Day before Response, Key Figure Resigns from Corporate Position

(Washington, D.C) – In response to a detailed letter from the Government Accountability Project (GAP) asking for clarifications of World Bank debarment policy in the wake of the recent episode involving Satyam Computer Services, World Bank Managing Director Juan Jose Daboub replied with a short non-responsive paragraph. His note rejects transparency at a time when the Bank is under fire for concealing allegations of corruption involving an IT firm that solicited contracts throughout the UN system, even as the World Bank banned it from future work.

The United Nations awarded a multi-million dollar contract to Satyam on July 18, 2008, months after the World Bank first claimed to have suspended Satyam. Representatives of both the United Nations and World Bank sit on the U.N. Interagency Procurement Working Group – a panel explicitly designed to increase procurement efficiency by providing a forum for exchanging relevant information on vendors.

On January 14, GAP sent Daboub a letter with 11 questions regarding Bank policy for debarring vendors it contracts directly for its own operations – a process that has long been shielded from public scrutiny. By answering these questions, it was GAP’s hope that the Bank would progress toward openness and accountability on this issue of paramount importance to Bank operations. Satyam was the World Bank’s primary IT outsourcing vendor, responsible for a wide range of ‘back office’ IT services. In January, the company, India’s fourth largest in the IT sector, precipitously collapsed when the CEO confessed to a $1 billion-plus fraud. Click here to read GAP’s original letter: http://wordpress-350926-1087337.cloudwaysapps.com/doc/2008/DaboubLetterFinal.pdf

Instead of answering any of the questions directly, Daboub chose to respond with the following (in full):

I am in receipt of your letter dated January 14, 2009. With respect to the matter referenced in your letter, I would like to point out that not only did the World Bank take appropriate action consistent with its own Corporate Procurement Policy, but the Bank also referred the case to the U.S. Department of Justice for a determination of whether U.S. laws had been violated. As a whistleblower organization you will no doubt understand that because of the involvement of Bank staff in the matter, the Bank has also remained cognizant of the due process rights of its own staff members.

To see Daboub’s actual letter, click here

“This response means nothing,” said Bea Edwards, GAP International Program Director. “Mr. Daboub replied to questions about the Bank’s corporate procurement policy by saying that the Bank is in compliance with its corporate procurement policy. We can only conclude that the policy allows the Bank to conceal corruption from other organizations in the UN system.”

Background on World Bank/Satyam and the Debarment of Mohamed Muhsin

Included in GAP’s initial questions to Daboub was an inquiry into the debarment of individuals found guilty of misconduct. Specifically, GAP was concerned about the effectiveness of the permanent barring of Mohamed Muhsin from employment at the Bank. Muhsin was debarred in 2006 for accepting improper benefits from Satyam, while he was the Bank’s CIO. On his watch, Satyam received over $100 million in contracts, 32 of which were sole-sourced. The Department of Institutional Integrity (INT), the Bank’s investigative unit, began examining Muhsin’s relationship with Satyam in 2005, and in 2006, INT transmitted to the US Department of Justice information regarding the financial association between Satyam and Muhsin to determine whether US laws had been violated.

Specifically, GAP wrote in its letter:

“What is meant when the Bank bars an individual for disciplinary purposes from future employment at the Bank, as Mohamed Muhsin has been barred? Are companies that employ the individual also barred? Are such companies eligible to benefit from financing through Bank projects?”

GAP asked this question because Muhsin, a Sri Lanka national, sat on the board of directors of that country’s John Keell Holdings, Ltd. JHK received a $75 million loan from the International Finance Corporation (IFC) of the World Bank in February 2008. The same month, Satyam, one of Muhsin’s favored IT vendors, was suspended from competing for further work at the Bank for, as the Bank delicately puts it, ‘paying improper benefits’ to Muhsin.

The Daboub letter, received by GAP on February 2, was preceded the day before by a report in the Sri Lanka Sunday Times that Muhsin is resigning his position on the JHK board, effective March 1. Muhsin told the Times that he had recently assumed the post of Director and Chief Operating Officer of the Africa and Middle East practice of the Centennial Group, a privately held firm closely tied to the World Bank, implying that his new responsibilities explained his JHK resignation. But Muhsin has held the Centennial position for nearly a year, at the very least.

Click here to read the Sunday Times report

Click here to read the Centennial document from February 2008 showing Muhsin’s connection on p. 10

“We have a number of additional questions now about JHK and the Bank,” said Edwards. “But we are especially interested in why his association with JHK became inconvenient for one or both of the parties two weeks ago.”

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.