Letter to Senator Leahy

Government Accountability Project

National Office

1612 K Street, NW Suite #1100 • Washington, D.C. 20006

202.408.0034 • www.whistleblower.org

November 18, 2008

The Honorable Patrick J. Leahy

Chairman, State, Foreign Operations, and Related Programs

Subcommittee on Appropriations

127 Dirksen Senate Office Building

Washington DC 20510

Dear Senator Leahy,

We, the organizations and individuals undersigned, write to urge you to hold the World Bank accountable for its failure to comply with the legislated requirements for transparency attached to the contributions of the United States.

According to Sec. 668 (c)(1)(D) and (E) of the 2008 Consolidated Appropriations Act, which became Public Law 110-161 on December 26, 2007, “Ten percent of the funds appropriated by this Act under the heading ‘International Development Association’ shall be withheld from disbursement until the Secretary of the Treasury reports to the Committees on Appropriations that… (D) the World Bank has made publicly available the reports of the Department of Institutional Integrity, and any subsequent review of corrective actions for such reports, including, but not limited to … the May 2006 report on Credit Number 3703 DRC, Grant number H193 DRC, and Grant number H010 DRC; and (E) the World Bank is implementing the recommendations of the ‘Volcker Panel’ report in a timely manner.”

To date, the Bank has not publicly released the May, 2006 Department of Institutional Integrity (INT) report on the Democratic Republic of Congo (DRC). On April 28, 2008, the World Bank released an INT report entitled “Democratic Republic of Congo: Emergency Demobilization and Reintegration Project: Redacted Report”. This undated report – which mentions events that occurred in 2007 – is not the May 2006 report(s) specifically called for in the legislative provision.

Further, the Bank has not responded to Sec. 668 (c)(1)(E), as it has failed to implement recommendation made by the Volcker Panel, which was commissioned to review the practices of INT. In November 2007, the Bank approved the Panel’s recommendations. Among other lapses, however, INT has not complied with the following fundamental recommendation of the Volcker Panel:

Ø Rights of Complainant to Notice of Case Status: The Volcker Panel recommended that “INT should furnish regular updates to complainants and victims on the general status of an investigation and promptly respond to specific queries from complainants and victims.” But when a complainant requested information on the status of his allegations, INT refused to provide this information. Instead, an INT official told the Government Accountability Project, which advises the complainant, that “INT will not provide any information regarding its investigative methodology” and “going forward we will not be engaging in a continuous back and forth negotiation with your client...” The “regular updates to complainants” that the Volcker Panel recommended became, in the parlance of INT, “a continuous back and forth negotiation” that would be eschewed by the department.[1]

Finally, the Bank has failed to respond to Sec. 1505 (a)(11) of the 2006 Foreign Operations, Export Financing and Related Programs Appropriations Act, which became Public Law 109-102 on November 14, 2005. This Act states that it is the policy of the United States that each multilateral development bank “implement best practices in domestic laws and international conventions against corruption for whistleblower and witness disclosures and protections against retaliation for internal and lawful public disclosures by the bank’s employees and others affected by such bank’s operations who challenge illegality or other misconduct that could threaten the bank’s mission, including: (1) best practices for legal burdens of proof; (2) access to independent adjudicative bodies, including external arbitration based on consensus selection and shared costs; and (3) results that eliminate the effects of proven retaliation.” The Bank’s new whistleblower protection policy, which was approved in June 2008, does not meet the last two standards, as it does not offer the right to external arbitration and does not recognize the right to meaningful relief for vindicated whistleblowers.

Without access to external arbitration when protesting retaliatory dismissal, discrimination or demotion, whistleblowers confront a judicial forum in which the Bank is both the defendant and the judge. Experts on judicial proceedings at intergovernmental organizations have recommended independent, external arbitration as a responsible way to resolve this conflict. To comply with the requirements in U.S. law, the Bank must commit to guaranteeing external arbitration as part of its pending conflict resolution system reforms. To date, there is no indication from the Bank that this measure will be adopted.

