Remarks at World Bank Integrity Day
                                         World Bank Integrity Day

                                      Wednesday, December 3, 2008
                                            TRANSCRIPT

MR. McCARTHY: Thank you very much, ladies and gentlemen, colleagues and friends.

Welcome to this fitting occasion at an opportune time. We are privileged to have with us President
Zoellick and Chairman Volcker to lead the way, and a special welcome to the esteemed members of the
International Advisory Board, three of them; Ms. Ngozi Okonjo-Iweala, one of our Managing Directors;
and thanks to the EDs who are here, the other MDs, Vice Presidents of the Bank attending, and welcome
to you all.

I like cab drivers and barbers. I am still new in America, you know? So the other day, I drove with a cab
driver, and he told me that in the country that he originates from, nothing gets done unless you--what he
calls--"Chae Mzee." Now, those of you who speak Swahili know that means "Give the old man some tea."
It's a nice way of saying and describing what corruption is.

On the flip side of the coin, Ben Heinemann in the Bloomberg article on the 4th of November blamed the
lapses of business integrity for the financial turmoil we see at present. In short, as he put it, there was a
failure to fuse high performance with high integrity.

Back to my continent, Africa, three years ago, the Prime Minister of a government in Africa said that
"Integrity is about doing the right thing when no one is watching."

Yesterday, the JPAs of the Bank--typical--anticipated this event and had their own Integrity Day, and one
of the young people, more aspiring people, said that "Integrity is about the steps a business takes to
protect its brand."

So today we focus on this Latin term, "integra," "integer" meaning "whole." We want the Bank's lending
and assistance programs to be free from corruption, because like all moving targets, corruption is the
sharp end of poverty, and I think we need to accept and understand that because there are those people
who design to steal the Bank's money and to corrupt others so that it becomes a way of life and way of
doing business.

Another African icon, Nelson Mandela, who is old now, addressed some prosecutors in Cape Town in
2000, and he quoted von Savigny when he said [quotation in German]--"The prosecutor is the gatekeeper
of the law." Whoever thought that an old Chosa man would quote a Prussian justice minister from the
19th century--but that's the world, eh?

So in that sense, all of us are gatekeepers of the Bank, all of us, because we work for one company.

INT should be what the French call "la bête noir" of corrupt companies and crooked individuals. INT
should be their worst nightmare.

So I'd like to thank all the people in INT present here for their uncompromising work and commend those
who help them punch above their weight.
I would also like to pause at this time to just thank the people who have organized this event. I think they
have done excellently well, and I think it is appropriate that we acknowledge them and applaud them.

[Applause.]

MR. McCARTHY: A critical challenge for the Bank is to get to the accident before it happens, to
anticipate and prevent. As Einstein aptly said, "Intellectuals solve problems, and geniuses prevent them."
But in doing so, we must reach out to others to get it right, else we risk talking to ourselves.

I read the first 42 pages of the Volcker Report again on Saturday evening--that's what I do on Saturday
nights--the President goes--he watches movies--

[Laughter.]

MR. McCARTHY: --and I thought to myself that if we can implement these recommendations and apply
them around the world, we can turn around governance strategies in development and in the fight against
crime.

I want to turn finally to a man I met for the first time on the 18th of February 2008. He offered me tea. He
didn't say "Chae Mzee," but typical, he also corrected my English. He told me there is no such English
word as "proactive." So you will note that I haven't used the word "proactive."

In September this year, one of us in this room who would prefer to remain anonymous described Robert
Zoellick as "a Renaissance man." On the 8th of October--I write down what he says; I learn from him--he
reminded the Bank's Senior Management that "Our corporate brand is honesty." One of the people on my
left almost fell off his chair. He said that integrity is our number one corporate principle.

President, thank you.

[Applause.]

MR. ZOELLICK: Well, thank you very much, Leonard.

Good morning, and welcome to Integrity Day at the Bank. It's a great pleasure to be here to launch this
very important event, a day of initiatives that recognize the value of INT governance and anti-corruption
work to the institution and, as part of that, to help us build an inclusive and sustainable globalization.

