World Bank Arbitration Scandal Shows Why Global Institutions Must Change

New Delhi: A leaked investigation, recently uncovered by the German news agency bne Intellinews and French and Belgian media, has revealed yet another instance of corruption within Western-dominated international institutions. This time, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) is embroiled in controversy. Allegations of bribery, manipulated arbitrator appointments, and falsified expert testimony have tainted a €110 million arbitration ruling against Albania. The ruling, which favored Italian businessman Francesco Becchetti, had been lauded as a win for foreign investors. However, new findings have cast doubt on the legitimacy of this process, reinforcing long-standing calls from developing nations, including India, for the need to overhaul the global order. For countries in BRICS and the wider Global South, this scandal is a stark reminder of why Western-controlled institutions cannot be trusted to administer justice fairly and impartially.

Western Institutions’ Broken Promise of Neutrality 

The ICSID case against Albania revolves around a legal battle initiated by Becchetti, who accused the Albanian government of expropriating his assets, including his media company, Agon Channel, and a hydroelectric project. In 2019, an ICSID tribunal ruled in his favor, awarding him €110 million in compensation. At the time, the ruling was presented as an example of how international arbitration protects foreign investors from unjust state actions.

However, the latest revelations paint a different picture. The leaked investigation claims that Becchetti personally influenced the arbitration process by bribing two of the three arbitrators involved. According to the findings, Becchetti exploited his personal connections to ensure a favorable outcome. Moreover, expert testimony, crucial to the tribunal’s decision, was falsified to inflate the damages awarded. The valuation of Agon Channel, presented as a thriving business, was inflated despite evidence that it was a failing venture.

Screenshots from the recently leaked investigative findings. Becchetti’s close associate, Marco Giontella, claimed that Becchetti orchestrated fraudulent schemes to sway international arbitration outcomes.

For critics in India and across BRICS, these revelations confirm what many have long suspected: Western-led institutions like ICSID can be manipulated to serve the interests of the powerful, often at the expense of developing nations. In this case, Albania, a small nation with limited financial resources, was handed a massive financial burden through a process that now appears to have been rigged from the start.

This is not merely an isolated incident but part of a broader pattern. Time and again, these Western-controlled institutions have failed to uphold the values of impartiality and fairness that they claim to represent. In countries like India, the perception of such institutions as tools for advancing Western interests over those of the developing world is only deepened by cases like this.

A Case for Reshaping Global Institutions

For India and other BRICS nations, this scandal underscores the urgent need to rethink the global financial and legal systems. Institutions like ICSID, the World Bank, and the International Monetary Fund (IMF) were established under the control of Western powers and have consistently shown a bias toward developed countries and their multinational corporations. While these bodies claim to promote neutrality, they have often acted in ways that undermine the sovereignty of developing nations.

BRICS — the bloc of Brazil, Russia, India, China, and South Africa — has long called for a more balanced global order, one that takes into account the interests and realities of the emerging economies. The ICSID scandal is the latest in a series of events that reinforce the need for alternative structures that are truly inclusive and equitable. India has been vocal in pushing for reforms that would democratize these institutions, ensuring that they reflect the multipolar world we live in today.

This case is emblematic of the structural flaws that exist within institutions like ICSID, where powerful corporations and individuals can influence outcomes in their favor, leaving smaller nations with little recourse. While these bodies are supposed to provide neutral platforms for resolving disputes, they have become tools for the West to impose financial and legal burdens on weaker nations through corruption and manipulation.

With the West increasingly locked in a geopolitical competition with BRICS and other emerging powers, this scandal further erodes the credibility of Western institutions at a crucial moment. BRICS is rising, with India playing a leading role in shaping the future of global governance. As this shift occurs, there is growing recognition that new institutions are needed — ones that are fair, transparent, and representative of all nations, not just the wealthiest.

Corruption: A Recurring Theme in Western Institutions

This latest scandal is not the first time that corruption has been linked to World Bank-related projects. Across Africa, Asia, and Latin America, the World Bank has been embroiled in controversies involving allegations of fraud, mismanagement, and bribery. In Kenya, for instance, a World Bank-funded infrastructure project was marred by accusations of funds being misappropriated by corrupt officials. In India, a major healthcare project funded by the World Bank faced similar allegations of embezzlement and fraud.

These incidents highlight the hypocrisy at the heart of Western-led institutions. While they often impose stringent anti-corruption and transparency conditions on developing countries as a prerequisite for funding, they fail to adhere to these same standards within their own projects. This double standard has fueled widespread dissatisfaction in the Global South, where many feel that the global system is designed to work against their interests.

India and its fellow BRICS nations have long recognized these imbalances. The very foundation of these institutions, built in the post-World War II era, is outdated. They no longer reflect the realities of a world where the economic and political center of gravity is shifting away from the West.

The Need for BRICS-Led Reform

India, along with its BRICS partners, is in a unique position to lead the call for reform. In recent years, BRICS has already taken significant steps toward creating alternatives to the current Western-dominated institutions. The establishment of the New Development Bank (NDB) was a critical step in this direction, providing developing countries with access to financing that does not come with the political conditions typically attached to loans from the World Bank and IMF.

The ICSID scandal reinforces the need for similar reforms in international arbitration. BRICS, with India at the forefront, is working toward creating a new arbitration framework that will be fairer and more transparent. This framework would ensure stricter rules on arbitrator selection, greater scrutiny of expert testimony, and tougher penalties for corrupt practices. Such reforms are essential if we are to build a system that truly serves the interests of all nations, not just the richest and most powerful.

For too long, the West has enjoyed disproportionate control over global finance and arbitration, to the detriment of the Global South. But with India and other emerging powers leading the charge for change, the days of Western dominance are numbered. The ICSID scandal is a wake-up call, and it is time for the developing world to take charge of its own future.

The Road Ahead

The ICSID arbitration scandal against Albania highlights deep-rooted issues within the Western-led international order that nations like India have long warned about. For BRICS, this case serves as further evidence of the need to accelerate the push for more inclusive and equitable global governance structures. As emerging powers like India continue to challenge the status quo, the influence of Western institutions such as the World Bank and ICSID will come under increasing scrutiny, clearing the path for a new, multipolar global order that is fairer to the developing world.

The question is not whether this shift will happen, but how soon.