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Monday, March 1, 2021
WASHINGTON, Mar 14 2005 (IPS) - A U.S. Congressional committee said Monday that it would probe allegations of accounting irregularities at the World Bank, the world’s largest development agency that lent 20 billion dollars last year.
A U.S. Congressional committee said Monday that it would probe allegations of accounting irregularities at the World Bank, the world’s largest development agency that lent 20 billion dollars last year.
In a statement, Joint Economic Committee Chairman Jim Saxton said former World Bank employees made the allegations and pointed to number of problems with World Bank accounting practices, some of which go back many years. Some of the whistleblowers said that they were retaliated against.
“The allegations of accounting problems made by former World Bank Groups (WBG) staff are quite serious, even setting aside the question of whether there has been retaliation against the whistleblowers,” Saxton said.
“Inaccuracies in the World Bank’s accounts would be problematic in and of themselves, but I am also troubled by the way the World Bank’s management may have handled these issues. We will assess the facts, and determine the validity of these allegations,” he added.
One allegation is that problems in a World Bank accounting system produced tens of millions of dollars in errors, which were then offset by ad hoc adjustments.
Although the problem was apparently known for several years, when it was exposed by a World Bank accountant, his managers attempted to present it as a newly recognised issue and the accountant suffered eventual retribution, say whistleblower protection groups.
A World Bank spokesperson denied the accusations and said they were unfounded.
“The World Bank accounting controls are state-of-the-art. We have investigated the allegations made by this former staff member and found them to be completely false,” said David Theis, a Bank spokesman.
“That said, we will be happy to provide the committee with whatever information it requires for its review and will be as open and as cooperative as possible.”
Congressional sources told IPS that there are other allegations that have not been publicly mentioned, but declined to disclose them as they have not yet been verified.
“What we’ve been told by former World Bank employees certainly raises a lot of questions,” said Christopher Frenze, executive director of the committee.
Frenze said that Congress is seeking further documents at this stage. “We are going to examine what documents are available to us and then see if additional documents are needed, and then in appropriate time talk to the World Bank,” he said.
Saxton is a longtime critic of both the World Bank and the International Monetary Fund (IMF). His committee has oversight responsibility for economic policy and has been involved in examining the institutions’ financial operations.
The World Bank and the IMF are two of the most powerful architects of the world economy, and are dominated by the planet’s wealthiest nations. The United States, the world’s largest economy, naturally plays a central role. It is the single largest shareholder in almost every multilateral financial institution.
According to the Congressional Budget Office, the U.S. share in the World Bank – which lent 20 billion dollars for various projects last year – is roughly 14-22 percent, while its share in the IMF lies between 17 and 22 percent. The IMF lent 40 billion dollars in 2003.
“So we think since there’s potentially taxpayer exposure with regard to these institutions, it’s certainly legitimate for the U.S. Congress, which has a responsibility of safeguarding taxpayers’ money, to examine these issues,” Frenze.
The Government Accountability Project (GAP), a public-interest law firm that defends whistleblowers and promotes government and corporate accountability, said that three employees made the allegations, including disclosures on auditing irregularities.
One employee complained about her mistreatment after blowing the whistle on alleged corruption and fraud in a World Bank project in East Africa. She said that even though she went through the internal grievance system, she was demoted. GAP says she was placed into a new job without duties, or even a desk, and was eventually laid off.
GAP accused the Bank in a statement last week of fostering “a culture of corruption”.
“Despite repeated attempts by WBG staff to report wrongdoing, management has continually rejected any criticism and harshly retaliated against whistleblowers, ruining numerous careers in the process,” said the GAP statement.
“Instead of fixing problems, the internal environment perpetually fosters financial corruption, costing recipients and member nations hundreds of millions of dollars in misstated expenses or wasted funds.”
The new revelations come at a crucial period for the World Bank, as a decision on Wolfensohn’s successor is expected in the coming weeks.
The whistleblowers have identified the Department of Institutional Integrity (INT), a branch specifically created to investigate and report fraud and corruption of Bank operations directly to senior management, as the main culprit behind their mistreatment.
“Employees have repeatedly described INT as a tool for reprisals that discredits or dismisses potential messengers of news that could create bad publicity,” GAP said.
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