I want to open by thanking all of you for what each and every one of you do every day. I started this
morning with a videoconference with our colleagues in Delhi and Mumbai, because they obviously went
through some pretty traumatic events over the weekend. Five if our staff were caught in the hotels; two of
them were some of the last to get out. But I'll share with you two particular insights that will stay with me.

One is the head of our offices, both IFC and IBRD, really demonstrated that at a moment of crisis, you
really see what people are made of, because it's not something you can train or prepare for, but you see
the core character of individuals. And both Rashid and Sanjay took it upon themselves to be in constant
phone contact to try to deal with everything they could, to assure the people who were caught behind to
make sure that as soon as they got out, they got help and counseling. That to me at a time of tragedy is a
very encouraging sign, because it's the sense that we have people here of strong character who can rise
to the extraordinary challenges.

But there was another aspect in that after I made some opening comments, we took some comments and
questions by the offices via videoconference, and I was struck that one of the questions I got went to the
challenge that this would provide for the people of India and the signal that it would send for India at a
time that India needs help and investment and foreign enterprise.

I was just struck that at a time when people are going through what is still a very serious human trauma,
and they need our help in doing so, we have staff who are already thinking about how they can help the
clients, help people get back on their feet, and help do their job better.

It just reminded me that when the Indian Finance Minister gave his press conference and left his position
as Finance Minister to become Home Secretary, moving into a difficult spot, one of the things he
mentioned in his press conference was the critical role that he was depending on with the World Bank to
increase some of its lending to India at this important time.

That's not normally what you would expect somebody to be saying in a press conference after that event,
but it shows what's at stake here, and it shows what's at stake for all of us at the Bank to do this with
integrity and to be able to make sure that every dollar or euro or yen, or whatever the currency is, is
extremely well-spent, because we've got people in the field who are superb, they will stretch to do
everything they can, we have clients in great need, and we certainly have issues around the world,
whether financial crisis or insecurity, that really call upon us at this point.

And that's what all of you are about, and I want to thank you for that, because with your help and with the
cooperation of offices all around the Bank Group, we need to make every day into Integrity Day at the
World Bank.

I'd like to give a special welcome to the guests who have contributed so much to the work of this
institution.

Former Federal Reserve Chairman Paul Volcker is indeed one of the true giants of the economic and
financial world--he probably gets tired of being called a giant in different ways--and I really appreciate, as
all of you probably know, he has now taken a position with President-elect Obama, heading his Economic
Recovery Advisory Board, so for Paul to take time to join us given his schedule really shows the
commitment that he had not only to do a serious piece of work and report, but to try to help the institution
as we follow up.

I think, Paul, your presence is a testament to the importance that you continue to place on having the
Bank handle integrity issues seriously and effectively.

I also again want to thank you for heading that Independent Review Panel. I have said to a number of
people privately as well as on some public occasions how enormously helpful I found it in how we do
business, and I'll be talking a little bit more about that in a moment.

We also have here members of INT's new Independent Advisory Panel, the genesis of which was a
recommendation in the Volcker Panel Report. This Advisory Board is designed to help us protect the
independence and strengthen the accountability of INT by providing guidance on policy and procedures
and on the Department's interaction with the Bank Group.

The Advisory Board is going to hold the first of its meetings over the next two days, and they will also be
advising the Audit Committee of our Board and me on ways that we can strengthen performance and
implementation of the recommendations.

This is a new innovation, so it's really up to these individuals to help us design and make this work
effectively. I have been particularly pleased that the people who have agreed to join us represent a
variety of different views and experiences, people who again would take their time to help this institution
and help us with our mission.

We have today former U.S. diplomat and scholar Chet Crocker, whom I have worked with on many
occasions, including in recent years with Sudan and Darfur; former Philippine Ombudsman Simeon
Marcelo; and Peter Costello, who was Australia's former Treasurer, I think at the time the longest-serving
Treasurer or Finance Minister in the world. We also have Swiss jurist Mark Pieth, who is not able to join
us this morning, but he will be joining the balance of the meetings tomorrow.

