World Bank headquarters in Washington, DCA provision in the recently passed U.S. Consolidated Appropriations Act, 2012 requires three Multilateral Development Banks (MDBs) to make "substantial progress" toward "implementing" best practices for the protection of whistleblowers from retaliation before the U.S. can contribute tens of billions of dollars in cold cash and guarantees to these institutions' general capital increases. This is a major victory for MDB whistleblowers and those who wish to see these organizations operate in a more accountable manner.

According to Section 7082 of H.R. 2055, which was signed into law by President Obama on December 23, prior to the U.S. Congress disbursing funds for the general capital increases of the International Bank for Reconstruction and Development (World Bank), the African Development Bank (AfDB) or the Inter-American Development Bank (IDB), the Secretary of the Treasury must report that each institution is, among other things, making "substantial progress" toward:

implementing best practices for the protection of whistleblowers from retaliation, including best practices for legal burdens of proof, access to independent adjudicative bodies, results that eliminate the effects of retaliation, and statutes of limitation for reporting retaliation.

Prior U.S. legislation related to MDBs only required the U.S. Executive Director at each institution to advocate for best practice whistleblower protections. The new law requires the MDBs – as well as United Nations agencies – to go a step further and actually implement such policies in order to receive a full financial contribution from the United States. (Incidentally, the law also requires the Secretary of the Treasury to advocate for the implementation of best practice whistleblower protections at the International Monetary Fund, although no funding restrictions are attached to that provision.)

Inter-American Development BankAnonymous whistleblowers report that the management of the Framework General Fund for Spanish Cooperation (FGE) at the Inter-American Development Bank (IDB) is weakened by a conflict of interest. The whistleblowers produced evidence, some of which was published in the Spanish press four months ago, that Carmen Albertos, the IDB staff member who administers the fund, also serves on the Executive Committee of the Socialist Party of Spain (PSOE) in Washington. 

The IDB Code of Ethics is clear on this point:

[T]o preserve the independence and impartiality of their status as international civil servants and to avoid interference and conflict with their duties, they {IDB staff members] may not participate in partisan political activities that imply candidacy, acceptance of or appointment to public office or to a political party position. Accordingly, they must resign their position in the Bank prior to participating in such activities or accepting such offices, or becoming candidates for such positions (III.B.2).

Despite the fact that the details of the conflict of interest appeared in the newspaper ABC on October 2, 2011, IDB management has not addressed the issue. Moreover, the sweeping authority granted to Ms. Albertos, as trust fund manager, aggravates the problem: she alone can approve technical cooperation projects valued at up to €100,000.

"The perfect crime is the one that's not illegal."
– Greg Palast, Vultures' Picnic

World Bank headquarters in Washington, DCThe year 2011 was a long one of indecision between the new government in Egypt and the international financial institutions (IFIs) over new loans. Because lending from the World Bank and the International Monetary Fund (IMF) previously came with politically unpopular conditions, such as cuts to subsidies and higher sales taxes, the post-Mubarak government had difficulty signing on. As it now stands, the loans once offered and declined may be back on the table because, as we come up on the one-year anniversary of the fall of the Mubarak government, Egypt continues to need financial support. A quick look at the last "Financial Sector Policy Loan" signed between the Mubarak government and the World Bank, together with a review of the corruption that tainted high office in Egypt shows the new government's current dilemma.

The program document for the last Financial Sector loan includes references to new laws and presidential decrees issued to insure the effectiveness of the "sound" new financial policies adopted by Mubarak & Sons. Because the new laws were in place, according to World Bank specialists, the Bank would lend the Mubarak government $500 million in a single tranche, disbursed in July 2010, to help strengthen the financial sector. This payout followed two earlier disbursements of $500 million each in 2006 and 2008, through the first and second loans in this series.

The Inter-American Development Bank.It seems that the Inter-American Development Bank (IDB) is holding an accountability gala (invitation here) this week called "Leveraging Transparency and Integrity as a Condition to Sustainable Development." There will be a transparency carnival conducted by The Institutional Capacity and Finance Sector, and a special star turn by IDB Bank President Luis Alberto Moreno.

