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Protecting Whistleblowers since 1977

Lugar Urges Development Banks to Report Corruption for Prosecution

Bea Edwards, December 08, 2010

Senator Richard Lugar released a statement on Tuesday in which he urged all multinational development banks to refer companies and consultants suspected of fraudulent or corrupt practices to relevant national authorities. The development banks -- including the World Bank, African Development Bank, Asian Development Bank (ADB), European Bank for Reconstruction and Development, and Inter-American Development Bank (IDB) -- previously reported their practices in this area of anti-corruption work to Sen. Lugar at his request.

Lugar, who as Ranking Member of the Senate Foreign Relations Committee has long been a strong supporter of protections for whistleblowers at the development banks, noted that referring cases of corruption for potential prosecution is a strong deterrent.

Recently, investigators from the World Bank, IDB and ADB appeared together on a panel during the meetings of the International Anti-Corruption Conference in Bangkok to discuss their new cross-debarment agreement. Under the agreement, which took years to negotiate, a firm or consultant found guilty of fraud at one bank, and subsequently debarred, will, in many cases, be debarred by the others. But Lugar made it clear that expulsion from the club of development bank contractors is not sufficient to curb fraud and corruption in many cases. Referral for prosecution should also be more frequently considered and used. From his statement: 

“I urge the banks to work together to find ways to make greater use of prosecutions where appropriate. Vigor and consistency across the banks will enhance all their efforts in fighting the scourge of corruption.”

As the development banks line up at the doors of the US Congress for substantial capital increases over the coming year, their anti-corruption work has been subject to increasing criticism. The IDB will be scrutinized because of its history of risky investments and substantial losses in recent years, as well as a mounting number of whistleblowers who have documented retaliation after reporting improprieties at Headquarters, in Paraguay and in Haiti.

Beatrice Edwards is International Reform Director for the Government Accountability Project, the nation's leading whistleblower advocacy organization.