As the new Spanish government contemplates austerity measures in the face of an 8.5 percent of GDP budget deficit, cost-cutting officials might look to one of their Trust Funds at the Inter-American Development Bank (IDB) to save some public money. Events related to allegations of mismanagement and improprieties continue to plague the $50 million Spanish General Trust Fund (FGE) there. The pending resolution of this issue, which was first exposed in the fall of 2011 by Spanish whistleblowers at the IDB, has become a litmus test of the willingness of the newly-elected Spanish government to address poor management, cronyism and lack of accountability in the country’s official development cooperation programs.
In January and February 2012, GAP published blogs about the FGE, echoing the story broken by the Spanish newspaper ABC. The details of the case first appeared in ABC on October 2, 2011, citing the IDB whistleblowers’ evidence. A second ABC article (February 6, 2012) revealed that the Spanish Tribunal de Cuentas (the equivalent of the US Government Accountability Office) would investigate and audit Trust Fund activities and donations financed by the Spanish Ministry of Economy from 2008 onwards, especially those of the FGE. The Tribunal made its decision despite a note sent to ABC in October 2011 by Spain’s Deputy Primer Minister/Minister of Economy, Ms. Elena Salgado, denying all allegations.
As reported by both ABC España and GAP, there are three key issues that are clear evidence of conflicts of interest, weak internal controls, and lack of transparency in the management of the FGE at IDB:
1) The first issue is the conflict of interest involving the IDB staff member who serves as FGE’s manager, Carmen (Carmiña) Albertos. She simultaneously coordinates the Fund’s activities – approving technical cooperation projects of up to €100,000 each – and serves on the Executive Committee of the Spanish Socialist Party (PSOE) in Washington DC. These dual positions are in clear violation of the IDB Code of Ethics. Another IDB staff member, Juan Jose Llisterri, also serves on the Executive Committee of PSOE in Washington DC, in violation of the IDB Ethics Code. For obvious reasons, the IDB’s Code of Ethics unequivocally prohibits IDB staff from serving in political positions while working at the Bank:
…[T]o preserve the independence and impartiality of their status as international civil servants and to avoid interference and conflict with their duties, they may not participate in partisan political activities that imply candidacy, acceptance of or appointment to public office or to a political party position. Accordingly, they must resign their position in the Bank prior to participating in such activities or accepting such offices, or becoming candidates for such positions (Conflicts of Interest, p.5, emphasis added).
2) The second issue is the authority granted to the IDB, in the person Carmen Albertos, by the Spanish Ministry of Economy to approve funding for projects of up to €100,000 each, a fact established by a letter of agreement (carta acuerdo) signed by the Director of International Financing at the Spanish Ministry of Economy, María Jesús Fernández García, on November 3, 2008. This “delegación de autoridad” is cited in the FGE Annual Report for 2008 and 2009 as well as in the profile document of each technical cooperation project funded under such authority. While the authority granted to Ms. Albertos is problematic because of her affiliation with the PSOE and the fact that this decision was not published on the Spanish government’s official legal registry, the most disturbing aspect of this issue is that the Ministry of Economy thus bypasses the inter-departmental commission of the Spanish government, which is legally responsible for approving all operations to be funded by the FGE and other Spanish Trust Funds. As we know, Ms. Albertos has approved over $1 million in project funding using the delegación de autoridad scheme invented for the FGE, and one of her beneficiaries as project leader is her IDB colleague and PSOE associate, Juan Jose Llisterri.
3) Weak internal controls over the FGE by the Spanish Ministry of Economy are a third concern. This is evidenced by the role of the Spanish career civil servant appointed and sent to IDB headquarters by the Spanish Ministry of Economy (Cristina López Mayher from July 2008 to August 2011, and Ana María Martínez Jerez from September 2011 onwards) to both supervise (theoretically) the Bank’s Spanish Trust Funds and assist the Spanish Executive Director with other matters. This Spanish civil servant performs both of her duties under a consulting contract with the IDB, and she reports to the manager of the FGE (IDB staff) and member of PSOE Executive Committee in Washington, Ms. Carmen Albertos. The newspaper ABC dubbed this arrangement “la fiscalizadora fiscalizada” (the supervised supervisor): she lacks the independence to oversee the functioning of the FGE, given that she herself reports to the Manager of the trust fund, Carmen Albertos.
