Corruption and Fraud Stunt Third-world Growth

By By Michael W. Kramer, J.D., CFE

Corrupt officials burden developing countries with unfinished projects and crushing debt - conditions that lead to economic decline and international terrorism. 

The newly independent country urgently needed the $100 million humanitarian aid project, funded by several developed countries, to alleviate the consequences of a decades-long civil war. The war had ruined roads and cities and driven tens of thousands into squalid refugee camps.
Five years later, many of the cities hadn't been rebuilt, many of the roads were still impassable, and the refugee camps were even more crowded and filthy, which fueled the outbreak of disease and the spread of AIDS.

The government blamed continuing rebel activity in the area, but investigations revealed that the primary cause was fraud and corruption. Bribes, kickbacks, and embezzlement drained more than half of the project funds, which made it impossible for contractors to complete the project.

While U.S. business loses more than $600 billion a year to fraud, it's even worse in many parts of the developing world where corruption and fraud lead to the waste of vast amounts of aid and investment funds.  

At the cost of their jobs, careers, and even their lives, whistleblowers in impoverished countries have reported millions of dollars stolen from projects that provide desparately needed housing, hospitals, medicines, and vaccines for the poorest of the poor. What remains are sick children, half-completed structures, and towering debt.  

This article describes the serious nature and extent of the problem. Endemic corruption and fraud contribute not only to economic decline but also to the conditions that lead to international terrorism. 

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