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Corruption and Conflicts of Interest

Corruption and Conflicts of Interest

A Comparative Law Approach

Studies in Comparative Law and Legal Culture series

Edited by Jean-Bernard Auby, Emmanuel Breen and Thomas Perroud

As in all periods of swift economic development and political upheaval, our era of globalization has brought corruption and conflicts of interest into the spotlight. This comprehensive study highlights the difficulties of devising global legislative and judicial responses to these issues.

Chapter 15: How Multilateral Development Banks invest corruption in their funded projects

Mariangela Benedetti

Subjects: law - academic, comparative law, constitutional and administrative law, corruption and economic crime, public international law


According to the aim of helping the poorest countries, the International Financial Institutions (IFIs)provide loans, both to the public and private sectors, in order to support economic and social development projects (i.e. dams, hydroelectric power, bridges, etc.). Such internationally funded projects present a significant corruption risk. In fact, borrower governments are usually plagued with weak procurement systems, insufficient supervisory personnel, inadequate resources for investigating and prosecuting corruption and poor legal rules and procedures to prevent, detect and address corruption. In addition to this, international loans mainly involve developing countries that are particularly subject to corruption. Moreover, at the national level, the projects are often implemented through public-private joint ventures, company consortia or by engaging private multinational corporations that operate simultaneously in different countries. In this way, corruption risk goes beyond the national boundaries and involves a variety of public-private actors within and outside borrower countries. This chapter illustrates the importance of investigating and punishing corporate corruption in Multilateral Development Banks (MDBs), which refer to the World Bank (WB) and four other regional development banks, including the African Development Bank (AFDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the Inter-American Development Bank (IDB). These MDBs represent a small group of the IFIs.

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