Finally, I also want to open by thanking Leonard for bringing all of you together and for the exceptional
work that he has done in the time since he has joined as INT's new Vice President. When Leonard
agreed to take this position, I think we all knew that we were very fortunate to have someone who was
bringing not only ability and intelligence but also integrity and independence and a proven track record for
fighting corruption. Over the past five months, I have seen that Leonard has made extremely good
headway in positioning INT as a core partner in the Bank Group but also exercising its independent voice.

I am also delighted that Leonard has what we say in colloquial English "horse sense," and I believe this
will make INT more effective at its core job in terms of rooting out corruption and dealing with the most
serious problems we have at this institution. So it is a tremendous asset for us at the Bank Group, and
thank you, Leonard, for your dedication. I am very grateful that you are here, even if you do make jokes
about my comments.

[Laughter.]

MR. ZOELLICK: It was a year ago that I met with the staff in this same auditorium as we launched the
Governance and Anti-Corruption Implementation Program. At that event, I said that we always need to
keep in the forefront of our minds that each and every one of us has to be responsible for the public trust
that we bear. The work that we are doing on governance and anti-corruption has to be at the heart of
everything we do, both because our clients and our partners expect it of us and because it's the right
thing to do. This is not only our fiduciary responsibility, this is our ethical responsibility.

Now, in the course of the past year, we have made some good progress in turning the GAC Strategy into
practice. We now have 26 country programs that are building comprehensive governance and anti-
corruption processes into their Country Assistance Strategies. We encourage developed countries and
their private sectors to do their part with transnational corruption. And we have also been taking a firm
line--we have withheld loans when necessary because corruption concerns have led us to question
whether our investments would bear fruit. We have held wrongdoers accountable by debarring firms
when INT investigations have found that these companies and their owners have defrauded the institution
or corrupted the development process.

And this firmness also goes to the next critical point which is guiding our clients and partners to improve
their performance that has to be the larger aim.

We aren't in this to try to embarrass people or to score points, but we are deadly serious about protecting
funds, building integrity and getting ahead of problems.

What is interesting is there is really strong support around the world for exactly this type of work. We had
an international Gallup poll done recently to look at a lot of aspects of the Bank's work, and it reported
that a majority of respondents in every Region said that corruption had a negative impact on economic
growth and overcoming poverty. And these responses ranged from 67 percent in the Middle East to 89
percent in East Asia.

What these responses suggest is that the general broader public of our clients know they want change.
They know that corruption erodes government's legitimacy. They want to help build trust in their own
institutions. And they know that governance and anti-corruption are a critical part of the development
process, not something that is separate from it or a watchdog--it is a key part of development--and that
improvements in these areas are critical to achieving results. And that's what all of us are here to try to
accomplish.

I have had occasion to meet various of your colleagues who come to Washington for some of the group
meetings, and when I met the procurement team, one of the points that I tried to stress was that our duty
extends far beyond the value of money, as important as that is. What I think is critical for us to understand
is that many of our clients have younger staffs. They are looking about to understand the process of
governance and anti-corruption, and frankly, they are looking for role models. And when they see the staff
of the World Bank, and the staff acts, for example, in a way that says, well, this is just an economic cost of
business, or this is too small a sum of money to really be worried about, it's not only the money that is
lost; it is the effect on those people who will run a generation and a generation beyond them, because the
most critical value for any government is the value of integrity and trust in the public, and if these people
learn the wrong lesson, if they learn the lesson that you can look away, that this isn't big enough to
matter, my concern is that the asset they'll really lose is not the dollar of the day or the euro of tomorrow--
it is the question of trust in a government. And what I have seen in my career in my own Government and
in other governments is that once trust is lost, once that intangible asset has been removed, it's a
devilishly difficult thing to get it back.

So that's what is at stake at our work. It's not only a fiduciary responsibility, it's a question of the model
that we're going to be setting in countries on days you won't even recognize that people are watching
what you do and how you do it. And that's what's at stake for the development process.

We have also, I think, been very fortunate in that over the course of the past year with the help of OPCS
and others, to now make some serious progress on the implementation of the recommendations of the
Volcker Report. And as I said, I have been particularly grateful because on my first week here, I had the
experience of receiving some very long classified reports, and yet as I got the papers, I opened these
sealed bags, and basically, they said you can't share them with anybody, and you can't talk about the
results, and it was an unclear question of how you could implement these things.

