Legislation to encourage greater transparency and accountability in the World Bank and other international lending institutions has been signed into law by President George W. Bush.
The reforms were contained in an amendment to the 2006 foreign operations appropriation bill proposed by Indiana Republican Sen. Richard Lugar, chairman of the Senate Foreign Relations Committee. Bush signed the bill on Monday, Lugar said.
The reforms resulted from an investigation into multilateral development bank corruption launched by Lugar in 2003.
The reforms seek to encourage disclosure of personal financial holdings by bank employees; to improve the quality and oversight of development bank loans; and to ensure independent audits of bank projects.
A committee aide told Reuters the US Congress cannot mandate the banks to act, because they are multinational institutions.
But the new law does require US executive directors on the banks' governing boards to raise these specific reform issues and to seek adoption by the boards, he said.
The United States is the largest donor to the multilateral development system and has considerable clout over decision-making. Other countries are known to support Lugar's reform proposals, said the aide.
The financial disclosure requirements cover all bank employees. But in reality it will be up to each bank to determine which employees must comply and exactly how much of their personal financial histories they must make public, the aide said.
The new law also requires that the US Treasury Department make publicly available the positions on bank policies and significant projects taken by the US executive directors on the banks' governing boards.
Lugar said the new measures would "level the playing field so that honest companies and innocent individuals are not disadvantaged by the corrupt."
In addition to the World Bank, the affected institutions include the African Development Bank, the Asian Development Bank, the Inter-American Development Bank and the European Bank for Reconstruction and Development.