US legislation to replenish the funds of the world's development banks will include demands for more transparency and accountability of the institutions, a top lawmaker said.
Senate Foreign Relations Committee Chairman Richard Lugar, who is engaged in a probe of corruption in the banks' projects, said the legislation would include proposals to ensure more disclosure and less waste at the five multilateral banks.
"We must ensure that our contributions are managed well and that the mission of the multilateral development banks (MDB's) is not undercut by corruption," Mr Lugar said as he opened a hearing of his committee on fighting corruption at the banks.
For several months Mr Lugar and his aides have been visiting overseas projects and interviewed bank employees, non-profit groups and academics to examine the operations of the World Bank, Asian Development Bank, African Development Bank, the Inter-American Development Bank and the European Bank for Reconstruction and Development.
Under the legislation, the World Bank is slated to receive $2.85 billion in US funds over the next three years, the African Development Bank $407 million in the same period and the Asian bank $461 million over four years.
The push by Congress reflects a demand by the Bush administration for more accountability by the banks. British and Italian legislators also want anti-corruption reforms.
"Misuse of funds can inflate project costs, deny needed assistance to the poor and cause projects to fail," Mr Lugar said. "Stolen money may prop up dictatorships and finance human rights abuse," he said.
"Not only are the impoverished cheated out of development benefits, they are left to repay the resulting debts to the banks," said Mr Lugar, an Indiana Republican.
The United States and its wealthy counterparts in the Group of Seven are currently discussing ways to forgive the debts of the institutions' poorest borrowers, arguing the debt stymies growth and poverty reduction.
In February, World Bank corruption investigators said they had debarred or penalised more than 300 firms and individuals for corruption since 1999 but acknowledged they did not know how widespread the problem was.
Mr Lugar pointed out that a company that was debarred from the World Bank could still do business with the other banks.
The executive director of the Manila-based Asian Development Bank, Paul Speltz, said the institution had strengthened its anti-corruption efforts but acknowledged that it could not publish the names of debarred companies or individuals because of legal constraints under Philippine law.
Mr Lugar said such "resistance" should be raised at the highest diplomatic level by the US State Department.
Hemantha Withanage, convener for a Sri Lankan group on trade and global financial institutions, said the Asian Development Bank had approved $3.4 billion in loans for Sri Lanka but it was "highly questionable" if any of the projects had succeeded in their aim of reducing poverty.
"If we take the ADB's self evaluation at face value, more than half of Sri Lanka's ADB debt accumulated over three and a half decades is from projects that ADB considers to be less than successful," he said.