Global Policy Forum

By Emad Mekay

The world's largest development agency, the World Bank, should end a culture of intimidating its whistleblowers and adopt smoother mechanisms for reporting wrongdoing within the institution, says an internal report leaked Friday by a watchdog group.

The Government Accountability Project (GAP), a Washington-based whistleblower support organisation, released a study commissioned by the World Bank itself to update its policy on staff who inform on misdeeds. The 43-page "Vaughn report" -- named after its author, American University professor Robert Vaughn, a respected expert on whistleblower rights -- outlines 22 recommendations that seek to bring the World Bank closer to the safeguards adopted by the United Nations for those who blow the whistle on suspected fraud.

The report urges greater protections for those who risk their careers by calling attention to corruption, abuse and irregularities at the Bank. If adopted the recommendations could have implications not only for the World Bank, but also companies, workers, investors and developing nations where the institution lent around 20 billion dollars last year. The largest of the multilateral development banks (MDBs), the World Bank tends to set the tone for standards, policies and safeguards adopted by the other lenders. The MDBs are the largest source of development finance in the world, typically lending between 30 to 40 billion dollars to low- and middle-income countries in any given year.

Those lenders are the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank and the World Bank Group. Internal safeguard policies are important because the Bank, like other international organisations, is immune from national laws.

After the Enron and Worldcom Inc. corruption scandals erupted in the United States, lawmakers and a number of companies sought to pre-empt other future problems and adopt protections including job safety for insiders who report fraud. But, say critics, the way the World Bank has handled the whistleblowers report so far doesn't appear to auger well for the future of whistleblowers at the Washington-based institution.

Although the study was submitted nine months ago, the Bank has so far kept it under wraps in spite of repeated calls by watchdog groups and by the U.S. Senate Finance Committee Chairman Charles Grassley to publicly release the study. In a statement, GAP said it finally felt compelled to release the report after appeals for transparency on the issue met disregard from the World Bank.

In an ironic twist, the Bank is in the midst of a wave of rhetoric on the need for transparency and the fight against corruption, spearheaded by its controversial new president Paul Wolfowitz, previously number two at the U.S. Department of Defence. Facing a rising staff rebellion over what they say is his own favouritism in appointing outsiders to important senior Bank positions, Wolfowitz, best known for his role in pushing for the U.S.-led war in Iraq, has sought to recast himself as a champion of accountability and transparency.

But GAP complained in a statement Friday that even with the report hidden from the public eye, the Bank has failed to consult staff on Vaughn's recommendations, or accept offers from experts to help implement Vaughn's analysis. "All of this continues the pattern of the World Bank rhetorically promoting transparency while maintaining secrecy on management proposals to combat corruption," the GAP statement said.

This the second time this month the Bank has been accused of trying to keep an internal investigative report from public eyes. After an outcry from non-governmental organisations earlier this month, the Bank backed down and disclosed a report investigating its role in violence around a silver mine in Africa that claimed the lives of dozens of people.

The Vaughn report, seen by IPS, reveals flaws in the Bank's current whistleblower policy and says it fails to shield staff members who report corruption from retaliation. The report says the Bank has yet to address many of the problems in its safeguards, and recommends an extension of whistleblower protection to all bank staff, including former and temporary employees, consultants and contractors.

Last year, five whistleblowers in the World Bank who had complained about retaliation and harassment identified the Bank's investigative unit, the Department of Institutional Integrity (INT, a branch specifically created to investigate and report fraud and corruption in Bank operations directly to senior management), as the main culprit behind their mistreatment.

The study goes further to call on the Washington-based lender to allow its employees to report irregularities to other authorities and not just to the INT or management. Under the current policy, employees cannot take problems to the 24-member board, which conducts the day-to-day business of the World Bank, or external authorities like the U.S. Congress.

The report recommends the Bank adopt standards identical to those of the United Nations and the U.S. Whistleblower Protection Act, among others. GAP also questioned the Bank's commitment to the fight against corruption because of its reluctance to disclose key information. The watchdog group warned of possible crises arising from double standards practiced by the Bank and other public lenders involved in hundreds of projects in developing countries, many of them known for lack of oversight and corruption.

"Until the current climate of repression and retaliation that prevails across all the multilateral development banks changes, neither the Bank's poverty alleviation mission, nor its aspirations to lead anti-corruption efforts can be achieved," said Melanie Beth Oliviero, GAP international programme.

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