The Bank has been working hard on transparency and integrity because it needs a bailout from the US Congress, which has been asking intrusive questions about the IDB's appalling record on aid effectiveness and anti-corruption. Specific Congressional offices have even been prying into the IDB's habit of retaliating against whistleblowers and using internal "oversight" offices to do it. As Representative Charles Dent (R-Pa) put it during a hearing this past spring (minutes 29 – 31):

As you know, these banks need reforms in many areas, but specifically in their internal judicial systems, which are not always as impartial when investigating charges of fraud, corruption and waste by various whistleblowers, and there was an example at the Inter-American Development Bank that, according to the press, immediately dismissed a contract officer in Haiti when that person raised the issue of fraud in the IDB's Haiti reconstruction contracts.

World Bank headquarters in Washington, DC.So, the big banks are back in Congress with their multiple hands out looking for donations from US taxpayers. But we're not talking about the Goldmans and the Sachs again – the current banks begging are the "development" banks – the World Bank and its regional clones in Africa, Eastern Europe, Asia and Latin America. Like the Chases, Morgans and Citi's, though, they're looking for a pantload of money, quietly promised them by our selectively generous Secretary of the Treasury

The development banks need money because, as Treasury Secretary Timothy Geithner told the U.S. Global Leadership Coalition in September, they are defending our national security interests and making sure that China doesn't get ahead in the world of international "aid." Also, it seems, they're fighting poverty. Earlier this year, when Mr. Geithner was disposed to answer Congressional questions on this topic (minutes 29 – 32), one concerned representative of the people asked (I'm paraphrasing here): "But aren't these banks corrupt?"

Good question.

في نهاية هذا التقرير تجد ترجمة له باللغة العربية

As the Egyptian people continue to protest and demand accountability and democratic rule by the thousands in the wake of the collapse of the corrupt Mubarak regime, we have received increased requests from friends throughout the Middle East to translate our reporting on our investigation into former Egyptian Minister of Investment Mahmoud Mohieldin into Arabic, so that far more people affected by or concerned about these issues can directly access our analyses. As explained in my previous posts, which are now all available in Arabic (here, here and here), despite having been named in allegations involving at least three suspicious privatization transactions that cost the Egyptian people thousands of jobs and hundreds of millions of dollars, Mohieldin continues to sit unquestioned in a senior position as a Managing Director at the World Bank -- even as multiple former officials associated with him in those transactions face similar charges and allegations of corruption, profiteering and abuse of public assets.

I will be reporting back soon on the latest phase of our investigative efforts into Moheldin's conduct as Egypt's Investment Minister, as well as the World Bank's failure to respond to our repeated requests for Bank President Robert Zoellick to review Mohieldin's current role as Managing Director in light of these serious allegations and finally agree to make his financial records public.

Stay tuned...

Last week I blogged on UN Secretary-General Ban Ki-moon's proposal that whistleblowers be denied the ability to challenge Ethics Office decisions before the UN internal justice system – the mechanism through which UN employees contest violations of their rights. Because the Ethics Office, which is charged with reviewing retaliation complaints and safeguarding the interests of whistleblowers, has ultimately substantiated retaliation in less than 1% of cases it has reviewed since August 2007, the Secretary-General's proposal would result in UN whistleblowers having little recourse when they are subjected to retaliation and would effectively render whistleblower protections at the United Nations meaningless.

GAP has learned that the judges of the United Nations Dispute Tribunal (UNDT), the court of first instance of the UN's two-tier justice system, are also opposed to the Secretary-General's proposal.

In October, UNDT President Judge Memooda Ebrahim-Carstens sent a letter to the General Assembly opposing Ban's proposal to amend UNDT's statutes to remove authority to review the decisions of the Ethics Office and the Office of Internal Oversight Services, which investigates misconduct. The judges observed that the proposal is "tantamount to allowing these entities to exercise power without accountability" and would "raise serious concerns regarding the respect for the rule of law within the Organization, especially taking into account the far-reaching consequences for staff members of decisions taken by such independent entities." [emphasis added]