The World Bank is crowing over a recent decision by the Supreme Court of Canada involving engineering giant SNC-Lavalin, international corruption, and the rule of law in Canada. The Supreme Court -- seemingly unaware of evidence to the contrary -- all but declared the World Bank to be one of the world's premier corruption fighters, a characterization the World Bank is now gleefully spreading far and wide, including last week in a hastily arranged panel discussion in Washington, D.C.
The case before the Supreme Court hinged on whether the World Bank and its officials should need to cooperate in a case involving Canadians accused by World Bank whistleblowers of conspiring to corruptly win a World Bank contract for a Bangladesh bridge-construction project. With the World Bank the winner at the Supreme Court -- the Court decided the World Bank did not need to give Canadian courts details about the whistleblowers' credibility, knowledge or motivations -- the loser is Canada's justice system.
As the Court and parties to the case acknowledged, the Court's decision compromises the justice system in that defendants could now be unable to "make full answer and defence": Canadians falsely accused of corruption in future could more often be unable to get a fair trial, and Canadians who are corrupt could more often be able to get off scot-free.
Here's what the Supreme Court -- which characterized the World Bank as being "particularly well placed to investigate corruption and to serve at the frontlines of international anti-corruption efforts" -- should have known about the World Bank's role in corruption before giving it a propaganda victory.
The level of corruption at the World Bank, which is comprised mostly of Third World countries, is so ingrained that even reformers at the top are powerless to clean it up.
U.S. lawmakers have warned about corruption at the World Bank and its sister multilateral development banks (MDBs) for two decades. In 2004 hearings before the Senate Committee on Foreign Relations, Northwestern University's Jeffrey Winters testified that, since the World Bank's creation in 1946, roughly $100 billion in World Bank loans, and another $100 billion from MDBs, went into private pockets. "On average, the poor have received about 70 cents on the dollar in loan funds from MDBs," Dr. Winters said. In the case of loans to Africa, the amount stolen is more like 90 per cent, according to a World Bank insider.
In a 2007 investigation, Paul Volcker, former chairman of the Federal Reserve and chief investigator of corruption on the UN Oil-For-Food Program, determined that decades of bid-rigging, bribes and other problems of graft in the World Bank's Third World lending operations led to the loss of "a sizable fraction of the funds provided for some Bank projects."
The level of corruption at the World Bank, which is comprised mostly of Third World countries, is so ingrained that even reformers at the top are powerless to clean it up. When newly arrived bank President Paul Wolfowitz, the former U.S. Deputy Defense Secretary, tried to cut off corrupt loans, the borrowers -- including China, India and other Third World countries whose officials often pocket a share of this largesse -- successfully deposed him. The deposition was aided by the Bank's own staff, many of whom feared exposure for their own corruption and balked at being sent back to their home countries in the Third World.
As an internal report to the Bank itself found, Bank loans often cannot be accounted for because loans given to Third World governments, many of them governed by lifer-leaders, are impossible to track down. Moreover, these borrower nations, with nearly a majority of the shares and votes, regard anti-corruption campaigns as an infringement of their sovereignty. As the Wall Street Journal concluded in an assessment of the World Bank's governance, "the inmates are now in charge."
In its apparent ignorance of the World Bank's culture of corruption, Canada's Supreme Court ruled that the World Bank's need to maintain immunity effectively trumped the needs of Canadians to our traditional right to "make full answer and defence." As a result, four Canadians who will be standing trial in the coming months for alleged bribery, three of them former SNC-Lavalin employees, may be wrongfully convicted because their lawyers cannot obtain evidence that might, for example, show the whistleblowers to have been in the pay of SNC-Lavalin competitors for the Bangladeshi bridge contract. Or, the four might in fact be guilty but need to be released because their lawyers successfully argue that the evidence withheld by the World Bank could prove the accused's innocence, and that the prosecution therefore cannot make its case beyond a reasonable doubt.
Either way, courtesy of our Supreme Court, Canadians cannot be confident of the integrity of our judicial system. And all to protect the immunity of an organization that only deserves scrutiny.
This blog was first published by the Financial Post.
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