I would not deposit a penny at the World Bank

It's sad that our tax dollars are shipped there by the truckload. Today's WSJ:

A senior operational bank source has now showed us a second set of INT reports concerning corruption in seven projects in Cambodia. The reports are so sensitive that they were never shared with Cambodia's government, lest they put the lives of whistleblowers at risk. We have therefore agreed not to publish or quote directly from the documents, as well as to obscure certain details. But take our word for it: These are remarkably specific reports that document corrupt practices and name officials and companies by the dozen. Even more astonishing, senior bank officials have essentially let the Cambodian government get away with it.

As usual, the projects have the most benign-sounding names: "Land Management and Administration"; "Provincial Rural Infrastructure"; "Flood Emergency Rehabilitation"; "Provincial and Peri-Urban Water Supply and Sanitation," and so on.

Yet in each case, evidence of extortion, bribe-taking, bid-rigging and procurement manipulation was rampant. In one or more of the projects, 75% of companies seeking project work admitted to offering bribes to government officials, some of them in the tens of thousands of dollars. In another project, investigators found that contracts for 17 out of 18 new office buildings were manipulated in favor of just one company, and that they had been built with substandard materials -- or not built at all. The jockeying for bids even led to contracts being taken out on people's lives. And so on and on, causing one to wonder what part of the World Bank's work in the country wasn't corrupted.

When INT released these reports inside the bank in May 2006, then bank-president Paul Wolfowitz immediately put the projects on hold, and demanded the Cambodian government refund the $12 million the bank estimated it had lost to corruption. Bank sources tell us Mr. Wolfowitz would have pulled the bank out of Cambodia altogether, but he was prevailed on to adopt what amounted to a "stop-go" strategy toward Cambodia.

The bank's bureaucracy had its own ideas. Within months the bank had lifted its suspension of the land management project and two others. In February, James Adams, the bank's vice president for the East Asia and Pacific Region, wrote to the Cambodian Finance Minister noting brightly that despite the INT's findings, the bank was ready to forgive: "Considering the Government's expressed commitment to improve governance and fight corruption . . . the Bank proposes to seek the immediate refund of only a portion of the [bank] funds against the misprocured contracts." We're told that not one company has been debarred, despite INT's recommendations.

In August, Mr. Zoellick visited Phnom Penh, where he announced that the bank "wants to assist the Government to enact reforms to reduce rural poverty, encourage social development, improve the business and investment climate, and strengthen the rule of law." Yet if the INT reports mean anything, it is that Cambodia's government cannot administer even the most basic projects honestly. It's far from clear that further aid won't simply generate more corruption, however many strings are attached.

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Mr. Zoellick is still new to his job, and no doubt he is eager to win over the staff that ousted his predecessor. Yet Mr. Zoellick's most basic obligations are not to them. They are to the bank's donors and to the world's poor, both of whom are cheated when corruption is tolerated. Cambodia is one country where that happens. If the bank isn't willing to act against it, then Congress should deny the bank more money until it does.