The Inter-American Development Bank (IDB) has released a response to GAP’s recent review of its whistleblower policy. We appreciate the time devoted by IDB officials to evaluating GAP’s analysis. We found some of its feedback to be useful and have, accordingly, released an updated version of our review. However, there were numerous deficiencies in the IDB’s response that we must address.

At the outset, we should mention that this ex post facto debate would have been unnecessary had IDB management invited comments before its policy was passed. The Asian Development Bank, the African Development Bank, and the World Bank sought public feedback on their proposed whistleblower protection policies before adopting them, a step that the IDB failed to take. Much of this debate could have been avoided had public consultation occurred.

GAP’s Response:

• Page 1: On this page, the IDB states that GAP’s assessment “seems to imply that the IDB’s administration is set on interpreting its rules and regulations in a way that is detrimental to whistleblowers. On the contrary, the IDB has a strong track record of protecting employees who expose wrongdoings.” While GAP cannot draw conclusions on how the IDB administration will act in the future, we do have information about how it has acted in the past. According to a recent report by the U.S. Department of the Treasury, from 2009-2011 the IDB’s Ethics Office received four requests for protection from retaliation and concluded that no retaliation existed in three of these cases. Of these cases, the Bank was obliged to resolve one to the constructive satisfaction of the complainant outside the judicial process. The second case is still pending at the IDB’s Administrative Tribunal, which is a problem in itself. The whistleblower reported retaliation in April 2010, and will not have a Tribunal hearing until 2013, if then. In the meantime, her career and her reputation have been severely damaged. In the third case, the whistleblower won very substantial compensation before the Tribunal but was not reinstated, although career-wrecking retaliation was established. One judge noted that “management did nothing to protect the whistleblower” in this case. There is also a retaliation case before the Tribunal that the report fails to mention. This record, while sparse, indicates that meritorious claims are not fairly evaluated by the Ethics Office.
• Page 2: The IDB “…disagrees with any assertion that the Whistleblower Policy falls short of standards essential to receiving the full support of its member countries, including the U.S.” As detailed in GAP’s review, the policy does not fully meet any of the standards for a whistleblower protection policy detailed in the U.S. 2012 Consolidated Appropriations Act. It also fails to meet certain standards established in the 2006 Foreign Operations, Export Financing and Related Programs Appropriations Act.
• Page 2: The IDB claims that “the GAP assessment is incorrect in stating that the IDB Whistleblower Policy was amended for the purpose of complying with standards set forth in U.S. legislation…” While GAP believes that U.S. legislation played a role in the IDB’s decision to update its policy, we have revised the language in our blog entry to reflect the IDB’s concerns, as we must assume that the IDB has accurately reflected its motivations and did not seek to comply with U.S. law.

Mahmoud Mohieldin, Image Courtesy of the World Economic ForumAccording to an internal document sent from World Bank President Jim Yong Kim on December 18, Mahmoud Mohieldin – Egypt’s former Minister of Investment during the deposed Hosni Mubarak regime – has apparently been demoted from his post as Managing Director. Mohieldin is now the Special Envoy on Millennium Development Goals (MDGs) and Financial Development. While it is not yet clear what the Special Envoy will do about the MDGs and the United Nations, two things are certain: 1) Mohieldin has exchanged a central post at the Bank for a peripheral one, and 2) this is a pattern.

Over the last year-and-a-half, we have been investigating Mohieldin for his role in at least three suspicious (and potentially criminal) privatization transactions in Egypt. During this investigation, we have repeatedly pressed the World Bank to release Mohieldin’s financial disclosure records, arguing through various appeals that this information is a matter of public interest. The World Bank refuses to release the records, but instead has been actively shuffling Mohieldin around. We can’t help but notice that each time he moves, Mohieldin has lost a good chunk of his authority.

For example, near the beginning of this year, we acquired two World Bank organizational charts: one issued in January 2011 and a second in November 2011. When compared, the charts show that General Services, which include procurement at the Bank, were transferred from Mohieldin to Vincenzo La Via during the year. Apparently, former Bank President Zoellick (responsible for Mohieldin’s appointment in September 2010) thought Mohieldin should no longer be responsible for that any longer.

The decision to remove procurement responsibilities from Mohieldin is hardly surprising, given the avalanche of corruption allegations that we have tracked that hit him and his cronies after the fall of the Mubarak regime. While his appointment as Managing Director under Zoellick and the protection from investigation that the Bank afforded him was troubling enough, his new role as Bank President Kim’s Special Envoy on Millennium Development Goals and Financial Development is also disturbing.

