June 30th, 2006 - Washington, D.C. - Two U.S. senators are calling on the World Bank to account for its progress in making internal reforms, including support for whistleblowers who report mismanagement and abusive spending. American taxpayers contribute about $1 billion a year to the World Bank to assist developing countries.
In a letter sent today to the President of the World Bank, Sens. Chuck Grassley of Iowa and Norm Coleman of Minnesota said that reforms recently sought by other international institutions should prompt the World Bank to take similar action.
“Without adequate protection, employees who witness fraud and corruption might fail to come forward,” Coleman said. “Today more than ever, the World Bank, as well as other multilateral institutions, need to create an environment where graft is not tolerated. Surely, if the U.N. can develop a whistleblower program, the World Bank should be able to do likewise. It takes an immense amount of courage to reveal wrongdoing in the face of intense scrutiny, and I applaud each and every individual who has made that difficult choice.”
“Institutions like the World Bank, that hold the public trust, have an obligation to put in place and abide by meaningful whistleblower protections,” Grassley said. “Whistleblowers stick their necks out a great risk to ‘commit truth.’ They deserve rewards, not reprisals. In addition to reforms by institutions themselves, Congress needs to continue strengthening the protections given to the courageous individuals who look out for the public interest.”
Earlier this month, the U.S. Senate acted to restore whistleblower protections provided to federal employees through the Whistleblower Protection Act of 1989, which had been weakened by employment practices and court decisions. The pro-watchdog legislation (S.494) was cosponsored by Grassley and Coleman and included in the fiscal 2007 defense reauthorization bill.
Coleman is Chairman of the Senate Permanent Subcommittee on Investigations. He has held three hearings and released three reports containing an avalanche of evidence demonstrating that the U.N. grossly mismanaged the Oil For Food Program, ranging from sloppy administration to outright corruption. Additionally, he has identified over $11 billion dollars in waste, fraud, abuse and potential taxpayer savings.
Grassley is Chairman of the Senate Committee on Finance. He has advocated on behalf of individual whistleblowers for more than 20 years and co-authored laws to empower and protect whistleblowers, including the Whistleblower Protection Act of 1989, the 1986 whistleblower amendments to the False Claims Act, and the 2002 whistleblower amendment to the Sarbanes-Oxley corporate reform legislation. He began his scrutiny of whistleblower issues at the World Bank last year after receiving accounts of retaliation against whistleblowers.
The text of the Grassley-Coleman letter follows here.
June 30, 2006
The Honorable Paul Wolfowitz
President
The World Bank Group
1818 H Street, N.W.
Washington, DC 20433
Dear Mr. Wolfowitz:
As members of the United States Senate and as Chairmen of the Senate Finance Committee and Permanent Subcommittee on Investigations, we write today inquiring on the progress and status of internal reform efforts and whistleblower protections at the World Bank Group (World Bank).
In September of last year, Senator Grassley wrote to you regarding efforts at the World Bank in working to create a comprehensive internal system to help control fraud and corruption. Included in Senator Grassley's letter was a personal request to you seeking the release of an internal review the World Bank commissioned. This review was conducted by Professor Robert Vaughn at the American University Washington College of Law and is commonly referred to as the "Vaughn Report". The request for this report was never met by your staff, and instead, a copy was distributed on Capitol Hill by a World Bank employee who felt Professor Vaughn's recommendations were going unnoticed. While we were encouraged by the findings and recommendations included in Professor Vaughn's report, we were troubled by the fact that it took a World Bank employee, acting as a whistleblower, to obtain a copy of this report and that a request from a United States Senator essentially fell on deaf ears.
Each year the United States contributes nearly $1 billion to the World Bank to provide much needed aid to developing countries. This funding is approved by the United States Congress and is often times subjected to certain conditions and recommendations made to your office. Of significant concern to us is that all too often, large sums of money used to finance World Bank projects is lost to corruption, fraud, or waste; preventing the funding from providing the much needed aid for which, it was originally intended. In April of this year, you spoke in Indonesia regarding the danger of corruption in hindering the growth and development of developing nations. More specifically, you stated, "[F]ighting corruption requires a long-term strategy that systematically and progressively attacks the problem," and then you continued to outline a three point strategy for fighting corruption within World Bank financed projects.