So, frankly, the Volcker Report ended up in my view being extremely valuable by doing what I call the
"wiring diagram," to have some sense of how INT relates to the Regions, how we relate to the donors,
how we relate to clients, how we connect this to the Board, all in a way that makes this an effective
process, draws the best out of people but also retains INT's critical independence. And frankly, for the
people who spent the time on doing that, I just cannot express enough gratitude, because it would have
taken an enormous amount of time to put that together, and they really presented it to us.

We have 16 of the Volcker Report's 18 recommendations now in the process of being implemented. They
include a Vice President for INT; establishing the INT Consulting Unit; increasing INT's transparency;
appointing the Independent Advisory Board. And the implementation of the remaining two
recommendations is underway. One involves a change to the makeup of the Sanctions Board, which we'll
be doing early next year as we rotate some of the people through the Board, and transferring the staff
misconduct cases to the Office of Ethics and Business Conduct, where we needed to get a new Chief
Ethics Officer, and now we are in the process of making those changes.

Importantly, we are now starting to see the results. We have created a new Preventive Services Unit, and
that has assisted more than 45 task teams over the past year with operational advice on fraud and
corruption, risk, assistance and mitigation. The final investigative reports from past INT cases are now
being posted on INT's website in redacted form so that Bank staff and the public can better understand
the challenges that we face in some of these environments.

INT's Detailed Implementation Review concerning our health lending in India led to a firm commitment by
the Bank and the Government of India to change the way we do business together. INT now has ongoing
investigations in India to follow up the DIR's findings. I'm told the INT team has received terrific assistance
from the staff in our Delhi country office, and we are also watching very closely the actions that the
Government of India is taking, because we expect them to keep up their game in terms of the
investigations and cooperation with the Bank.

Let me again give you a sense of how these follow up with one another. Over the course of the past
weeks, we have had some challenges with a different type of loan in India, one dealing with the road
process. So, frankly, we threatened to cut off the financing, and we had another key ministry, in this case
the Finance Ministry, step into the process. We'll watch this as we go, but we've got some serious reforms
being put in.

This is what I hope we can try to create. We've got to show the firmness and the seriousness on our part;
we have got to hold people to try to build their own sense of integrity and responsibility, take strong
actions where necessary, but where we can, it's not just to penalize, it's to try to build these systems so
that we can help these countries extend far beyond our own projects.

We have made a good start, but we've got a lot more work to do. I think all of us know that there is always
room for improvement, and our challenge now will be to move beyond these 18 recommendations to deal
with the findings of corruption and to try to anticipate problems to get ahead of them.

We also have to support INT's work as an institution. Some of this is a matter of basic resources and
personnel. At a time that we have maintained a flat budget environment across the Bank, we have
increased INT's budget to more than $18 million from the $14 million of FY08 to try to help recruit
additional investigators and forensic accountants. And Leonard tells me he hopes to boost the INT staff
numbers to 100 by January.

We also have to make sure that INT becomes more integrated within the Bank. This involves many of you
and your colleagues on the operations side working closely with the Regions. And frankly, hosting events
like this I think is very useful in trying to help explain to a larger audience the INT mission, how INT works,
and what we hope to achieve.

But the challenge is deeper than just recognizing the work of INT. We have to build this notion of integrity
into everything we do. Now, obviously, we are in a momentous time period. We're at a point of financial
and economic crisis, and as one of the prime ministers said at the G-20 meeting, by the time they meet
again in the spring, we'll be in an unemployment crisis. No one knows how deep this is going to run, but
obviously, it is an extremely serious issue. What we saw in the food and fuel side is that what looked like
a financial crisis in the developed world was a human crisis in the developing world. And because of that,
we're in a period where many citizens are going to be asking these basic questions about trust and
confidence in institutions and markets.

So I return to that vital issue of trust. Confidence is a key to the functioning of markets, and public trust is
essential to building a functioning private sector and to encouraging foreign investment.

