Watchman, who watches thee? Donors and corruption in less-developed countries.

• Author: Rashid, Salim
• Position: REFLECTIONS

The status of the professional economist, political scientist, or other social scientist is deeply committed, by training and by the need for security and advancement, to the official concepts, problems, and theoretical structure of his science.

--Robert S. Lynd, Knowledge for What? The Place of Social Science in American Culture

The recent oil-for-food scandal at the United Nations (UN) brought to light several interesting facts. We see that the donor agencies entrusted with implementing humanitarian goals can be subject to considerable mismanagement and that they can vigorously deny any responsibility and adamantly refuse outsiders an opportunity to examine their books. Even the U.S. Senate was refused a look at the UN's accounts. (1) Leaks to the news media eventually forced the UN to disclose some relevant information. Is this case an isolated one, or does it indicate a deeper malaise in the world of humanitarian acts?

The economic approach to understanding society is based on examination of the consequences of self-interest, and this approach naturally makes us skeptical about altruistic motives. Perhaps the most important problem facing economists is world poverty. In this article, I turn a skeptical eye on the individuals who specialize in finding solutions to this all-important problem. Considering economic effectiveness alone, many observers, including the former research director of the International Monetary Fund (IMF), Kenneth Rogoff, have questioned the value of development-aid donors. (2) I begin my examination by presenting some general grounds for caution about altruism and then provide a concrete example from Bangladesh. My work has focused on the donor agencies, but to my sorrow I recently encountered an expose--complete with names and dates--of corruption and wrongdoing by the medical scientists at the International Centre for Diarrhoeal Disease Research, Bangladesh, an internationally famed research center (All 2004). Perhaps the rot in the donor culture has spread.

The IMF and the Asian Development Bank (ADB) employ more than one thousand economists at salaries that range from a starting average of $90,000 to approximately $300,000 at the highest levels. (3) The World Bank has a similar scale. The salaries arc tax exempt, so we can add another 30 percent to these numbers to get the approximate remuneration equivalent to a salary subject to taxation. I was unable to find any figures for the number of economists the World Bank employs, but if the bank's visibility is any guide, the number may be thrice as many as the IMF employs. Let us ignore the UN altogether--we already have enough examples to make my point. The total number of employees who are considered to be economists in these three donor agencies comes to some five thousand individuals. It is not inaccurate to say that these economists owe their living to the existence of poverty. If poverty is cured, where will so many bright, pricey professionals find new jobs? For all these individuals, there is an implicit tension between self-interest and altruism. "Poverty" has translated into considerable comfort for some people. (4)

Why should we be skeptical about the actions of the major donors, such as the United Nations Development Program (UNDP) and the World Bank? The simplest reason is that these organizations refuse to open themselves to public scrutiny. When sufficient leverage has succeeded in opening their books, grounds for concern have been obvious, and not just in the oil-for-food program in Iraq. Under the headline "World Bank Accounting Allegations Are Verified," a communique from the Joint Economic Committee tells us: "The Joint Economic Committee (JEC) has obtained evidence documenting allegations of accounting irregularities at the World Bank in the 1990s, Chairman Jim Saxton said today. The new information corroborates allegations of accounting errors amounting to tens of millions of dollars made by former World Bank employees in interviews with committee staff." (5)

Why will those who preach accountability and transparency to the whole world not open their own books? Leading by example has always been the most effective form of leadership. What ails the donors that they will not avail themselves of the chance to demonstrate the value of what they preach? Their refusal to take the obviously desirable action allows...