The Bank’s new staff rule providing whistleblower protection fails to “eliminate the effects of proven retaliation,” as it does not provide for mandatory reinstatement for whistleblowers who prevail. Under the new policy, Bank management retains the right to argue for the dismissal of the whistleblower if it deems that such an action is “in the best interests of the institution.” The party found culpable of misconduct must not retain the right to influence a decision on the remedy available to the whistleblower. A preliminary review of Administrative Tribunal cases, the ultimate judicial forum for staff members, has found that of the complainants who challenged termination successfully on due process or substantive grounds between 2000 and March 30, 2008, less than 15 percent of cases concluded with actual re-instatement. In the remaining 85 percent of cases, plaintiffs were dismissed from institutional employment despite prevailing. Such a dismissal is particularly draconian at the World Bank, as loss of employment often means the “victorious” whistleblower must leave the country.

United States IDA appropriations to the World Bank are contingent upon compliance with these legislated standards and provisions. We urge you to ensure that these accountability measures are fully respected before further IDA disbursements are made.

Thank you for your continued leadership on these transparency and good governance issues at the international financial institutions.

Sincerely,

The Government Accountability Project

Food and Water Watch

International Rivers Network

New Rules

Friends of the Congo

Greenpeace

ActionAid

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[1] These Volcker Panel violations are further detailed in the “Plundering the Yerevan Water Utility” report, which is available at http://www.whistleblower.org/doc/2008/PlunderingtheYerevanWaterUtility8.1.08.pdf .

Blowing the World Bank Whistle - Investigation Report

After 18 months of unrelenting pressure on the World Bank’s Department of Institutional Integrity (INT) and the UK’s Serious Fraud Office (SFO), they have eventually completed their investigations into the ‘Blowing the World Bank Whistle’ claim of multiple acts of fraud, corruption and embezzlement associated with the World Bank funded Municipal Development Project in Armenia, as exposed (but covered up) by Vahan Hovhanissian’s Parliamentary Commission in 2004.

Washington’s Government Accountability Project (GAP), legal counsel throughout the process, submitted the 62-page claim to the INT in March 2007 and has subsequently provided the INT with several packets of compelling evidentiary documentation. GAP has persistently pressured the INT into carrying out the investigation it would otherwise have avoided, and there has been additional pressure from numerous high-ranking British Government officials in the UK, in Armenia and in Washington, who have written to and spoken to the INT on numerous occasions. Extensive human and logistical resources have been expended in the internationally-backed effort to persuade the INT and the SFO to investigate this claim, at a cost of hundreds of thousands of Dollars.

In March 2008, a team of INT investigators travelled to Armenia to interview witnesses and gather information. The work continued in Washington and on the 21st August, the British Ambassador in Armenia advised that the investigation had been completed.

The process was extensive, and investigations found that Mr. Richard Walkling, Authorized Representative for the International Operator in Armenia, ACEA – A. Utilities, managing the Municipal Development Project, was centrally involved in multiple cases of fraud, corruption and the embezzlement of Armenian public funds, in collusion with Mr. Roger Robinson, who was World Bank Armenia Country Manager at the time of the wrongdoings. The total loss to the people of Armenia, who should have benefitted from the $35 million World Bank project, was tens of millions of dollars.

Information has not been released on what corrective action the Bank may take, if any. But Roger Robinson continues to work for the Bank in Kyrgyzstan, despite having colluded in this affair, and it is understood that Richard Walkling now works as consultant in a Yerevan water project, although not financed by the World Bank. However, the recently released World Bank ‘Economic Monitoring Note’ for 2008 indicates that the Bank may now be operating more responsibly in Armenia, under the management of Mr. Aristomene Varoudakis, which is an encouraging sign that this arduous campaign could have been in some way beneficial.

The full report is being translated to Armenian, for distribution and publication, and it will be available to readers of this article upon request.

Bruce Tasker

Senior Specialist
Armenian Parliamentary Commission (2003/4)
Blowing the World Bank Whistle