So it's all the more important that we remember the critical importance that we, each of us as a member
of the World Bank Group, hold in trying to secure that public trust. As a public institution, we have to show
our donors that we are responsible stewards of funds, that their resources are reaching the right people
and are having the maximum impact on the ground. I and others are going around to developed countries
trying to make sure they keep up their foreign assistance at a time that their budgets are under stress.
And the quickest thing that will undercut us, knock the legs out from underneath that effort, is the sense
that these moneys are being stolen or that they are not being used effectively. So this is absolutely
fundamental to what we're trying to do to help the poorest at a time of crisis.

We have to show our client governments that the financing is being used effectively and not being
diverted for personal gain and that we'll hold people accountable if they steal from the poor. And we need
to help governments show their people that through governance and anti-corruption efforts, they can have
confidence in their government and public institutions.

To make this work, this requires a robust investigative function in INT, strong whistleblower protections so
staff can feel confident that they can report problems without fear of retaliation, but it also requires each
and every one of us, from the procurement officer in the field to the country director at Headquarters, to
take very seriously the responsibility and integrity that we have to build in all elements of our work.

And, look--all of you know this, many of you have seen it--there are courageous people all around the
world who are trying to take on the challenge of governance and anti-corruption, and many of them are
doing it in environments where they are putting their lives at risk. So the cues that they take from our
behavior are vital in giving them the sense of fiber and moral support to really decide whether this is
something they can take on, whether they can be helped by somebody. So it is our responsibility to set a
high standard because we certainly can't expect others to live up to the standards if we don't meet them
ourselves.

Now, this raises a question that I want to touch on before I close, because I get this in many contexts, and
this is to ask, well, won't this just lead to risk aversion; isn't there a contradiction at a time when we are
trying to stretch and reach out and try to deal in a crisis, that you're saying we have to watch out for these
factors, too?

I feel that there is absolutely no contradiction in being aggressive and innovative in trying to help our
clients and at the same time being smart and learning from experience, because it's the same issue of
risk management. What you have to try to do when you encounter a problem on the financial side or on
the integrity side is to recognize that problems don't get better if you ignore them. People are going to
encounter difficulty, and when you do and it seems too much for you, you've got to raise it with your
colleagues, you have got open it up, discuss it, try to figure out has somebody else had a solution.

A lot of these questions, whether it is risk management that is done in our Treasury portfolio or risk
management that is done in the field, are questions of what can we do to build in precautions, what can
we do to lower the probabilities of danger, what can we do to make sure we draw on the public to help us
capture an issue in advance.

One of the things that Leonard and the INT team have started that makes a lot of sense is if you look
around the world, road projects seem particularly subject to cartels, so we are taking a look at this
worldwide to try to learn from some experience. And we're going to have to move faster, by the way, in
terms of when we identify firms that have caused problems, so we don't put a country under our
procurement rules in a situation where they may end up hiring a firm that we're going to have under
investigation. So this is where we have to make our process work more quickly.

So the starting point is if there's a problem, don't keep it quiet, don't hold back information. By sharing
information and by sharing experiences with others, by asking questions, by suggesting solutions, that's
the way we can fix problems. That's the key to effective risk management whether it is financial or
governance and anti-corruption.

I want to close by thanking all the INT staff here today for your dedication and hard work under difficult
circumstances. I really appreciate and value your contributions, and I ask you to keep it up, because
there's going to be a lot more work to do. We are going to be expanding our business, we are going to be
moving into some novel areas, and our clients are going to be looking for our help, so your role is
absolutely critical as we expand the services at a time of crisis in the global economy.

I also want to thank the other World Bank Group staff who have joined us today. I ask if you can to try to
learn more. We have some information on the INT website. We have some other sessions today that will
give people some practical nuts-and-bolts sense. We have a new publication that Leonard and Jeff
Gutman showed me about red flags that is a very good handy list to check to see if some of these things
occur and to put you on watch about dangers to integrity.

So we'll try to use whatever we can to help people be able to monitor this efficiently, but see as part of
your job that this isn't just INT off on the side, but it's INT as a partner that tries to help us understand how
to get ahead of these problems.

So I'd like to thank all of you for coming and turn it over to Chairman Volcker and again to thank him. I
was very, very much struck when I saw all the demands that were going to be put on him by the new
administration, and we asked him to do this event, and he still took time to join us. I really think that's a
testament to the fact that this is an individual who cares deeply about institutions; he likes to fix problems,
but if you look at his career, he has been part of some of the major institutions in the United States and
the world, and the fact that he values this institution enough to be able to come back to try to help us on
this is something that I think all of us deeply appreciate.

