Corruption is among the greatest obstacles to economic and social development. The harmful effects of corruption are especially severe on the poor, who are hardest hit by economic decline, most reliant on the provision of public services, and least capable of paying the extra costs associated with bribery, fraud, and the misappropriation of economic privileges. Corruption also represents a significant additional cost of doing business in many developing countries. It undermines development by distorting the rule of law and weakening the institutional foundation upon which economic growth depends.
Corruption damages policies and programs that aim to reduce poverty, so attacking corruption is critical to the achievement of IFC's overarching mission of poverty reduction. Countering corruption is therefore aligned with IFC’s overarching mission to promote sustainable private sector investment in developing countries, to help reduce poverty and improve people's lives.
IFC has always expected its staff and clients to maintain the highest standards of ethical behavior and compliance with the law and is at the forefront of the market and of development institutions in guarding against fraud and corruption in its work. This approach complements and supports IFC's determination to act as a leader on sustainability. Avoiding fraud and corruption is necessary to ensure that IFC's investments are successful, that its resources are being used effectively, and that its development objectives are met.
IFC’s Sanctions Process sets clear standards and procedures if there are allegations against clients or partners. These standards have gained broader acceptance. Multilateral Development Banks (MDBs) have stepped up their fight against corruption with the signing on April 9, 2010, of a joint Sanction Accord with Cross Debarment as a new enforcement tool, greatly increasing potential penalties for firms engaging in fraud and corruption, and adding a strong deterrent.
The World Bank Group is committed to improving governance and fighting corruption in member countries through the Governance Anti-Corruption framework, which has three main pillars: