The World Bank Breaks its Silence Over Jordan's "Fake" Aid Theft

Published May 21st, 2020 - 11:35 GMT
The story exploded when a Jordanian journalist living in exile - with a large base of fans broke the news that the World Bank had put out a paper “showing” that $3 billion in its aid to Jordan was transferred out of Jordan by influential Jordanians and placed in safe haven accounts abroad.
Amman
Highlights
The story exploded when a Jordanian journalist living in exile - with a large base of fans broke the news that the World Bank had put out a paper “showing” that $3 billion in its aid to Jordan was transferred out of Jordan by influential Jordanians

By Rana Sabbagh


After a week-long rumor that Jordan’s elite have transferred $3 billion in aid to offshore accounts, the World Bank had to intervene to break the cycle of fake news that has gripped the nation.


In a clarification issued late on Wednesday the WB said that the working paper entitled: "Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts” found no evidence for aid diversion in Jordan.

But how can this be true after these spiraling rumors? Because the study did not look at Jordan. Instead, it documents that World Bank aid disbursements to 22 heavily aid-dependent countries, mostly African states, coincide with increases in foreign deposits held in “tax havens”.

So what is the Jordan connection?

Jordan is among the category of modestly aid-dependent countries which receive IDA and IBRD disbursements equivalent to about 1.1 percent each year, compared to heavily aid-dependent countries where such disbursements account for more than 2% of GDP on average per year.


“And it's inclusion in the sample weakens correlation to the extent that it becomes statistically insignificant,” said the terse statement. The statement concluded by stressing that the “World Bank Group takes corruption and related fiduciary risks seriously. This has long been an area of focus and ensuring the proper use of the Bank’s funds is a top priority.”

The next few days will show whether this belated World Bank intervention will convince the largely skeptical Jordanians that the tale they have been hearing from MPs, activists and even journalists about “the big, fat and ugly aid theft by the elite” is not true.

The carefully-worded World Bank statement, does not mean that Jordan is free from corruption. However, the statement helped clarify what went wrong in the logic that was used by public-opinion shapers, many of whom do not seem to have read the paper.

I witnessed the fabrication of this piece of fake news over the past week.
The story exploded when a Jordanian journalist living in exile - with a large base of fans broke the news that the World Bank had put out a paper “showing” that $3 billion in its aid to Jordan was transferred out of Jordan by influential Jordanians and placed in safe haven accounts abroad.


I witnessed the fabrication of this piece of fake news over the past week. The story exploded when a Jordanian journalist living in exile - with a large base of fans broke the news that the World Bank had put out a paper “showing” that $3 billion in its aid to Jordan was transferred out of Jordan by influential Jordanians and placed in safe haven accounts abroad.

Seconds later it was picked up by users of multi social media platforms. An opposition MP stepped into a mushrooming campaign asking the government for an explanation.

The leader of a local transparency group joined the media frenzy. She told me she was convinced that a local money changer in downtown Amman provided the conduit these transfers. Days later, few regional and international mainstream media and platforms followed the suit, running articles and opinion columns on the massive aid theft as if it was undisputed evidence. The sexy theft narrative took over.

The Jordanian government, it seems, was taken by full surprise by the ferocity of the bout of fake news. It asked the World Bank for clarification, as a cabinet minister pointed out over the phone.

A video conference call between two former ministers who lead the Jordan Strategy Forum and several WB governors did not calm public anxiety. Local media reported on this high-power discussion, and quoted World Bank participants as denying any link between “Jordan and the safe havens.”

Bit these reports fell on deaf public ears. Why? Because there is a total breakdown in the trust relationship between Jordanians on the one hand, and their government, most parliamentarians, much of the private and public media, and the judiciary.

In the eyes of most, all branches of power have turned into functionaries of the state amidst an unprecedented crackdown on free speech, a stifling bureaucracy and a differential attitudes holding many Jordanians back. The situation is further complicated by the lack of political will to hold the corrupt “big fish” to account.

In an era of popular mistrust, anger, worry about what the future will hold, frustration with how state affairs are being run, anxiety and apathy, rumors spread like fire, and facts mix with lies. Everything becomes possible. 

In an era of popular mistrust, anger, worry about what the future will hold, frustration with how state affairs are being run, anxiety and apathy, rumors spread like fire, and facts mix with lies. Everything becomes possible. Sadly, journalism in Jordan and abroad has lost its role as society’s watchdog. Today, most journalists prefer to sit in the warm laps of officials in exchange for petty personal gain or to ensure they can support their families. The era of mediocrity seems to have taken over on all fronts.

