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This is the World Bank's blog on governance and anti-corruption. It aims at providing a space for debate and knowledge sharing on this critical field of development. | Learn more...

financial fraud

Problems solved: corruption, lack of transparency and leadership

Submitted by Kathrin on Wed, 2009-05-06 16:55

The global economic crisis revealed large scale fraud in the financial sector and dropped public confidence and trust. This presents a daunting array of challenges to companies and government alike. It is practically impossible for a single stakeholder on their own to effectively address the problems that contributed to this crisis: corruption, greed, lack of transparency and leadership. Hence there is a case for collective action that enables companies to collaborate with competitors and/or stakeholders from the public and civil society sector to create and maintain fair market conditions.

Recognizing this, the World Bank Institute is organizing an Executive Development Program precisely on such joint approaches titled Fighting Corruption through Collective Action in Today’s Competitive Marketplaces. 

From Madoff to Stanford Ponzi, from SEC to Congress: in dire need of political reforms

Submitted by Kaufmann on Wed, 2009-02-18 12:25

Another Ponzi scheme has allegedly been uncovered now, led by the Texas Financier R. A. Stanford, who may have swindled about 50,000 investors out of US $8 billion, or so.  The Feds have raided his house of cards but were having a hard time finding him. 

At US $50 billion, Madoff may have stood out because of the sheer magnitude of his scam.  But obviously he is not alone in large Ponzi schemes, not even within the US.  As global financial conditions have continued to deteriorate, the nakedness of those emperors without clothes is starkly exposed. 

But like the case of Madoff, this case also raises questions about whether ‘the SEC was asleep at the switch’ in this case as well.  Evidently allegations of fraud (and possible drug money laundering) have been made against Stanford over the past decade.  Yet the SEC took belated action very recently only after two former employees filed a lawsuit in civil court.

 

Ponzi Schemes in Russia, Colombia and the US: from Mavrodi to Murcia to Madoff (MMM)

Submitted by Kaufmann on Thu, 2008-12-18 08:34

Very recently we witnessed political and social unrest in Colombia due to the implosion of the DMG pyramid scheme (named after the scammer, David Murcia Guzman).  And now we got Madoff in Wall Street.  These cases today show how difficult it is sometimes to learn from the past.  Especially when past events are far way in space and time…

I have received articles from experts in Colombia who found parallels in their current case with the analysis I made long time ago on the Mavrodi’s MMM pyramid scheme collapse, which inflicted major pain on so many Russian citizens in 1994.  The focus of my old article was on the MMM Russian case.  But there were other such financial collapses caused by pyramid schemes at that time, including in Romania, and then the tragic case of Albania, in which 2,000 citizens died during the civil war that ensued.