IDB’s Misleading Letter Attacking Account of Pipeline Fraud Attempts to Cloud Real Issue

(Washington, D.C.) – Last week, the Washington Times published an article by freelance reporter Kelly Hearn that exposed gross financial mismanagement of the investment portfolio of the Inter-American Development Bank (IDB), and a cover-up of serious irregularities in the construction of the Camisea pipeline(s) through the Amazon Basin in Peru. The IDB responded with a letter to the editor to the Times a few days later.

Today, the Government Accountability Project (GAP) sets the record straight by correcting the tortured arguments made by the IDB.

GAP takes issue with virtually every point raised in the nearly-800 word letter. The IDB wrongly challenged validated facts presented in the article, specifically by:

  • Misrepresenting the chief criticism of the Camisea pipeline’s integrity by focusing on a disproven cause of the corrosion in the pipes, rather than the allegation that the pipes were corroded. The letter ignores the sources and facts in the story that document the serious potential problems with the pipes. (Allegation #5)
  • Misrepresenting the approval process for securing an increased capital contribution from the U.S. government, making it seem as if the increase had been approved although the United States Congress has not passed the necessary legislation. (Allegation #2)
  • Obscuring a serious financial loss suffered by the IDB as a result of its high-risk investments by citing the institution’s overall income. (Allegation #1)
  • Emphasizing that a commissioned, third party engineering report looked into these allegations after they were initially raised – in an obvious attempt to suggest the problems were solved. The article illustrates how this third party report should have been more thorough, and how it actually discovered additional serious problems. (Allegation #6)
  • Praising the institution’s practices in protecting whistleblowers, when in fact, GAP has extensive documentation showing that the IDB routinely retaliates against whistleblowers. (Allegation #8)

GAP’s International Reform program has been monitoring the whistleblower policies of multilateral development banks and other international organizations for over a decade. In 2007, whistleblowers working with GAP were pivotal in the scandals surrounding Paul Wolfowitz, which resulted in his abrupt resignation.

Government Accountability Project

The Government Accountability Project is the nation’s leading whistleblower protection organization. Through litigating whistleblower cases, publicizing concerns and developing legal reforms, GAP’s mission is to protect the public interest by promoting government and corporate accountability. Founded in 1977, GAP is a non-profit, non-partisan advocacy organization based in Washington, D.C.

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Contact: Beatrice Edwards, International Reform Director
Phone: 202.457.0034 ext. 155
Email[email protected]

Contact: Dylan Blaylock, Communications Director
Phone: 202.457.0034, ext. 137, cell 202.236.3733
Email[email protected]