LaEx-World Bank Managing Director Mahmoud Mohieldinst weekend, Egypt’s upper house of Parliament formally sanctioned a “reconcilement law” which, according to the head of the justice ministry’s legislative committee, Sherif Omar, is designed to “encourage businessmen to settle their financial disputes,” even if they previously fled the country to escape conviction for corruption. The new law will provide retrials for individuals convicted of financial crimes, and it has many supporters. One of them is Omar, who believes that this quasi-amnesty will “lead dozens of businessmen to return to Egypt.” A second justice ministry official asserts that the law will inject much-needed capital back into the economy.

Nonetheless, multiple civil society groups publicly oppose the measure – with good reason. While the law requires a committee headed by the justice minister to oversee the new process, this set up, as raised last week by the Egyptian Initiative for Personal Rights (EIPR), may actually prevent legitimate judicial supervision by allowing the executive branch sole oversight. EIPR has a point                                                      and the organization captured the problem perfectly:

"The committee could easily be politicized and pave the way for the return of Mubarak-era officials."

That is exactly what we must watch for now.

The Ahram Online article cited above names several former Mubarak-era ministers tried for profiteering and financial corruption who may return home. For us, the most notable fugitive mentioned is former Minister of Trade Rachid Mohamed Rachid. As detailed in our year-and-a-half long investigation into the role former Minister of Investment Mahmoud Mohieldin played in at least three suspicious (and potentially criminal) privatization transactions (two of which connect Mohieldin to Rachid), Rachid fled Egypt in early 2011. He was tried in absentia, convicted and sentenced to five years in prison for embezzling public funds and profiteering. Subsequently, he was charged in absentia yet again and sentenced to an additional fifteen years for squandering public funds.

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.

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.

Over the past weekend, the New York Times broke the story about electronic surveillance of Food and Drug Administration (FDA) whistleblowers by the agency itself. The Washington Post followed up today with the news that FDA lawyers approved the surveillance, which included:

…confidential letters to at least a half-dozen Congressional offices and oversight committees, drafts of legal filings and grievances, and personal e-mails…

At GAP, we’ve been defending John Kim, a World Bank whistleblower who exposed the details of debates internal to the Bank about weakening anti-corruption measures to be put in place. As part of their pursuit of Kim, World Bank investigators hacked his personal email account and read hundreds of non-Bank messages, including those  between Kim and his family’s attorney that were written five years before the incident  purportedly under investigation. In any credible legal environment, these communications are protected by attorney client privilege … but that did not stop the World Bank’s “Vice Presidency for Institutional Integrity” (INT). 

Kim’s attorney repeatedly requested the internal authorizations INT claimed to have secured from senior management to launch such invasive surveillance, but investigators never produced them. GAP could not determine whether the authorizations even existed, never mind whether they were at all limited in time and scope. The depth of the privacy invasion strongly suggested they were not.

The process was simple. INT deployed an off-the-shelf program – Encase – that costs a couple of hundred dollars and overrides passwords.

So, while “investigating” a 2008 leak, INT found that Kim had also leaked the information about the Bank’s anti-corruption measures during the period when the press focused on Paul Wolfowitz’s delinquent behavior as World Bank president. At the time, hundreds of Bank employees were leaking information about the Bank’s internal debates to blogs, press, and GAP. Because the investigation didn’t establish that Kim was the source of the 2008 leak, the Bank fired him in 2009 for whistleblowing about Wolfowitz years before.

World Bank headquarters in Washington, DCIn response to Richard Behar’s article in Forbes, "The Fate of a World Bank Whistleblower,” the World Bank claimed that GAP client John Kim, the subject of the piece, was not, in fact, a whistleblower. We at the Government Accountability Project (GAP) want to set the record straight.  For 34 years, we’ve represented whistleblowers – thousands of them now – and we know one when we see one. John Kim was a whistleblower, and the World Bank fired him in order to punish him for telling the truth.

The World Bank makes much of the fact that a whistleblower protection policy is in place there.  But it is a weak policy, riddled with loopholes. Kim’s attorney therefore argued that Kim should be reinstated because he was a whistleblower and because, as a consequence of his whistleblowing, Bank management violated his rights as a staff member. The Administrative Tribunal ruled that the Bank violated Kim’s rights, but the whistleblower policy failed to protect him. The ruling the Tribunal issued is thus silent on why Bank management picked John Kim, out of over 10,000 employees, to spy on, hack, marginalize and fire.  The Tribunal simply ruled that this was what happened. At GAP we know that it happened because  Kim made a public interest disclosure to the press about anti-corruption debates at the Bank.  There was no other reason. The Bank did not present an alternative explanation and the Tribunal didn’t ask for one.

To our knowledge – and we keep close track – since 2008, when the whistleblower protection policy was put in place at the World Bank, not a single whistleblower has been able to protect him or herself from retaliation using that policy in arguments before the Tribunal. 

Bea Edwards is Executive Director of the Government Accountability Project, the nation's leading whistleblower protection and advocacy organization.

في نهاية هذا التقرير تجد ترجمة له باللغة العربية

On June 5, in my last blog, I stressed the need to keep a close watch on the courts and ruling military government in Egypt. Since then, the urgency to do so has escalated. Underscored in that piece was the very real threat that the courts were incapable of enforcing the law, and that the iron fist of former Egyptian President Hosni Mubarak still had a grip, despite the revolution. My worry was that the Mubarak regime simply shifted form into the Supreme Council of the Armed Forces (SCAF), which then allowed many Mubarak holdovers to remain in government, most notably the generals, prosecutors and judges.

