfW Entwicklungsbank explicitly draws its contractual partners' attention to the fact that, in the case of a violation of this clause, disbursements will be halted and payments already rendered may have to be refunded.
The new clause reinforces the judicial position of KfW Entwicklungsbank. In case of doubt the contractual partner must substantiate that he has undertaken appropriate efforts to prevent corruption.
To complement this, a declaration of undertaking for consultants was incorporated into the Guidelines for the Assignment of Consultants.
A comparable declaration of undertaking was also added to the Award of Contracts for Supplies and Services.
This guideline is currently being completely revised. The purpose of the revision, among others, is greater transparency and a stronger focus on competition in the awarding procedure. Transparency International (TI) is included in the revision process of the award guidelines.
Examples from practical experience
Strict "probity rules" were drawn up and applied to the tender and award of an operator agreement for a treatment plant to recover drinking water in Windhoek, Namibia, that essentially lay down transparency rules for the relations among all interested parties. For the project in Windhoek we assess our experience with the strict set of rules as quite positive. Also, The new clause reinforces KfW Entwicklungsbank judicial position. In case of doubt the contractual partner must substantiate that he has undertaken appropriate efforts to prevent corruption.
has applied suggestions by Transparency International to certain projects in order to test new procedures. In a bridge project in Cotonou (Benin) an anti-corruption clause was incorporated into the tender documents in concert with the TI Chapter Berlin.
Further Information