The three points to the anticorruption strategy you outlined were: (1) improved anticorruption efforts in partner countries, (2) implementation of a new system for minimizing risk to bank funded projects, and (3) expanding partnerships with third-party stakeholders. While each of these three parts to the strategy are important, you also noted that absent assistance from developing governments the strategy will not work, as "enforcement alone will not cure corruption." The partnership between developing nations and the World Bank is vital to the success of World Bank financed projects, yet we were surprised that within the anticorruption strategy you outlined, there was no mention of any internal reforms at the World Bank for complaints of corruption, fraud, or waste raised by World Bank employees acting as whistleblowers.
As United States Senators, we both understand the need for and the good brought about by whistleblowers. Senator Grassley has long championed the plight of whistleblowers who often risk everything to explore allegations of corruption and wrongdoing. Over his career, Senator Grassley has passed and amended numerous laws to provide protections for whistleblowers as well as sanctions against those who seek to prevent them from coming forward.
Among the few reforms enacted by the United Nations this past year, are commendable policies relating to whistleblower protection, including: (1) a broad mandate for freedom of expression for employees, (2) a definition of whistleblowing, (3) multiple internal channels for reporting corruption and abuse, (4) protection for external/public whistleblowing, (5) protection for contractors and consultants, (6) mandatory discipline for those who retaliate against whistleblowers, (7) legal burdens of proof consistent with the Whistleblower Protection Act (as passed by the United States Congress) and (8) the application of this new policy to internal UN administrative tribunals. The whistleblower protections announced by the UN are worthy of imitation by other international organizations. Had provisions such as this existed in the past, perhaps the problems Senator Coleman brought to light with the UN Oil-for-Food Program could have been detected before they started.
It is our understanding that currently, you have been working to reform the internal appeals process inside the World Bank. More specifically, you stated in a recent question and answer session following a speech at the Brookings Institution that, "We are working on a full reform of the conflict resolution system, and [whistleblower protection] needs to be an important part of it." (emphasis added) You closed your answer by stating that these reforms would be forthcoming in the next two months.
Accordingly, as United States Senators, and Chairmen of the Committee on Finance and Permanent Subcommittee on Investigations, we request that the following documents and information:
(1) Please provide a confidential briefing to our respective staff members regarding reform efforts at the World Bank. In complying with this request, we ask that the briefing take place as soon as possible and include all aspects of any internal reform efforts, including but not limited to, whistleblower protections, internal grievance processing, administrative appeal systems, and all anticorruption efforts. This briefing should also include information regarding the work of both Professor Vaughn and Mr. Robert Posen, who we understand were retained as consultants to the World Bank on internal reforms.
(2) Provide a copy of all documents and records which were either commissioned or solicited by the World Bank related to internal reforms for whistleblowers within the past two years.
(3) Provide a detailed explanation of the work of Mr. Robert Posen and his role as a consultant to the World Bank Group. In complying with this request, we ask that you provide any documents or records, including presentations or accounts of meetings with Mr. Posen related to internal reforms and whistleblower protections.
(4) Provide a list of all internal complaints alleging corruption, fraud, waste, or abuse in projects funded by the World Bank Group for the last two years. In complying with this request please produce a document stating the date of the allegation(s), the nature of the allegation(s), the title of the internal party making the allegation(s), as well as the disposition of the allegation(s) highlighting any action(s) taken by the World Bank Group in addressing the allegation(s).
(5) Provide a detailed explanation as to why the World Bank Group has yet to make public an official account of the Vaughn Report and its findings.
The World Bank is an institution with a mission that is noble in purpose and righteous in action. However, the noble ideas and endeavors are threatened when much needed dollars are squandered by corruption, fraud, and/or waste. By implementing true, meaningful internal reforms that include whistleblower protections, the World Bank can join the United Nations in leading other international institutions with a system that protects those who bring forward allegations and examples of wrongdoing.
We thank you in advance for your assistance in this matter and ask that your office provide a point of contact to help schedule a briefing to discuss the important issues addressed in this letter no later than July 7, 2006. Additionally, we ask that you provide the requested documents prior to any briefing, but no later than July 14, 2006.
Sincerely,
Charles E. Grassley
United States Senator
Chairman, Committee on Finance
Norm Coleman
United States Senator
Chairman, Permanent Subcommittee on Investigations
Contact(s):
Leroy Coleman, (202) 224-5641
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