The Inter-American Investment Corporation (IIC), the private sector lending arm of the multilateral Inter-American Development Bank (IDB), continues to be entagled in the U.S. justice system, as a case against the international financial institution (IFI) makes its way through the courts here in Washington, DC. Typically, an IFI, such as the IDB or the World Bank, is shielded from lawsuits regarding personnel matters in the countries where they operate, but this time the US courts allowed the case to proceed.

The Plaintiff in the case, Jorge R. Vila, sued the IIC in October 2006 claiming that the institution solicited, received and benefitted from his services from January to August 2003, but then refused to compensate him. Court papers show that the IIC entrusted Vila with broad authority to negotiate terms and conditions of loans with clients and potential co-financiers. Through senior officials, the institution also asked Vila to participate in both internal project discussions and external negotiations and to draft internal and external IIC documentation for the signature of IIC senior management.

In June 2009, the Court of Appeals confirmed the decision of the District Court for the District of Columbia, issued in February 2008, that Vila had a legitimate claim against the IIC, and the institution must respect the authority of the U.S. court system in this case.

The claim against the IIC is now through the discovery phase, and the IIC was obliged to produce extensive documentation in anticipation of a trial by jury. This case continues to receive increasing public and political attention in Washington, as the Court decisions already handed down represent an important judicial precedent that pierces the immunities of international organizations, such as the World Bank and the United Nations.

At trial, testimony is expected to focus on the lack of internal controls, the audits, transparency and accountability problems of the IIC, that lie at the heart of the Vila case. These issues are expected to attract the interest of members of Congress, the White House and the Treasury Department, as the U.S. government evaluates the prudence of continuing to disburse public funds to both the IDB and the IIC.

Editor’s Note: This blog post was updated on November 19, 2013.

Bea Edwards is the Executive Director for the Government Accountability Project, the nation’s leading whistleblower protection and advocacy organization.