It is not yet clear that Kim is aware of the shadow over Mohieldin as a consequence of his past dealings in the Mubarak government. What is clear is that Mohieldin has no experience protecting anyone from poverty other than himself. How he qualifies as an advocate for the MDGs is a mystery, but it probably indicates the low priority now assigned both the MDGs and Mohieldin at the World Bank in 2013.

Michael Termini is International Officer for the Government Accountability Project, the nation's leading whistleblower protection and advocacy organization.

In November, the U.S. Department of the Treasury issued two reports that contain information about the whistleblower protection records of the Multilateral Development Banks (MDBs).

In part, these reports are responsive to a spring 2012 GAP petition that urged the Department to include these data in its future reports.

The reports contain useful information about the implementation record at four MDBs. Key findings include:

The World Bank

According to one report, from January 2009 – July 2012 “233 staff and consultants made protected disclosures to INT [the Office of Institutional Integrity] of alleged misconduct.” During this time period, the Bank’s Office of Ethics and Business Conduct (EBC) received 26 whistleblower retaliation allegations. It appears that the EBC did not substantiate any of these allegations. The report also says that the final level of the Bank’s internal grievance system, the Administrative Tribunal, received 13 cases of alleged whistleblower retaliation during this time period and found in favor of six of the applicants.

GAP has several observations about these statistics. First, on the positive side:

• Many staff members have made protected disclosures to INT without reprisal. This is, of course, the objective of the whistleblower protection policy.
• Nearly half of the retaliation cases brought to the Tribunal were vindicated.

However, the figures also show that:

• The EBC is not effectively protecting whistleblowers when retaliation does occur. Not one out of 26 retaliation complaints to the EBC was substantiated over a period of three years. While such a record is possible, it is highly improbable, especially in light of the fact that several whistleblowers who did not receive relief from EBC were apparently vindicated by the Tribunal.

Moreover, the report could be strengthened by showing whether the Tribunal substantiated the whistleblowers’ retaliation claims. Often, such cases involve not only allegations of retaliation, but also allegations of due process violations, and in GAP’s experience, the Tribunal has been hesitant to substantiate retaliation, even in cases (i.e.: decision no. 448 and 437) in which it sided with the applicant on other claims. The statistic would also be more meaningful if it indicated whether the relief received by whistleblowers who prevail is comprehensive and covered the consequences of reprisal. Finally, the Treasury Department’s report implies that the Bank’s whistleblower policy is “consistent with international best practices.” GAP disagrees.

Editor's Note (January 7, 2013): In response to IDB reaction to this blog post, the text of this blog has been edited slightly. For GAP's full reaction to the IDB reaction, click here.

On October 31, 2012, the Inter-American Development Bank (IDB) announced the release of a revised whistleblower protection policy and Code of Ethics and Professional Conduct. Although the IDB claims that its new whistleblower policy maintains “alignment with international best practices,” in reality the policy violates all best practice cornerstones, as detailed in GAP’s review.

In December 2011, President Obama signed into law the U.S. 2012 Consolidated Appropriations Act. According to this law, the U.S. Treasury Department must certify that the IDB is “making substantial progress” toward “implementing best practices for the protection of whistleblowers from retaliation, including best practices for legal burdens of proof, access to independent adjudicative bodies, results that eliminate the effects of retaliation, and statutes of limitation for reporting retaliation,” before the Congress will disburse funds to the IDB for its General Capital Increase.

Unfortunately, despite some minor advances, the revised policy does not fully meet any of these standards. According to GAP Legal Director Tom Devine, “this policy cleanly flunks all relevant criteria for a lawful appropriation to the Bank.” The IDB’s policy also fails to adopt several recommendations made by Global Compliance, the company that the IDB hired to review its ethics system.

Key shortcomings include:

• Flawed burden of proof: Although the burden of proof initially appears to meet best practice standards, it is severely undermined by loopholes, including those in sections 2.4.2 and 2.4.5.

Interviews Reveal Serious Systemic Problems

Photo courtesy of Wikimedia CommonsToday, the Government Accountability Project (GAP) is releasing a report that analyzes the impact of the United Nations internal justice system on accountability practices in the UN peacekeeping missions. The GAP report, “Tipping the Scales: Is the United Nations Justice System Promoting Accountability in the Peacekeeping Missions or Undermining It?” is based on a review of two years of UN Dispute Tribunal (UNDT) and UN Appeals Tribunal (UNAT) judgments, and 36 interviews with key UN personnel, external attorneys and whistleblowers from eight different peacekeeping missions.

