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GAP Responds to Treasury Report on Multilateral Development Banks

March 29, 2005
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Government Accountability Project Response to Treasury Department Assessment of MDB Whistleblower Policies
(Washington, DC) – The Government Accountability Project (GAP) responded today to Friday's late release of a report evaluating transparency reforms including whistleblower protection at the World Bank and other Multilateral Development Banks (MDBs).
"In terms of whistleblower policies at the banks, so far Treasury has been satisfied with too little, too future," commented GAP legal director Tom Devine. "The good news is that Treasury is using its bully pulpit to press for change. The bad news is so far the reality is not close to the rhetoric. MDB whistleblowers still proceed at their own risk in policies that are more like traps than protection. Treasury praises long-pending Bank promises of still-secret plans to create whistleblower policies. Secret transparency reforms are an oxymoron."
The Treasury Department evaluation is the second progress report required by Section 581 of the Consolidated Appropriations Act, 2004. That provision, known as the McConnell-Leahy Amendment, requires the U.S. to use its voice and vote at MDBs to achieve seven accountability reforms based on transparency, including whistleblower protection that meets the standards of U.S. and international law. These reforms are essential if the hundreds of billions of dollars administered by the MDBs are to succeed in their anti-poverty economic development mission, free from corruption.
GAP is a whistleblower support organization that has led the campaigns to pass, monitor or defend nearly all U.S. whistleblower laws. Last summer it released a Ford Foundation-funded study, Challenging the Culture of Secrecy, that assessed MDB transparency and anti-corruption policies on paper.  GAP has since been investigating their implementation, especially with regard to whistleblower protection.
GAP identified three items of good news in the March 25 Treasury Report:
  • The U.S. government is using the McConnell-Leahy Amendment as a bully pulpit to go beyond lip service and institutionalize rights for MDB employees. Thanks to Treasury's efforts, whistleblower rights are a dynamic policy issue at the Banks.
  • The report criticizes programs for being ineffective or nonexistent at the Inter-American Development Bank, African Development Bank and European Bank for Reconstruction and Development.
  • Treasury offered an unqualified endorsement for an upcoming report by Professor Robert Vaughn of American University, a highly-respected expert on whistleblower rights hired by the World Bank to recommend an overhaul of its whistleblower policy, which is a flagship for other MDBs. Thanks to Treasury's support, Professor Vaughn's report may make a difference instead of gathering dust.
The bad news, however, dampens any enthusiasm. More than half the text of this report continues to repeat unverified assertions from the highly unsatisfactory September report, reflecting heavy reliance on the Banks' self-reported claims. In addition to offering premature credit for future adoption of longstanding promises:
  • Treasury gives the World Bank a free ride, not commenting on the effectiveness of a whistleblower policy that increasingly has been exposed as dangerous for anyone bearing witness to wrongdoing. 
  • Treasury also endorses the World Bank's Department of Institutional Integrity  (INT) as a model when its investigations are not independent of management and it has been misused to inflict reprisal on whistleblowers.
  • Treasury's acceptance of MDB policies at face value obscures failed conflict resolution systems that are incapable of affording due process to victims of reprisal.
  • Treasury's bases for its conclusions are secret, without any explanation of methodology or references. There is an inherent credibility gap for transparency reforms that are assessed by concealed means.
  • Treasury's baseline for reform is the best existing practices at MDBs, but these practices are not close to meeting national or international norms. GAP's study found that systemic, structural overhauls are necessary before those seeking to thwart abuse and fraud can trust any existing Bank policies as a realistic channel to safely make a difference. Settling for failure should not be an option. 
For example, Treasury was satisfied with the U.S. Executive Director's unsupported opinion that the Asian Development Bank's (ADB) whistleblower policy is effective, although it has not had any major financial recoveries, is an Official Secrets Act that institutionalizes prior restraint, does not have independent due process, and does not protect communications with its Board. GAP's evaluation had found that while ADB anti-corruption staff acts in good faith, the Bank's operation is a work in progress as the structure for a modern whistleblower policy.
GAP International Director Melanie Beth Oliviero outlined specific recommendations for achieving the objectives Congress has set for Treasury, stating "Treasury should assert its influential voice and vote to extract new policy commitments with firm start dates by June 1, as required by the McConnell-Leahy Amendment. Further, it should push the Banks to seek and incorporate public comment by staff and third parties such as non-governmental organizations (NGOs) and academic experts. Treasury should lead all Board members in assuming their responsibility to monitor organizational policies and demand accountability than can be independently verified, such as through external audits."
Genuine whistleblower protection could be an accountability breakthrough in MDB anti-corruption campaigns. Phony policies will only become a magnet for cynicism, and an incentive to leak instead of work through Bank channels to challenge abuses of power. This is a crossroads for accountability reform at the Banks, and the process should reflect open public scrutiny. The stakes are too high to accept anti-secrecy reforms generated fully in secret, until they are fait accomplis.
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