Many journalists say even they do not believe what they write. However, they have no choice but to obey orders. Over 93% of Jordanian journalists are practicing self-censorship to survive, as repeated studies indicate.

Unfortunately, Jordanian stakeholders are paying a hefty price.
Many government officials admit in private that the public does not want to hear their side to the story anymore. “Damned if you do and damned if you don’t” says one.
A 2007 law to secure the right to access public information and records remains ink on paper. Any journalist who files FoI requests knows that he/she will get nowhere. A few of who have sued several government officials for withholding information under this law lost their cases because of legal loopholes.

Jordanians, as the tough Coronavirus times have revealed, remain very patriotic and resilient even if many feel alienated in a country where a group of 300 so-called “loyal” Jordanians form the strategic reserve for filling top government jobs.

Many feel betrayed by a system that lacks the proper checks and balances to take serious action to uncover corruption or treat them fairly as law-abiding tax-payers with equal citizenship rights. The entrenched alliance between the so-called “deep-state,” and the political and business elite is unbreakable.

It is impossible for a journalist, or a deputy to remain independent in an era where the “herd culture” rules supreme. The public does not appreciate investigative journalism that exposes the truth to serve the public right to know. The public will not go out of its way to support a deputy who gets arrested for speaking out.

Finally, I have to admit that I personally believed the story about the $3 billion aid theft when it came out last week because over my 36-year career as independent journalist, much has gone missing with minimum accountability. The few who dare speak truth to power pay a hefty price.

Finally, I have to admit that I personally believed the story about the $3 billion aid theft when it came out last week because over my 36-year career as independent journalist, much has gone missing with minimum accountability.

I spent a week trying to understand what went wrong. I thought the World Bank has given independent investigative journalists a great story to expose. I read the report four times, but could not find evidence to support what the public was being told. I talked to scores of officials, diplomats, independent experts, economists, forensic accountants and bank controllers but got nowhere. “Those spreading rumors are making it sound as if the World Bank aid is up for grabs”, said a Western diplomat. "Little do they know about the tight mechanisms and compliance rules in place" to monitor the disbursement of aid".

On Monday afternoon. I got through to one of the three researchers who took part in the study. He walked me through the paper. Again, I found no evidence to implicate Jordan’s elite in the aid theft.

Today, the World Bank decided to break the silence. Let’s hope Jordanian officials, social media activists, public opinion shapers, and journalists engage in a series of debates and discussions into its content.

The paper is clear in some of its conclusions: countries attracting the most aid are not only the least developed, but also among the worst governed.

This paper provides enough data and analysis to debate the effectiveness of foreign aid, why the research cannot identify the precise mechanism generating these flows from the countries it focused on for the purpose of this research, and why the data gathered does not provide information in individuals who store wealth in offshore accounts.

The paper is clear in some of its conclusions: countries attracting the most aid are not only the least developed, but also among the worst governed. And aid effectiveness depends on the quality of institutions and policies in the receiving nations.

For those who did not read the document, here are its concluding remarks as copied from the document:

“We document that aid disbursements to the most aid-dependent countries coincide with significant increases in deposits held in offshore financial centers known for bank secrecy and private wealth management. Aid capture by ruling politicians, bureaucrats and their cronies is consistent with the totality of observed patterns: it can explain why aid does not trigger flows to non-havens, why the capital outflows occur precisely in the same quarter as the aid inflows and why the estimated effects are larger for more corrupt countries. Other explanations are possible but we find them harder to reconcile with all the patterns in the data. We cannot exclude that firms benefiting from aid-sponsored spending receive payments in quarters with aid disbursements and deposit the funds with foreign banks; however, this mechanism cannot explain why the money only flows to havens. It seems even less likely that the results reflect profit shifting by multinational firms, the effect of aid on income through aggregate demand and portfolio adjustments by commercial and central banks. Our estimates suggest a leakage rate of around 7.5% for the average highly aid-dependent country."

 

Rana Sabbagh  Co-founder of the award-winning ARIJ network, established in 2005, former chief editor of the Jordan Times. She dedicated the last 35 years of her career as journalist, columnist and media trainer to promote free speech, independent media and human rights in a largely autocratic region.

The views expressed in this article do not necessarily reflect those of Al Bawaba News.

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