The World Bank must not just point fingers when it uncovers corruption, but should work with countries to fix problems by sharing data and analysis on effective ways to root out graft, the bank's head said on Wednesday.
Jim Yong Kim, in his first speech about the challenges of fighting corruption since becoming president of the World Bank in July, estimated that between $20 billion (12.7 billion pounds) to $40 billion (25.3 billion pounds) is stolen from developing countries each year.
"It is not just standing back and pointing a finger, we have to call it out when we see it and stick by our guns, but we feel we also have a responsibility to do everything we can to help people build those effective systems," Kim told the Center for Strategic and International Studies.
The World Bank should not only gather and share data on fighting corruption, but should also learn from the experiences of governments that have successfully tackled graft, he said.
As examples, he noted that in Brazil the government has tackled drug-infested slums and turned them into safer neighbourhoods, while in Italy the authorities have exposed tax dodgers, and in India the government is grappling with anti-corruption legislation.
Corruption is a major impediment to development, he said, saying that the World Bank should not shy away from publicly naming offenders.
"We have to send a signal that if we detect corruption we will call it out and move forward, and will have to have a whole discussion again" on a lending program," he said.
The World Bank has aggressively tried to toughen up on corruption ever since former President Jim Wolfensohn condemned the "cancer of corruption" in a speech in 1996.
Although World Bank lending is influenced by how a borrower scores on governance and fighting corruption, the bank has long wrestled over whether to suspend lending to a country when it discovers corruption in bank-financed development projects, or to keep the money flowing while fixing the problem.
Last year, Kim cancelled a $1.2 billion credit for a Bangladesh bridge project after the bank found "credible evidence" of high-level corruption among Bangladeshi government officials.
Later, the World Bank agreed to resume financing only after the government took measures to address the problems.
"Our willingness to work in difficult situations and appetite for measured risk should never be confused with a willingness to tolerate corruption in bank projects and activities," Kim added.
(Reporting By Lesley Wroughton; Editing by Leslie Adler)