At the time of that last writing, the Egyptian courts themselves were already being tried by tens of thousands of distressed Egyptians in Tahrir Square – the symbolic epicenter of the revolution. On June 2, Mubarak was sentenced to life in prison for complicity in the deaths of unarmed protestors during the uprising. The ruling disappointed the families of the murdered demonstrators, since the Interior Ministry officials most directly responsible for their deaths were set free. Moreover, all of the additional charges of corruption levied against not only Mubarak, but his two sons Alla and Gamal, were also dropped. The sons of Mubarak however, as tracked in previous posts (here, here, here and here), remain in custody to apparently answer for charges of money laundering and insider trading. But is it at all realistic in this climate to believe that these charges, or similar ones pending against officials associated with the Mubarak regime, will actually go anywhere?

If SCAF has anything to say about it, the answer appears to be “no.” Mubarak’s own crimes were minimized by SCAF, which, despite its promise to transition the country to a legitimate democracy, is keeping its power intact while shoring up the very institutions and individuals the Egyptian people revolted against last year.

As president of Dartmouth University, President Obama’s nominee to head the World Bank, Jim Yong Kim, presides over extreme, traumatizing, pervasive, revolting and potentially illegal hazing at fraternities. Andrew Lohse, the whistleblower who exposed it, is now, alone, among those charged with misconduct, on the brink of expulsion.

Janet Reitman of Rolling Stone investigated Dartmouth’s infamous fraternity system and described the violence, class privilege and ritual abuse that fraternity pledges must survive in order to join the clubs. On this site, we don’t quite have the stomach to detail the particulars of hazing at Dartmouth, but suffice it to say that the customs mainly involve forcing the younger boys to wallow repeatedly in the bodily emissions of the older ones. Extreme binge drinking is, of course, part of the fun, as well as, inevitably, gang vomiting. 

It is also common knowledge at Dartmouth that the frat boys at times fall back on date-rape drugs to romance their girlfriends. An un-named Dartmouth girl reported to Reitman having two drinks at a fraternity party:

The next thing she remembers is waking up in the hospital with an IV in her arm.  “Apparently, security found me in front of the house. That was my introduction to the frats: passing out from drinking, waking up in the hospital and not having any idea what happened.” What she did notice were bruises that looked like bites on her chest that hadn’t been there before.

GAP's Shelley Walden holds the GAP & NTU petition in front of the Department of the TreasuryLast week, GAP delivered copies of our joint petition, Protect Whistleblowers at U.S. Taxpayer-Funded International Banks, to key officials at the Treasury Department and in Congress, in conjunction with Treasury Secretary Tim Geithner’s testimony before the House Committee on Appropriations (State, Foreign Operations and Related Programs Subcommittee). This joint petition was produced with coalition partner National Taxpayers Union. Thank you to the more than 500 supporters who signed the petition!

Geithner was slated to testify about the reforms required by Congress as part of the U.S. contribution to the General Capital Increases at the Multilateral Development Banks (MDBs). Unfortunately, Geithner failed to mention whistleblowers once in his testimony, despite the fact that the U.S. Consolidated Appropriations Act, 2012 requires the Treasury Department to report whether the World Bank, African Development Bank and Inter-American Development Bank are making "substantial progress" toward "implementing" best practices for the protection of whistleblowers from retaliation before the U.S. can contribute tens of billions of dollars in cold cash and guarantees to bailout these institutions.

The Treasury Department recently released its report to Congress and unfortunately, it is not responsive to the whistleblower protection requirements in this legislation. Given that Congress is on the verge of contributing billions of dollars to the MDBs, one would think that Congress would have spent part of the hearing evaluating Treasury’s report and determining whether the MDBs have complied with the reforms required. As sometimes happens, much of the hearing was devoted to unrelated issues.

في نهاية هذا التقرير تجد ترجمة له باللغة العربية

Here at GAP, we were both shocked and pleased this morning to see that the World Bank advocates the public disclosure of financial assets by public officials as an effective anti-corruption measure.

Disclosure by public officials of their income, assets and interests should be mandated if the fight against corruption is to succeed, according to a study released today by the Stolen Asset Recovery (StAR) Initiative of the World Bank and the United Nations Office on Drugs and Crime.

Does this mean that the Bank itself will release the long-sought financial disclosure records of its Managing Director Mahmoud Mohieldin? We sure hope so. Mohieldin, you will recall, was the Minister of investment under the corrupt regime of Hosni Mubarak in Egypt. He was lucky enough to depart the country six months before the revolution that sent the Mubarak family to jail and sentenced Mohieldin’s fellow Ministers to lengthy prison terms.

GAP requested the public disclosure of Mohieldin’s financial assets after a whistleblower in Cairo called attention to his central role in a badly flawed and ultimately annulled privatization project. Allegations of fraud related to the privatization were also widely publicized. The whistleblower claimed that Moheildin and his staff sold a government company to a private investor for half of its real value.

We made the first request for Mohieldin’s financial information, which he was to make to the Bank as a condition of his hire, through the Bank’s Access to Information program. GAP received the following response:

Specifically the information you request is covered by the "Personal Information" exception under the AI Policy. However, we would like to inform you that the summary of such information for the calendar year 2010 will be disclosed in due course through the World Bank Annual Report. For the calendar year 2009, you can find the summary of such information publicly available at: http://go.worldbank.org/MXXC54C2X0.