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Protecting Whistleblowers since 1977

Inter-American Development Bank Passes Improved Whistleblower Protections; Fatal Flaws Remain

Shelley Walden, June 04, 2010

The Inter-American Development Bank (IDB) has just released a new whistleblower protection policy – “Staff Rule No. PE-328 Whistleblowers and Witnesses” – that is a substantial improvement over its previous protections. GAP applauds the IDB for:

  • Prohibiting retaliation by external parties: The policy states that if an external party commits an act of reprisal, “then any dealings with such party shall be reviewed by the Bank, and the Bank may terminate its dealings with such party, refrain from future dealings with such party, or exercise contractual remedies, if applicable.” (section 109) This excellent provision is similar to the groundbreaking one included in the Asian Development Bank’s (ADB) whistleblower protection policy in 2009.
  • Protecting whistleblowers who report suspected acts of wrongdoing to any of the numerous Bank “authorities” that exist, such as the Conduct Committee of the Board of Executive Directors, the Office of Institutional Integrity, the Ethics Officer, or the Independent Consultation and Investigation Mechanism, which provides a forum to address civil society and communities’ concerns about IDB operations. (section 106) In cases involving any external party, however, the policy exempts the Bank from an obligation to investigate the whistleblower’s disclosures or compensate victims of wrongdoing.
  • Protecting whistleblowers from unconventional harassment: The policy prohibits numerous forms of retaliation against a whistleblower, such as wrongful termination, harassment and unsubstantiated adverse evaluation of performance, and explicitly states that prohibited reprisal “is not limited to” these forms.
  • Prohibiting “spillover” retaliation: The rule prohibits “spillover” reprisals against suspected whistleblowers, those who are associated with a whistleblower, or those who are believed to be about to make a disclosure. (section 104) Unfortunately, the policy only provides for the discipline of the retaliator, but is silent about addressing the consequences of the retaliation against this broader category of whistleblowers.
  • Allowing whistleblowers to make external disclosures (in certain circumstances): Although this is a significant improvement over the Bank’s previous policy, the circumstances under which a whistleblower can make a disclosure are still more restrictive than under the United Nations whistleblower protection policy, which allows whistleblowers to report externally when the Organization has failed to inform the individual in writing of the status of the matter within six months of their report. The UN policy also allows whistleblowers to report “to an entity or individual outside of the established internal mechanisms,” such as a member of Congress or the media, whereas the IDB policy only allows whistleblowers to report to an “authority” outside of the Bank. (section 111)

Although the IDB’s new policy contains several significant advances, it also contains fatal flaws.

The policy violates three of four policy criteria in U.S. law for credible whistleblower protection at Multilateral Development Banks, as it lacks:

  • Access to an independent adjudicative body, including external arbitration based on consensus selection and shared costs: Because the Bank is not subject to national law in the countries where it operates, its staff members and consultants are dependent on the functioning of its internal grievance procedures for justice when their rights are violated. The internal system, however, is heavily influenced by geo-politics and the demands of management in internal disputes. Whistleblowers, to the extent that their disclosures of wrongdoing and corruption have implications for management or governments, often find themselves victimized by this flawed internal system, even when they win. Without access to external arbitration when protesting retaliatory dismissal, discrimination or demotion, whistleblowers confront a judicial forum in which the Bank is both the defendant and the judge. The IDB policy does not offer whistleblowers access to independent external arbitration.
  • A guarantee of employment/reinstatement when whistleblowers successfully contest retaliatory dismissal: The Bank’s policy is especially defective in this regard, as it states that the Bank “shall not be obligated to provide remedies that are unrelated to the reprisal or that extend beyond the entitlements provided for by the employee’s contract of employment.” (section 109) Therefore, the Bank is not obligated to reinstate an employee whose contract was not renewed because s/he blew the whistle. Failing to renew an employment contract is a common form of retaliation at the International Financial Institutions.
  • Best practices for legal burdens of proof: The policy fails to establish what burden of proof the whistleblower has to meet in order to prove retaliation. It also fails to explain what specific steps will be taken to enforce the policy after a whistleblower reports retaliation. And although the policy refers to the existence of a statute of limitations, it fails to specify what those time limits are.

In addition, the Bank’s definition of “whistleblower” could be strengthened. The new policy protects an “employee or external party who reports allegations of fraud or corruption in Bank activities, or of other misconduct under Bank policies (collectively, “wrongdoing,”) to the Bank’s authorities.” (102) There are two problems with this definition. The first is that the Bank’s definition of who is a whistleblower is too limited. It defines “employee” as all categories of international employees as defined in Staff Rule 311, including consultants and other contractual employees,” and “external party” as any “non-employee party, including individuals or entities either engaged in or seeking dealings with the Bank, and their employees, agents or representatives.” But Staff Rule 311 does not necessarily apply to certain categories of Bank employees hired to work under special programs. The definition of “employee” used in Staff Rule 311 is inexplicably ambiguous and could become a substantial gap in protection. The second problem is that the scope of protected activity is narrow.  Only reports of “fraud or corruption” or “misconduct under Bank policies,” are protected. Whistleblower systems should cover disclosures of any illegality, gross waste, mismanagement, abuse of authority, substantial and specific danger to public health or safety, and any activity which undermines the organization’s mission to its stakeholders, as well as any other information that assists in fulfilling those duties.

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Shelley Walden is International Officer at the Government Accountability Project, the nation's leading whistleblower advocacy organization.