The weak internal controls over the FGE by the Spanish government are also evidenced by the absence of independent evaluations for technical cooperation projects. Instead, the FGE Annual Reports only contain self-evaluation reports prepared by the project’s team leaders, who seem to extol both their projects and their donor uniformly.
To penetrate the management miasma surrounding the FGE, GAP wrote to Bank President Luís Moreno on January 26, 2012 (Spanish Executive Director at the IDB, María Pérez Ribes was copied). Marcelo Cabrol, Manager of External Relations, responded to us, but Cabrol answered only one of the issues raised and in the baffling way below:
…[T]he Ethics Officer has determined that there is no evidence that the IDB employees mentioned in your letter have taken any actions that are contrary to the standards of ethics and professional conduct established by the IDB.
But the language in the IDB Code of Ethics is absolutely explicit about politics and money: Simply having a position in your national political party and a position the at the IDB violates the Code of Ethics, even if you’re simply sipping espresso all day long and taking no action at all.
Therefore, who exactly is/was the Ethics Officer who ruled on the conflict of interest resulting from the political activities of Ms. Albertos and Mr. Llisterri? Was it perhaps María Borrero, the IDB’s first and longest-serving ethics official, who resigned abruptly last April 2011 just as an investigation of her conduct concluded? If she was the expert who made the decision in question, I’d look for a second opinion. Or perhaps it was Mr. Michael Woscoboinik? After Ms. Borrero’s unseemly departure, the IDB assigned Mr. Woscoboinik to serve as the acting ethics official. At the time GAP received this letter, he had been ‘acting’ for nearly one year, and the fact that he’s only temporarily appointed for such a long time is a problem, both for him and for anyone who seeks his counsel. Officials working in a temporary capacity lack the autonomy and job security necessary to make impartial judgments that management may not favor. Finally, of course, it’s worth pointing out that, whichever ethics officer made the determination that there’s nothing wrong here, that officer is prima facie wrong her- or himself.
In the meantime, the Spanish Executive Director at IDB, Ms. Pérez-Ribes, wrote to GAP on February 21, 2012, in response to the letter GAP had addressed to Moreno. This letter not only failed to address the primary allegations of impropriety at the FGE, but was apparently written in an unofficial capacity: it bears no letterhead, either for the government of Spain or for the IDB. Nor does Ms. Pérez-Ribes include her official title under her signature. It’s important to note that Ms. Pérez-Ribes must have known about the of conflicts of interest, weak controls, and lack of transparency at the FGE; she served as Deputy Director General for Multilateral Financial Institutions (including the IDB) at the Spanish Ministry of Economy from September 2010 to August 2011. She was appointed by the outgoing Spanish government to the position of IDB Executive Director in September 2011, so she has seen the irregularities at the FGE from both the government’s and the Bank’s side.
The unusual letter Ms. Perez Ribes sent to GAP prompted us to write directly to her on March 7, 2012 in her capacity of Spain’s Official Representative at the IDB, so we could ask in detail about the position of the newly elected Spanish government on the allegations of impropriety at the FGE. We also asked if she had proposed action to the new leadership of the Spanish Ministry of Economy to clean up the FGE. Ms. Perez Ribes, however, has yet to respond to GAP’s letter.
To conclude, the appearance of mismanagement and impropriety is enough to prompt an audit by Spanish authorities, but IDB management simply denies that anything is amiss, despite the fact that a conflict of interest is plainly visible to anyone who can read the newspaper and the Code of Ethics. In addition, IDB spokesperson Marcelo Cabrol denied that Carmen Albertos has the authority to approve funding for projects of up to €100,000, although he cites no authority for his denial. Yet a document signed by the Director of International Financing at the Spanish Ministry of Economy in October 2008 establishes that she can indeed approve such projects. In short, the management of the FGE falls well short of the ethical standards the IDB advertises for itself: “The Bank strives to ensure its activities are free of fraud and corruption and subject to the strictest control mechanisms.”
From the perspective of Spanish taxpayers, if the new Spanish government’s commitment to rid its official development cooperation aid of mismanagement, cronyism and lack of accountability is to be taken seriously, the new leadership of the Spanish Ministry of Economy must take immediate action to clean up the FGE. At present, the very least Spanish taxpayers deserve is effective use of their contributions to the IDB, given that they are being asked to make significant sacrifices under tough austerity policies in 2012.
Bea Edwards is Executive and International Director for the Government Acountability Project, the nation's leading whistleblower protection and advocacy organization.