The U.S. government’s oversight of whistleblower protection policies at some of the world’s most influential financial powerhouses is inadequate to protect those who risk their careers by calling attention to corruption and irregularities, a leading watchdog group said Tuesday.
The Washington-based Government Accountability Project (GAP), a whistleblower support organisation, was responding to a report by the U.S. Treasury that came out on Mar. 25 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,” said 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.”
Devine said that MDB whistleblowers still proceed at their own risk in trusting policies that are ”more like traps than protection.”
The MDBs are the largest source of development finance in the world, typically lending between 30 to 40 billion dollars to low- and middle-income countries in any given year.
The Bank Information Centre, a Washington-based clearinghouse on the MDBs, says that those institutions, and in particular the World Bank, the world’s largest development agency, are also a primary source of development ”knowledge”.
Those banks are ”central in determining the direction” of development policy, including approaches to sustainability across Latin America, Asia, Africa, the Middle East and Central and Eastern Europe.
They include the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development and the Inter-American Development Bank and the World Bank Group.
Reforms in those institutions are essential if the hundreds of billions of dollars administered by the MDBs are to succeed in their anti-poverty mission.
The Treasury Department evaluation is the second progress report mandated by a provision in the Consolidated Appropriations Act of 2004. The first came out in September 2004.
That provision, known as the McConnell-Leahy Amendment, requires the U.S. to use its voice and vote at MDBs, through its executive directors on the boards of those institutions, to achieve ”seven accountability reforms” based on transparency, including whistleblower protection that meets the standards of U.S. and international law.
The U.S. Congress has the authority to determine how much and under what conditions funding will be allocated to MDBs.
But GAP said that the Treasury was repeating unverified assertions from the banks and heavily relied on their self-reported claims in its report.
”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,” said the group in a statement on Tuesday.
GAP also faulted the Treasury for endorsing the World Bank’s Department of Institutional Integrity (INT) as a ”model” when the unit’s investigations are not independent of management.
The group said the unit has also been misused to inflict reprisals on whistleblowers.
Earlier this month, five whistleblowers in the World Bank who had complained about retaliation identified the INT, a branch specifically created to investigate and report fraud and corruption in Bank operations directly to senior management, as the main culprit for their mistreatment.
They had blown the whistle on auditing and accounting irregularities at the Bank, prompting a congressional committee to announce that it would investigate the accusations.
The Treasury’s report appeared to be too lenient in accepting MDB policies at ”face value”, which watchdog groups say risks keeping systems that are incapable of affording due process to victims of reprisal in place.
The group also criticised the secrecy, methodology and references used by the Treasury in its 48-page report.
”There is an inherent credibility gap for transparency reforms that are assessed by concealed means,” it said.
GAP’s legal director said keeping rules on transparency and accountability secret was contradictory and incongruous.
”Treasury praises long-pending Bank promises of still-secret plans to create whistleblower policies,” Devine said. ”Secret transparency reforms are an oxymoron.”
But the Treasury report seems to also have included items that were accepted by watchdog groups.
These included criticism of the lack of strong whistleblower protection policies at the Inter-American Development Bank, which lends to Latin America, the African Development Bank, which operates in Africa, and the European Bank for Reconstruction and Development.
GAP also applauded Treasury for endorsing an upcoming report by Prof. Robert Vaughn of American University, a respected expert on whistleblower rights hired by the World Bank to recommend an refurbishment of its whistleblower policy.
GAP had long called for a systemic and structural overhaul to policies and whistleblower protections at the MDBs.
The GAP statement on Tuesday quoted GAP International Director Melanie Beth Oliviero as saying that the Treasury should use its influential voice and vote to extract new policy commitments.
She recommended Jun. 1 as a deadline for new policies at the banks 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 organisations and academic experts,” she said.
”Treasury should lead all Board members in assuming their responsibility to monitor organisational policies and demand accountability than can be independently verified, such as through external audits.” Emad Mekay