Wednesday, March 09, 2011

Whistleblowers: Despite reforms, insiders who blow the whistle at institutions like the World Bank, face retaliation

Republished permission Inter Press Service (IPS )copyright Inter Press Service (IPS) and

Despite Reforms, Whistleblowers at Development Banks Face Retaliation

By Charles Davis

WASHINGTON, Mar 8, 2011 (IPS) - Multilateral lending institutions – like the governments they serve – are ostensibly committed to the values of transparency and accountability. But more often than not, insiders who blow the whistle on waste, fraud and abuse at institutions like the World Bank are retaliated against, not rewarded, and typically find themselves out of a job for daring to speak out about wrongdoing.

It's not supposed to be that way, of course.

In June 2008, the World Bank issued what it described as a "strengthened" whistleblowing policy "designed to encourage staff to report misconduct" through a number of internal channels.

"This policy sends an unambiguous message that retaliation against whistleblowers will not be tolerated," Hasan Tuluy, the Bank's vice president for human resources, said at the time.

The move came little over a year after Paul Wolfowitz, one of the key architects of the 2003 invasion of Iraq, resigned in disgrace as president of the World Bank after numerous whistleblowers exposed incident after incident of corruption during his tumultuous two-year tenure, most notably his giving a massive 35.5 percent raise – or 47,700 dollars – to a woman with whom he was romantically involved.

Whistleblowers also exposed that Wolfowitz had covered up the near-shooting death of an employee in Iraq, after he had moved to expand the bank's lending in the war-torn country in violation of its own policies. They also revealed that he was strictly curtailing the bank's promotion of family planning services in developing countries, in keeping with the George W. Bush administration's conservative social policies.

Wolfowitz in turn launched a series of investigations aimed at discovering who was leaking the politically damaging material.

But while whistleblowers are better off on paper since then – the Asian Development Bank implemented a strengthened policy in 2009 purportedly aimed at guarding them against retaliation, as did the Inter-American Development Bank in 2010 – Beatrice Edwards, a former World Bank employee now with the Government Accountability Project (GAP), told IPS that little has changed in practice.

"All the policies are in place," says Edwards, "but the implementation of the policies is the problem."

And that's evidenced by the number of whistleblowers who continue to reach out to GAP with stories of retaliation after they tried to live up to their institutions' stated values.

"We are not finding these new policies to be effective," says Edwards. Whistleblowers who reach out to GAP have usually "been subjected to some form of harassment", she says. "And when they get to us, they're already pretty far down the road to termination, which is often the end result."

That retaliation – and termination – remains a fact of life for whistleblowers is in large part because the World Bank and other multilateral lending institutions enjoy a sort of diplomatic immunity, their employees governed not by the laws of the countries in which they operate, but by a "Conflict Resolution System" that critics say is influenced more by political considerations than a sense of justice.

Officials at the World Bank did not return an IPS request for comment.

"The internal administrative justice systems at the banks are dysfunctional and lack impartiality," says Edwards, "especially for whistleblowers who have embarrassed the banks."

Though internal bodies such as the World Bank's Office of Ethics and Business Conduct are tasked with protecting whistleblowers, they're ultimately still in the service of the institution – and of management, which is often the subject of the very leaks and accusations of unethical behaviour that are being investigated.

Indeed, while the administrative justice system is supposed to protect whistleblowers from retaliation, a review of cases at the World Bank between 2000 and 2008 found that 85 percent of those who were found to be unjustifiably terminated for speaking out were never actually reinstated.

And the situation hasn't improved much since 2008, despite whistleblowers time and again exposing massive waste – and outright corruption – at multilateral lending institutions. But then maybe that's the problem.

As GAP's Edwards points out, multilateral lending institutions would prefer to keep news of corruption from reaching the outside - to the publics they serve - where it could embarrass both their leadership and host governments.

And history shows that "if high-level officials in the borrowing country are involved, Bank management may back down," says Edwards. "With a whistleblower in the process, it is much harder for Bank management to conceal corruption that is politically inconvenient to expose."

That was certainly the case with a natural gas pipeline project in Peru. After already receiving a 73-million-dollar loan from the Inter-American Development Bank (IDB), journalist Kelly Hearn revealed last year in The Washington Times that bank officials lent the project – owned by a consortium of companies including Texas petroleum giant Hunt Oil – another 400 million dollars, despite whistleblowers reporting that the project had developed a series of leaks, and had in fact been built using uncertified welders.

When problems with the project were confirmed in an IDB- commissioned report, management decided to go ahead with the loan anyway – and to keep the report from being made public "in light of objections expressed" by the consortium.

Bank officials have denied wrongdoing.

If the past is any indication, though, the whistleblowers who revealed the problems with the Peru pipeline risk derailing their careers if their identities become known, despite the new protections they enjoy from retaliation – on paper. And that's why their advocates say more meaningful reforms are necessary to protect them, beginning with the internal review process.

"Management dominates and manipulates these processes," says Edwards.

She advocates creating an independent, third-party arbitration process that can assess whistleblowers' claims and whether action taken against them was retaliatory in nature.

More broadly, though, "the internal administrative justice systems at the banks must be reformed so that they cannot operate as the Kangaroo Courts that they can often be now", she said.