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The Inter-American Development Bank
The Inter-American Development Bank (IDB), the largest lender in Latin America, currently anticipates dramatically increased lending throughout Latin America and the Caribbean during the coming years. In preparation for this expansion, in July 2010 the IDB’s Board of Governors agreed to a $70 billion General Capital Increase (GCI) for the Bank. This is the largest increase in the Bank’s resources in its history and will enable it to double its pre-crisis lending in the region to $12 billion annually.
Meanwhile, IDB employees have reported that the institution is failing to address the risks of fraud and corruption in its lending and grant programs adequately and that its development efforts are often ineffective as a result. In April 2010, as part of its campaign for the GCI, the IDB strengthened its whistleblower protection policy, which is supposed to shield IDB staff members and external parties from reprisal when they report allegations of fraud or corruption in Bank activities. In October 2012, the Bank made additional changes to this policy. Unfortunately the policy still violates all four policy criteria set forth in US law for credible whistleblower protection at Multilateral Development Banks. The failure to meet the standards set out in U.S. law raise questions about the prospects for the U.S. contribution to the GCI.
Early reports show that the IDB’s internal process for protecting whistleblowers remains chaotic and ineffective. GAP is currently testing the policy by representing IDB staff members who suffered retaliation after they exposed critical vulnerabilities in the IDB’s investigative and ethics practices, as well as corruption and fraud in projects in Haiti, Peru and several other countries in which the IDB operates.
GAP has also helped whistleblowers to expose racial discrimination at the IDB. A 2009 GAP report found that the Bank fails to promote racial equality adequately in its hiring, retention and promotion practices. The report also found that IDB lending has failed, over the years, to reduce poverty and inequality in Latin America effectively, especially among Afro-descendant and indigenous populations.
GAP also monitors challenges to the IDB’s immunities and has been closely tracking the Vila v. Inter-American Investment Corporation (IIC) case in the U.S. Court of Appeals for the District of Columbia. The IIC is the private sector lending arm of the IDB.