Remind me what happens to a US citizen if our personal finances "struggle with fraud" and unaccountability to the tune of 40% when it comes to the IRS?

The money is not actually missing*.

Oxfam attempted to add up all the numbers in various PDFs linked on the World Bank's website and got a total that's less than the headline figure in the World Bank's press releases. (See the actual report at https://oxfamilibrary.openrepository.com/bitstream/handle/10...)

Some of that is probably missing data and some of it reflects that headlines like "USA donates 1 billion" don't actually always result in the US making a bank transfer for a billion dollars. For example sometimes it's a simplification of a complicated loan.

Your comment reflects a common misconception about audits. When the books don't add up that doesn't show that money is actually missing.

I don't love analogies to personal finance but a better one would be to suppose you asked a random US citizen what they spent money on last month and then compared it to their bank account. They'd probably be wrong, and you probably wouldn't have enough information to know exactly how wrong they were because they didn't save all their receipts and so on.

*edit: this report provides no evidence money is missing. to be fair it doesn't disprove missing money either

Great comment. On one hand I like what Oxfam has done, which is to show that the World Bank has poor financial controls and should do a much better job tracking where funds are actually spent. On the other hand I don't like how this is reported/interpreted (and Oxfam I think deserves some blame for how their investigation is characterized) as "there is a ton of fraud at the World Bank". That's simply not accurate, and your edit sums up the situation very well

> they didn't save all their receipts and so on

This analogy explains well but it's missing the important bit: private citizens don't have any requirement to save receipts. Charities and businesses do have that requirement.

While I'm continually frustrated by the complexity and opaqueness of the US tax code, your analogy doesn't make any sense to me. If your personal finances "struggle with fraud", it means you committed fraud. So yeah, of course you should be held directly responsible. That's very different from a large organization doling out money for tons of various complex projects, and those 3rd parties (or 3rd parties down the chain) commit fraud.

Heck, if you give money to someone and they commit fraud and abscond with your money, you get to take a tax write-off for the stolen funds.

> you get to take a tax write-off for the stolen funds.

At least for US federal taxes, that changed with a very partisan ~2017 law, where Republicans stripped it down to only cover federally declared unique disaster situations.

https://en.m.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act

Thanks, I was unaware of that change. Note that limit largely just applies to personal property: "For tax years 2018 through 2025, individual taxpayers with theft losses are allowed a deduction if the loss is due to theft related to a transaction entered into for profit.", https://www.irs.gov/taxtopics/tc515#:~:text=For%20tax%20year....

E.g. for financial fraud crimes, you much more than likely would still be able to take the loss.

I don't read this as a problem of fraud within Oxfam. They audited the World Bank and found there was fraud in the bank. Or am I missing something?

They didn't find that there was fraud. They just found that the World Bank has poor financial controls and a lack of transparency in determining where funds are spent.

Of course, a lack of financial controls makes it easier for people to actually commit fraud, but the Oxfam report didn't go to that next level and look for specific evidence of fraud.

I have an uncle who actually audited a large org and found evidence of fraud. Each time something weird was found, he investigated, and alsmot each time fraud of some sort was involved. Pressure increased as the time passed, from all side (especially below, as he was near the top of that bank, but from the side too).

He and his team were physically threatened and had to have bodyguards (actually, it was cops, but they acted as bodyguards). In the early 2000s he decided to call it quit, after 8 years. He told us that the weirdest fraud of all was money laundering, as it was at the same time the easiest and the hardest to prove, depending on who did it.

All that to say actually finding fraud is hard, proving it is even harder, and can be dangerous even for lower orgs, so i won't criticize Oxfam for letting it rest where it is.

> They just found that the World Bank has poor financial controls and a lack of transparency in determining where funds are spent.

You mean like a certain crypto exchange CEO that recently went to jail for it?

Pretty sure that CEO was not just bad at accounting. In fact, he was pretty good at it, since all the "mistakes" were designed to benefit him.

Seems like they are based in Kenya and fraud/corruption is rampant in some of these African nations. Really sad but its seemingly been like this for so long which is why many of the countries there are in constant civil wars, coups, and their populations poor/starving.

If hundreds of billions of dollars in aide over 2 decades isn't fixing these nations, what will?

One idea I've read in the works of Ivan Illich (among others) is that the best thing we could do for developing countries that struggle with corruption is to leave them the hell alone when it comes to financial matters (aside, perhaps, from canceling their World Bank debts, which often come from loans made to past corrupt governments and for which the people are unjustly held accountable) and let them sort their problems out. Injecting money, even with the best of intentions, tends to make things worse when there are already structural problems.

How exactly could we even "leave them the hell alone"? Developing countries are integrated into the world economy and financial system. Other countries trade with them. If they want to issue sovereign debt then someone will buy it, if not the World Bank then the Chinese government or random private investors. The World Bank isn't perfect but they're at least somewhat helpful with improving governance standards and avoiding the most egregious forms of corruption.

I mean, yes and no. The World Bank (and other multilaterals) are supposed to provide or facilitate loans which the private sector would not otherwise advance (or provide them on concessionary terms which the private sector otherwise would not offer). Absent this form of lending, countries have a stronger financial incentive to improve their governance to the point where they can borrow on better terms on the open market. This is how bond markets operate in developed markets - hence why eg Italy pays more to borrow money than Germany (despite both being in the Eurozone).

Most people would probably agree that the reduction in those basic financial pressures to reform is more than offset by the more formal governance requirements which are (sometimes) attached to the granting of multilateral loans (and the types of governance the private sector cares about don't necessarily always align with what the World Bank cares about). But it's not automatic, especially given "improving governance" isn't the main reason the multilaterals make loans in the first place.

Kenya is not a rich country, but hardly suffers from "civil wars, coups, and a starving population". Not all African countries do.

If you really believe that, you should take a look at the Wikipedia page of Kenya, especially the history section.

Which part of it?!

Probably the 1982 coup and 1988 elections.

Recent years have also seen rigged elections and attempts to change the 2010 constitution.

I see someone hasn't worked in Kenya.

There's a lot of change happening now in Kenya, especially in terms of stable and democratic governance, but in no way is it not corrupt. It ranks at near the top consistently amongst African nations for corruption and bribery at all levels of the government.

Oxfam is headquartered in Nairobi, Kenya because it's a relatively stable/safe country with relatively good facilities and infrastructure. Nairobi provides a good central location to reach other parts of Africa where much of their work is based, and Kenya also provides a favourable regulatory environment for these international organisations to operate. The UN Environment Programme (UNEP) is also based there.

Both of these organisations certainly have their issues with corruption, fraud, and grift, but that would likely be the case no matter where they are based. If anything, being physically closer to where much of the money is being spent should help them keep a closer eye on the work that they're funding.

Is there overlap between what you think needs to be fixed vs what the folks in those African countries think needs to be fixed?

This problem inspired this program at Williams college. The locals get the opportunity to interact with the students by attending or hosting functions.

One of the functions is each student presenting their country and their interests.

Always got the sense the program is to train public officials on proper methods of government.