And my experience in writing reports is the connection between writing a report, reaching a conclusion, and having some implementation that is never very clear--until I came to the World Bank. Now, I'd like to think that this report, which really does read fairly well, that we produced a little more than a year ago has gone so far in its implementation in the Bank.
I was struck particularly by Bob's emphasis on trust, which is part of my usual speeches in a somewhat different context, because trust is important in this area, but it's important, and we are reminded so much, in financial markets now. I never thought I would live to see the day when the biggest banks in the world were unable or unwilling to deal with each other for more than overnight and sometimes not even overnight for some feeling of distrust as to what might happen.
And it's not just distrust in financial markets or the private financial markets that in some ways is so striking and has so complicated this current situation. What is really disturbing is the sense of distrust in governments, and I will give you an illustration of that.
When the United States Government says it will protect this or that kind of company, or it will protect these or those securities, it doesn't bring forth a response in terms of trading or in terms of pricing that you might expect if they really trusted the statement.
What do we see here? We see an erosion, I think, in trust in government, and I'm talking now of the United States Government, but it's probably applicable more broadly. There has been survey after survey in the United States, and one of these surveys asks the same question over the decades, and one of the standing questions is: Do you trust your government to do the right thing most of the time? That doesn't sound like the most difficult test to make--do the right thing most of the time, like 51 percent. The answer is 20 percent trust the government to do the right thing most of the time. Somebody told me the latest annual survey showed something less than 20 percent. That is what we are suffering from, I think, in a wider context than just corruption.
But let me say that a couple nights ago, Jim Wolfensohn was celebrating his 75th birthday--he's a young fellow, but it reminded me--and he spoke proudly of his going to the World Bank and his work with the World Bank, but it was just a little more than ten years ago when he made that speech where he mentioned the word "corruption" and said that was an important challenge for the World Bank, a "cancer on development." It was one paragraph in his speech, and obviously, this problem has gone on for some time, but I have not heard a more eloquent exposition of the point than you all just heard a few minutes ago from Bob Zoellick, and I'm glad I came to hear it.
I was handed by Leonard some remarks I made when we issued this report--I had no idea it went on for so many pages--but what I noticed with gratification was that there was a lot of underlining of particular points. Now, when you see a report like that underlined, it is one of two things. If it's underlined for emphasis, that's fine; if it's underlined with a big question mark in the margin or an exclamation point or two, or "That's dumb," that's another thing. I didn't see one question mark in the margin, Leonard, for which I am very grateful.
You know, it is timely and a pleasure for me to be here particularly when the new members of the Advisory Board are here. We consider that one of our critical recommendations. Why do we consider it so critical? Because this whole record, as I'm sure you realize, has been a bit of a struggle for the Bank in kind of acclimating itself to the importance of corruption and infusing it through the operations. And we had a feeling that to make sure the message got through and continued, having an outside group to oversee from two dimensions--one is to kind of keep interest, keep a little fire on, as to the importance of this subject, but also to provide some confidence that had not been there earlier that the program would be carried out in a fair, sensible, effective way, respecting the rights and conditions that are appropriate.
So I think from both directions, we thought that at least for the time being, this kind of outside group had a very important role to play, and I'm glad to see the kind of people who have accepted responsibility. I had a chance to work with Mark Pieth, who isn't here, on an earlier investigation in the United Nations, and he is, added to the talent you see before you and the experience you see before you, a man who has had very long experience, incredible experience, in the anti-corruption area.
Now, I am told--Mr. Daboub keeps me in track of these things, and he proudly calls me up every few months to say "We have adopted another recommendation"--you've got them all adopted now, with a couple that I know are still in process, and that's terrific, because it's not often that somebody in my position who has written a report can actually see it implemented in a substantial kind of way.
Now, it is also true--and I think Bob has addressed this point--that I'll never forget that one of the retired or ex-senior officials of the World Bank, commenting on a draft of our report, said the most important part was not those 18 recommendations or whatever, the specific recommendations--it was the kind of tone that was argued in the first ten pages. He said it's the first ten pages of the report that are really important and whether this whole kind of ethic and effort suffuses the operation generally. And I hope, and from what I hear, that that is beginning to take place and is taking place in a large organization where it is sometimes difficult to change.
I noticed in these remarks I made a year ago that I started off by saying something about the challenge before the World Bank, the sense that it was in not quite a crisis but a point of difficulty because what the World Bank was doing in supplying capital to developing countries has to some degree in many cases been superseded by private markets, and the World Bank had a smaller proportion of the whole, and whether it had the same leverage that it had earlier was questioned by a lot of people, I think rightly. But it's remarkable how that has changed in the past year. In the midst of financial crisis, suddenly, the deficiencies of the private market, the discontinuities of the private market, the lack of confidence that I mentioned are very apparent, and the potential for an institution in which people do have confidence, confidence in integrity and confidence in its competence, has suddenly become very important again in dealing with this, what is now a worldwide crisis, not just of economics but of confidence.
I am struck in that connection that while it's evident that the role of the Bank is risen and restored, I might say, during this period, it is very difficult to almost read the daily press without reading stories about corruption and how corruption is affecting development and how corruption is unfortunately undermining some of the trust I talked about in my own country and other developed countries, but it is really crucial, I think, as part of the development process, and that is becoming better and better understood, not just because of the--well, partly because of the crisis--that some of the cases of flagrant corruption are so evident, beyond anything the World Bank is doing, but its conflict with development and dealing with this crisis has become very evident.
So I just want to--I can't say it with the same eloquence--but the remarks that Bob just made about the critical role of integrating this effort about corruption into your operations and into your attitudes and into your performance seems to me if anything much reinforced from what we were able to say a year or two ago.
I can't tell you the degree to which this institution, which in some sense is a small part of the world economy important as it is, and the way you approach these problems will send a signal to other development institutions internationally and nationally, and I think the critical importance of that should not be forgotten. And I suspect that what has been going on in this institution is already affecting to some degree what other institutions are doing in this area, and I look at the World Bank to take a leadership role in making sure that happens, because it does have the respect of other development institutions and I think the respect of world leaders generally.
So I think I will cease and desist at that point and wish Leonard well in developing relationships with the rest of the Bank.
That other crucial recommendation that we made for the Oversight Board, the other one was that this isn't going to work unless the Management of the Bank itself takes responsibility for the anti-corruption program and for implementing the reforms that are proved necessary in particular countries as revealed by the investigations of INT. And to the extent that is happening, and I believe it is, I think the foundation is being laid for this institution assuming and maintaining the kind of leadership role that it really had earlier and can be strengthened and reinforced today in the midst of what is the biggest financial crisis of my lifetime, and my lifetime has been fairly long, so that covers a considerable range of activities.
Volcker Panel Full Report
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