So, thank you, Paul.

[Applause.]

MR. VOLCKER: Thank you very much, Bob, ladies and gentlemen, members of the World Bank
community.

When Leonard invited me down here, I guess some months ago, it sounded logical to come down when
you are greeting a new Advisory Board, but when I got on the plane this morning, I wondered what I was
supposed to be doing. And I now understand. I came down here to listen to Bob Zoellick give a really
terrific statement of what this problem is all about that I worked on a little bit a year ago.

He said initially that I'm a "giant" in one sense. I recognize that, and I thought, you know, that's the first 20
years of my life, growing from small to large. And now I'm in the last 20 years of my life, and my function
is somehow to write reports.

[Laughter.]

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.

Things are going on that I could never have imagined in financial markets and in governmental reform.
This is an institution that I in a sense grew up with. I graduated from college about the time this institution
was formed. It has been part of my life, it has been part of the apparatus of effective governance around
the world, and I think this challenge has grown even larger given what has happened now, however many
years after it was created--75 or thereabouts, 70--

A VOICE: Sixty.

MR. VOLCKER: That's very young. You've got a lot of time to go yet, I assure you.

Thank you for being here.
[Applause.]

MS. OKONJO-IWEALA: Well, it's very difficult to stand up and follow through after two such wonderful
speeches about corruption that went right to the heart of the issue, so I want to thank Bob and Mr.
Volcker again. I think they both deserve another round of applause.

[Applause.]

MS. OKONJO-IWEALA: I want to thank and add my thanks and welcome to the members of the Advisory
Board for taking the time to support us here, and to all of you who are here this morning from the World
Bank, but particularly to Leonard and the team from the INT for doing this.

It has been a pleasure for me in particular to watch how they have tried to do one of the things
recommended in the report, which is to try to integrate and support operations much more than they used
to. Working with them through the Operations Committee and through other avenues, I am very, very
hopeful that the consulting arm of INT and the staff of INT will have a very different relationship now and a
much more supportive one, while still maintaining their independence, than has been the case before.

When I was coming this morning, my son was asking me about my day, because he was trying to see if
he could have lunch with me today, and I told him that we have Integrity Day today at the Bank. And he
said to me, "Oh, but, Mommy, I thought every day is Integrity Day at the World Bank."

So I said to him--I thought about it, and I said, "Yes, every day for us should be Integrity Day and is
Integrity Day, but sometimes we need to take out one day to remember, just like a birthday, to remind
ourselves what it's all about."

And I hope that this will be the beginning of an important series of these Integrity Days.

Bob spoke earlier of the need for public trust and asked that we remember the critical importance of
public trust that each one of us holds as the World Bank staff. And he noted that as a public institution, we
need to show donors that we are responsible stewards of funds, that resources are reaching the right
people and are having the maximum impact on the ground. I think that's the reason why we are all here,
and that's the essence of the integrity that we are talking about. It is the essence of trying to fight
corruption that many of us are very focused on.

I have seen the ugly face of corruption in my own country, Nigeria, during the time that I was there on the
other side of the table as Finance Minister, and I have seen firsthand the way that it can really corrode
development and take away resources from people, take away resources from services that people are
supposed to have.

If you want to boil it down to the basics, I have seen how it can mean that children cannot be taught
because there is no chalk in the schools.

I have seen how it means that teachers do not get paid because a local public official, a state governor, a
local government chairman, has taken away the resources that were supposed to be meant for paying
those teachers and buying the chalk.

I have seen what it means for farmers when they have to drive on roads that have not been maintained
and have their produce lost in the process or cannot even evacuate the produce because the road has
not been built.

This is where the rubber hits the road in terms of corruption. So I have seen all of that, and this is what we
are here for, this is what the World Bank is about--to try to fight this kind of cancer, as Mr. Volcker alluded
to earlier and as Jim Wolfensohn has said, to fight the cancer of corruption to make sure that it does not
stop the people whom we are here to serve from getting access to the resources that are due them, not
just from the World Bank funds but also from their own governments.

