MANILA - Corruption is likely diluting the impact of hundreds of billions of dollars spent by governments on stimulus measures to battle the financial crisis, an global graft monitor said Wednesday.

Transparency International chairwoman Huguette Labelle said packages designed to spur growth and employment were vulnerable to corruption, especially in the infrastructure and construction sectors.

"If you have $700 billion, $800 billion and even if only 10% is lost into the pockets of individuals or in a higher cost than it should be, that's an awful lot of money not going into development," said Labelle.

The 10% estimate would be "very conservative", she said, in a world where "trillions" are lost in embezzlement and money laundering each year and where graft raises the cost of doing business by "between 10% to 25%."

World leaders have promised trillions of stimulus dollars in a bid to maintain growth and cushion economic contraction, in response to the financial storm that erupted a year ago.

Labelle, a former senior Canadian aid official, spoke to reporters after addressing an international governance conference sponsored by the Asian Development Bank in Manila.

At the meeting she told anti-corruption prosecutors and activists that the crisis has forced governments around the world, including the world's largest aid donors, to look more closely at the problem of corruption.

"Corruption undermines the effectiveness of aid," she said. "It siphons off the resources intended to alleviate suffering."

Labelle noted that Asia, where most of the world's poor live, "does not have a regional convention on corruption with certain Asian countries not having even bothered to ratify existing international conventions."

While she had no estimates of the percentage of official development assistance (ODA) lost through graft, Labelle said "direct economic losses due to overcharges match or bypass total ODA disbursements."