‘red Flags of Corruption’ in World Bank Projects: an Analysis of Infrastructure Contracts

Abstract: ‘Red flags’ are indicators of potential issues regarding governance failure, collusion or corruption in projects. This paper examines project documentation from a small, semi-random sample of past World Bank water and sanitation projects, including two publicly linked with allegations of corruption, in an attempt to collect data on the presence or absence of thirteen commonly accepted red flags. It compares results to a parallel analysis of transport contracts from the Africa region. This paper finds that: (i) almost every contract reviewed raised at least one of thirteen red flags analyzed; and (ii) potentially tainted contracts did not exhibit notably more red flags than control contracts. The ubiquity of red flags suggests that their roll-out as a monitoring tool requires additional thought as to interpretation, context and use.