Reviewer of World Bank Integrity Office Wrong Choice
GAP Cites Conflict of Interest

(Washington, D.C.) – Despite an apparent conflict of interest, Paul Volcker has been chosen by World Bank President Paul Wolfowitz to lead an independent review of that organization’s Department of Institutional Integrity (INT), the office that investigates allegations of internal fraud and corruption. Volcker’s professional connections put him too close to former INT staff members, now employed by a company with a questionable relationship to INT, to allow him to qualify as an independent evaluator.

The Government Accountability Project (GAP) has learned that doubts have arisen among Board members and staff over the propriety of the relationship between Glenn Ware, a Senior Advisor on fraud and corruption at INT, and Diligence LLC, a private company. Diligence, according to its Web site, was founded in July 2003 “as an intelligence gathering and risk management firm that helps its clients confront difficult business challenges.” The company was established to assist private firms searching for business opportunities financed by reconstruction funds for Iraq.

Any review of INT practices must examine the sequence of events surrounding Ware’s move from the Bank to Diligence in 2005, and Diligence’s subsequent acquisition of an INT contract within sixty days of Ware’s appointment there. While Ware has subsequently rejoined INT, Diligence now employs at least four investigators who worked directly with Volcker on the evaluation of a U.N. program less than two years ago. These four people were previously also employees of INT.

GAP International Program Director Bea Edwards stated, “Because of his own connections with these Diligence personnel, Volcker cannot impartially evaluate the company’s relationship to INT.”

National laws on conflict of interest typically cover the perception, as well as the reality, of impropriety. A public official’s personal interests and connections must not even appear to influence a decision or judgment. To maintain any objectivity, Volker would have to establish a blackout on contact for the duration of the review between himself, acquaintances and colleagues who are now, or were previously, staff members at Diligence and INT. This blackout would be difficult, at best, to maintain.

In addition, the Consulting Services Manual of the World Bank defines a conflict of interest as “Conflicting assignments by nature in which the consultants could bias their advice to be consistent with findings of another of their assignments or those of their affiliates.”

“If he were to investigate the practices of INT over the last several years, Mr. Volcker would face a situation in which he would be evaluating the work of a number of people with whom he has had a close and recent professional relationship,” stated Edwards.

Wolfowitz is undertaking this putatively independent review because the Board of Directors, representing the Bank’s shareholder governments, mandated this step in 2006 as a result of complaints about improper activities by INT personnel. While the Bank is not subject to any national law on conflicts of interest, Volcker’s appointment does not lend credibility to the Bank’s effort to establish INT as a good faith investigative unit. Volcker’s connections to former INT and Diligence personnel are too numerous, too friendly, and too recent to allow him to qualify as a credible external reviewer.

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.