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Technology Is Helping the Fight Against Corruption

Posted: 12/09/11 11:27 AM ET

Just last week, a man in northern India made news around the world when he dumped 40 snakes on the floor of the local tax office, angry at allegedly being asked to pay bribes to local officials over a land allocation. People will use whatever means they have at their disposal to take a stand against the corruption that stifles their daily lives. And in the developing world the cost of corruption can take a heavy toll: a bribe paid by a father to get a license can mean a poor family goes without food; books never delivered to a classroom mean children lose an opportunity to learn; looting in irrigation means farmers are forced to pay a high price to water their crops or watch them die.

It's estimated that each year developing countries lose some $20 - $40 billion to corruption, with billions of dollars stashed in safe havens abroad. It's a staggering amount when you consider $100 million would pay for full immunizations for four million children. Equally concerning should be the monies lost on the ground in countries -- the goods and services that were promised but never materialized; and the inflated contracts that only served to line the pockets of corrupt officials, leaving ordinary citizens paying the price.

As we mark International Anti-Corruption Day, we should acknowledge that there is no single quick fix for curbing corruption. But there are steps that can and should be taken to raise the cost of being corrupt -- to send a powerful message that corruption doesn't pay.

The farmer had snakes. What he didn't have was a well-maintained e-government program that might have obviated the need for a snake-filled protest. (Although we are now working with the Government of India to put in place just such a program.)

Technology is already democratizing development, vastly improving how critical information and services can reach beneficiaries. And when this doesn't happen, technology can make it easier to figure out why, and to hold someone responsible. Using the full potential offered by modern technology -- such as open government initiatives -- can help harness transparency, reducing corruption's drain on development. Criminals have a much easier time perpetrating crimes in the dark.

We already see how technology can make a difference. Take Indonesia, where an Urban Poverty Program, which distributes $150 million annually in World Bank and government funding, has successfully harnessed the Internet and mobile phone technology to enhance project monitoring, transparency, and overall effectiveness. Or Moldova, where the government has committed to using technology to improve governance and citizen participation. Or the Philippines, where Finance Secretary Purisma has started an online public tip-off program called Pera Ng Bayan, which netted dozens of tax evaders and smugglers within its first six months of operation.

We've seen it ourselves within the World Bank -- where the simple use of a phone or the Internet has helped the Bank's Integrity Vice Presidency, known as INT, in its investigations of fraud and corruption in Bank financed projects. INT's regular hotline already receives about 26,000 hits a year. In the past financial year, about 370 were directly related to Bank financed projects. During the year, the World Bank sanctioned 34 firms and individuals, while multilateral development banks as a group honored 37 cross-debarments. During that same time, the World Bank built precautions into high-risk projects valued at more than $14 billion dollars, while stopping a number of tainted contracts before they were awarded.

New technology is helping fight fraud and corruption in other ways. Satellite photography enabled INT investigators to ascertain that building for a World Bank-financed project in a conflict zone had not been completed, despite the government's claims to the contrary. In its Detailed Implementation Reviews, INT uses data-matching to identify thousands of suspicious procurement transactions, for example, firms that were supposedly competing with one another that have identical phone numbers or addresses listed. In a recent investigation, cyberforensics allowed INT to determine that twice on the last day before a firm had to declare its financial results, it modified over 300 cash payment entries to remove indications of corrupt payments.

The World Bank is currently developing a next-generation software to detect red flags indicating fraud, corruption and collusion in public procurement. Outside the World Bank, new technologies will allow consumers to determine whether a drug is counterfeit before they buy. The purchaser sends a code marked on the drug's package to central databases by text message and gets a reply in seconds saying whether the drug is a fake or is real.

Inspired by the boom in apps, the World Bank is creating its own Integrity App, aimed at giving citizens instant access to information about World Bank-financed projects, as well as a means of instantly reporting concerns of fraud and corruption. The app allows users to send a photo of the half-built school; an audio recording of a request for a bribe or any other file or document that might be relevant, directly to the Bank. Future versions of the app will advise users of the exact location of Bank-financed projects and use QR tags to provide specific information on how much money has been spent and how close a project is to completion. In areas where smart phones are less prevalent, a separate mechanism will allow anyone with a basic cell phone to contact INT free of charge.

While technology can be an effective tool to transparency, we also need to be alert to its dark side -- the exponential growth in cyber crime. Just last month PriceWaterhouse Coopers reported that cybercrime is now the fourth most common type of economic crime. Ten years ago it was barely a blip on the radar. One way we can curb this trend is by doing more to block the transfer of dirty money through open and transparent financial systems. It's an issue the Bank intends to push when law enforcement authorities from around the globe -- members of the International Corruption Hunters Alliance -- meet at the World Bank again next June.

It's sometimes said integrity is how you act when no one else is watching. The reality today is with the power of modern technology we can all watch to varying degrees. Technology can give real meaning to transparency and accountability; can help bring sunshine to the darkness. But technology is also human-made and human-driven. Technology can help. Integrity will always count.

Ms Anstey is Managing Director of the World Bank
Mr. McCarthy is the World Bank's Integrity Vice President