But I also want to say that sometimes, as much as we are pessimistic about corruption, we can also see
that it can be fought, and that's the other side of the story. It takes courage. It takes honesty. It takes
speaking up, as Bob said earlier. It takes transparency. It takes the willingness to stick your neck out and
say that something is wrong and that you are ready and willing to engage in what is often an unpleasant
and difficult fight. And I can tell you firsthand how, when people are corrupt and you try to fight them,
when you touch their pockets, they can be the worst people to deal with in the whole world. But they can
be fought, and do you know what? Most of them are cowards. When they see that you are ready to stand
up as we are in the World Bank, they retreat.

One of the things that the World Bank can really do that helps is building systems and building
institutions. One of the most wonderful things that we saw in Nigeria was at the time that we were trying
to fight corruption, the World Bank's Country Procurement Assessment Review was an important tool that
helped us set up a good procurement system and avoid all those who would make money through public
contracts.

All the other types of tools that we have at the Bank that help to strengthen a country's ability to manage
its public resources better--these are the kinds of things we can do to help and support countries to fight
corruption.

But as individuals, you have to have the ownership, you have to work with the government to make sure
that it is not just a question of the World Bank coming in, but having them take ownership of those
systems and those institutions and the legislation that is needed so that you have a lasting and
sustainable impact for what we do. And I think that's why we are all here. When we see those things
being built in the countries, we get excited. When we see that we are able to put the right people up front
and have the wrong people who are taking away resources punished, we get excited.

Leonard has been working with his Management team in INT on a new business strategy which I alluded
to, which includes closer work with operations, and which he has discussed with many--in fact all--of the
operational vice presidents and the Managing Directors as well as with the President. I want to
congratulate him and INT on it. This new strategy which will guide the way that INT operates within the
Bank and govern its external investigative posture will, I learned, soon be sent to the Audit Committee for
their consideration, and I think it's a good, common sense approach. I'm sure that all of us will feel the
impact of what Leonard and his team are proposing and the way they would like to go about their
business.

I would like to just take a moment to emphasize the enforcement side of the INT strategy. I am
emphasizing that because it relates to the work that we do in operations, which is so important. I know
that a major case involving 16 firms in the Philippines was recently brought to the Bank Sanctions Board,
the results of which are expected soon. The level of collusion that was found in the investigation was
staggering, but thanks to an unprecedented level of coordination between the East Asia Region and INT,
no contracts were awarded to the co-conspirators in this roads project, and as a result of this, Bob had
alluded to the fact that INT is embarking on this investigation--a review--of the roads sector which I think
will yield us very important results that will improve the way we work in this very important infrastructure
sector and help us think about how we mitigate risks.

Another forward-looking issue that INT is currently working on that I would like to highlight is in the
sanctions arena, and it is to move in concert with other multilateral development banks--and this speaks
to the point that Mr. Volcker raised about the World Bank setting the example and leading the way--so,
with other MDBs, it is moving toward a unified Sanctions Board. If this initiative bears fruit, we could begin
to see all the MDBs, all of the multilateral banks, cross-debarring firms that have engaged in wrongdoing
on development projects.

Right now, a firm that we debar here at the World Bank can get a contract from one of our sister
organizations, like the Asian Development Bank or the African Development Bank, the next day. Cross-
debarment would raise the deterrence factor exponentially. If these firms knew that stealing from the poor
and doing the wrong thing in one institution can lead to them being banned in several other important
institutions, I think it would serve as a very strong, strong deterrent for them from doing the wrong thing.

So I think it is a fantastic initiative, and I hope it happens soon and it bears fruit.

Let me now close by just thanking Mr. Volcker for his extremely important contribution, thanking the
members of the Advisory Board again, and thanking Bob for his leadership in this important area, for
marking it out as an area in which there will be no compromises, in which the World Bank should stand
front and center as an example to others.

And I want to thank you all once more for coming here today to join us.

Congratulations to Leonard and INT.

[Applause.]

MR. McCARTHY: Thank you, Ngozi, for those very nice, kind and powerful words.

We will now adjourn for tea.

[Applause.]

[END RECORDED SESSION.]