"Virtually every person in a UN peacekeeping mission whom we spoke with raised disturbing concerns about fundamental shortcomings in the UN’s accountability mechanisms," said GAP International Officer Shelley Walden, one of the report's authors. "Most stated that they were afraid to speak-up about misconduct, and whistleblowers who did told us that they were subjected to intense retaliation as a result.”

A copy of the report's Executive summary can be downloaded here.

A copy of the full report and annexes can be downloaded here.

The report details both positive and negative findings related to the judgments of the two-tiered Tribunal system, which is a UN staff member’s only legal recourse in an employment dispute. Encouraging data and evidence illustrated that the new system appears to better protect the due process rights of staff members. Negative findings, however, included numerous shortcomings in the new justice system, the UN’s procedures for protecting whistleblowers in peacekeeping missions, and prevailing practices for addressing disciplinary issues.

في نهاية هذا التقرير تجد ترجمة له باللغة العربية

On September 13, 2012, Egypt’s Administrative Court ruled that the selling of nearly 96% of the stake of Assiut Cement to a foreign investor (CEMEX, a global building materials firm based in Mexico accused of violating environmental laws in the United States) was illegal, and therefore invalid. The Court order that Assiut be returned to the people of Egypt.

In November 1999, the Mubarak regime sold Assiut Cement to CEMEX for 1.38 billion Egyptian Pounds (LE). At the time however, the book value of Assiut was LE 2.3 billion and its market value was nearly ten times as much: a staggering LE 13 billion. The court found that the procedures followed in this transaction were unlawful and resulted in the gross depletion of Egypt’s national wealth. Two former employees of Assiut filed the case; they had been forced, along with others, to apply for early retirement. In protest, workers staged multiple strikes at the factory during 2012.

The court has now instructed Assiut to rehire all of the 2,545 workers (out of 3,777) whose employment contracts were terminated as a result of the fraudulent deal.

So, the Mubarak regime sold a valuable state-owned asset to a foreign investor for a fraction of its true value, costing Egypt billions and leaving thousands of its citizens without jobs. Does this pattern sound familiar? If not, it should ­– we have seen the same pattern in questionable privatization transactions executed not long after Assiut Cement was privatized. This all too familiar development is indicative of a longstanding practice in the country which was accelerated in part by the subject of GAP's own investigation into privatization fraud in Egypt: the former Minister of Investment, Mahmoud Mohieldin.

We began this investigation with the sale of the state-owned department chain in the country, Omar Effendi (OE). The Bank Information Center produced an in-depth report on that transaction. The sale of Omar Effendi was also annulled in May 2011 by the Administrative Court (our investigation into the OE affair and other dubious transactions involving Mohieldin can be found here, here, and here). Mohieldin himself remains free from scrutiny; he is a Managing Director at the World Bank, which refuses to release his financial disclosures – despite our repeated attempts to secure them.

Today, GAP is releasing nearly 2,000 pages of documents obtained through a Freedom of Information Act (FOIA) request filed with the United States Agency for International Development (USAID). The request sought specific records related to the KEK Network and Supply Project in Kosovo and the work of the Kosovo Energy Corporation JSC.

In submitting this FOIA request, GAP sought to identify the rationale behind the commitment of U.S. government funds (including USAID financing) to the Kosovar Energy Corporation. The Corporation fails to provide uninterrupted electrical supply to its consumers and independent surveys show the Kosovar public regards it  as corrupt. Through this FOIA request, GAP also obtained information about a controversial coal power plant in Kosovo (known as Kosovo C) that various environmental groups, including the Sierra Club, oppose. The Sierra Club argues that opportunities exist in Kosovo to provide cleaner power, which do not put communities or the environment at risk. In contrast, the U.S. government and the World Bank support Kosovo C.

The documents obtained through GAP’s FOIA request include:

• PA Government Services Contract with USAID 
• An Attachment to the Technical Proposal, Approval Memo, Statement of Work, Incremental Funding Certification and Assistance Checklist Supplement 
• The USAID KEK 2007, 2008, 2009 and 2010 Annual Reports
• PA Quarterly Reports for 2007 (1st, 2nd, 3rd and 4th quarter), 2008 (1st, 2nd, 3rd and 4th quarter), 2009 (1st, 2nd, 3rd and 4th quarter), 2010 (1st, 2nd, 3rd and 4th quarter) and 2011 (1st, 2nd and 3rd)
• KEK Work Plans for 2007, 2008-9, 2010 (with an attachment) and 2011
• A Kosovo “B” Feasibility Study (part 1, part 2)
• An amendment to the KEK Initial Environmental Examination