The Great Bank Swindle

What Happened to Missing $40 Billion in World Bank Funds to Fight Climate Change?

Protestors in Washington DC marching to urge the World Bank to do more to help developing nations wean off fossil fuels

The World Bank somehow lost track of upwards of $41 billion to fight climate change, about 40% of all its climate funding over the past seven years. The stunning disclosure was made public last week following an audit by Oxfam, the left-leaning British NGO focused on fighting worldwide poverty.

The amount of missing money “could be twice or 10 times more,” according to a World Bank insider who asked for anonymity.

Oxfam’s bombshell report outlined what might ultimately be an enormous public sector financial scandal.

For those of you not familiar with the World Bank, it describes itself as “international development organization owned by 187 countries…that help developing nations advance their economies.” Five countries — the U.S., U.K., France, Germany, and Japan - are the bank’s major shareholders. Because the U.S. gives so much money to the World Bank, it is the only country that has a veto power on how it is run. The World Bank, with about $320 billion in capital, is supposed to distribute money to developing countries through low cost or zero-interest loans, grants, equity investments, and guarantees.

The World Bank introduced a Climate Change Action Plan in 2016 at the direction of the U.S. and European countries that urged it to make fighting climate change an equal goal with eradicating poverty. The Bank revised its mission statement to “end extreme poverty and boost shared prosperity on a livable planet.” By 2023, 41% of all the Bank’s financing to developing nations was directed to climate projects.

Oxfam raised red flags — what it called “serious concerns” — that something was wrong when they began their audit of the Bank’s climate spending. It reviewed 181 climate projects the Bank had funded since 2017.

“We had to sift through layers of complex and incomplete reports, and even then, the data was full of gaps and inconsistencies,” reported Kate Donald, the chief of Oxfam’s Washington D.C. office. “The fact that this information is so hard to access and understand is alarming —it shouldn’t take a team of professional researchers to figure out how billions of dollars meant for climate action are being spent.”

The Bank could not account for somewhere between $24 billion and $41 billion in climate funds from the time they approved a project and the work was supposed to be completed. The World Bank did not know how the money it provided was used, not even if it was spent on the climate-initiatives for which it was earmarked. The Bank has “no single reliable source of data and information on [its] expenditures.” The lack of transparency, according to Oxfam, means “that it is impossible to verify the numbers that the Bank has reported as climate finance…”

“All the figures are routinely made up,” a World Bank insider told the New York Post. “Nobody has a clue about who spends what.”

Is the money missing because it was simply not accounted for by the countries that received it or did some of those tens of billions disappear into graft and corruption?

That is impossible to determine because the World Bank is self-policing and not very forthcoming. Its Financial Integrity Unit is supposed to help developing nations build cases to pursue the illegal diversion of funds. And the Bank’s Office of Suspension and Disbarment (OSD) handles reports of fraud and corruption. The OSD refused my request to confirm or deny whether any of the unaccounted climate funds were the subject of an ongoing investigation.

A private attorney in practice in Washington D.C., and who has helped NGO’s submit proposals for funding to the Bank, told me that, “It is a private fiefdom. They are not accustomed to much oversight.”

If you have not heard about this story before this Just the Facts, that is not surprising. Although the Oxfam report was covered in the financial press by Bloomberg and Barrons, the leading MSM outlets, including the New York Times, Washington Post, and NPR, did not report on it. Nothing.

Maybe that was because it was a money scandal involving climate change and the editors there thought that somehow sullied the underlying cause? I can’t figure out what today’s MSM editors consider newsworthy, but it is hard to imagine why they would not at least give some coverage to such a big story. Billions in missing taxpayer funds at a storied international institution should be front page news. Without widespread press coverage, the World Bank may never feel enough pressure to come clean with what really happened to all that money.