WORLD: Hidden World Bank Whistleblower Report Made Public

The Government Accountability Project (GAP) today released the Vaughn Report, commissioned by the World Bank as a guide to modernize the Bank's whistleblower protection policies. In the nine months since the Vaughn report was released on April 30, 2005, the World Bank has refused to publicly release the report, consult staff on Vaughn's recommendations, or accept any offers from experts to help implement Vaughn's analysis.

The 22 major recommendations of whistleblower law scholar Robert Vaughn of American University Law School incorporate best practices that have been adopted by the United Nations, approved by the Organization of American States to implement its Inter-American Convention Against Corruption, and enacted last fall as U.S. policy to strengthen anti-corruption efforts at all multilateral development banks (MDBs).

The Vaughn Report was commissioned under previous World Bank President James Wolfensohn. The present World Bank President Paul Wolfowitz, was Deputy Secretary of Defense in the administration of President George W. Bush until he assumed leadership of the World Bank on March 31, 2005.

U.S. Senate Finance Committee Chairman Charles Grassley, an Iowa Republican who oversees the Treasury Department's funding of and participation at the MDBs, reached out to World Bank President Wolfowitz, calling on him to join in the battle to prevent waste, fraud and abuse. The World Bank rejected Grassley's request.

By contrast, during the same nine months, the United Nations has involved its staff and called on GAP for advice in rewriting its whistleblower policies. In doing so, the United Nations has implemented many of the recommended "best practices" in a policy that took effect on January 1, 2006. The United Nations leads by example - not only in content and commitment to reform, but in implementing an inclusive and transparent process.

Vaughn recommends that whistleblower protection should extend to all Bank staff, including former and temporary employees, consultants and contractors. The World Bank Group employes approximately 10,000 people in offices around the world.

Currently, GAP says, the World Bank does not adequately protect any of these individuals who may witness corruption and abuse in the management of development funds.

Freedom of expression must apply to all individuals making lawful internal or external disclosures about actions that threaten the Bank's mission, as is currently the case at the United Nations, Vaughn recommends.

Employees must have the ability to report directly to multiple authorities, including the Bank's board. This action should be permitted and encouraged, Vaughn says. Presently, the World Bank does not allow its employees to report misconduct to anyone independent of management.

The World Bank Group says on its website that it "recognizes an obligation to protect whistleblowers from being subjected to pressure or retaliation, or the fear of such consequences, as a result of raising workplace concerns in good faith." There are four ways in which the Group affords this protection.

World Bank Group (WBG) current policies provide that staff members may choose to remain anonymous when reporting suspected misconduct to the Integrity Department or raising concerns with any entity in the Conflict Resolution System.

Staff members may request to have their identity kept confidential during the investigative process, the World Bank says. This means that their identity would not be disclosed outside the investigative team unless the staff member consents to the disclosure, or the WBG is so ordered by a competent judicial authority within a member government, or it is determined that the staff member knowingly made a false allegation of misconduct.

In consultation with the human resources staff, the whistleblower staff member may be transferred elsewhere in the WBG, if possible. For example, in recent cases of whistleblowing, management has used the WBG's Institutional Staff Resources Program to move staff into other areas of the WBG at the staff member's request.

As a deterrent, the World Bank Group says it "expressly prohibits retaliation by a WBG staff member against any person who in good faith provides information about suspected misconduct or who uses the Conflict Resolution System, and the WBG says it will take "appropriate disciplinary action" under an established staff rule.

But GAP says that not only are Bank whistleblowers prevented from taking disclosures directly to the board, but employees are under penalty of termination for reporting to external law enforcement authorities or to overseeing legislative bodies such as Congress.

The independence of the Bank's investigative unit, the Department of Institutional Integrity (INT), must be ensured by having it report directly to the Bank board and subject to external evaluation, Vaughn recommends.

GAP says it has uncovered repeated examples where INT has been misused by management to instigate investigations of the whistleblower rather than the whistleblower's evidence of corruption, chilling the entire environment for telling the truth.

Criteria for protected disclosures and prohibited retaliation must be standardized based on existing and tested U.S. and international norms, Vaughn recommends.

The law scholar says standards of proof of retaliation must be adopted and applied placing the burden on the Bank to prove that its representatives have not retaliated when whistleblowers report harassment and professional reprisal.

The Vaughn report recommends standards identical to those adopted by the United Nations, the Organization of American States, and the U.S. Whistleblower Protection Act.

GAP explains that with the adoption of the new MDB reform law, it is now U.S. policy to ensure that all banks apply modern legal burdens of proof to protect whistleblowing. The policy bans actions taken when whistleblowing is relevant to dismissal or other alleged reprisal, unless management can prove it would have taken the same action had the individual been silent. The policy requires that where there is retaliation, the whistleblower must be "made whole" and the retaliator punished. "Without benefit of these standards, no witness to wrongdoing in these public institutions is safe from retaliation," says GAP.

Vaughn devotes five recommendations to the right of a whistleblower to due process under the law, which he says must be "accessible and enforceable."

Access to an external adjudicative body separate from the Bank is necessary to pursue claims of retaliation for whistleblowing. Until such a forum is available, GAP suggests, current administrative conflict resolution mechanisms must be reformed to operate on due process norms and must be given the power to issue "make whole" remedies, including special attention to the unique vulnerabilities of visa holders.

The Vaughn Report advocates modernizing procedural rights for internal appeals, and adding the option for binding external arbitration. These rights include: being represented by counsel, a formalized discovery process for relevant evidence, open hearings, bringing witnesses forward, decisions in writing with detailed reasoning, and a balanced and incorruptible process for selection of tribunal members.

GAP endorses replacing the existing appeals committee and administrative tribunal and "pathways of disclosure" with alternative dispute mechanisms external to the Bank where both parties determine the decisionmakers by a strike and mutual consent process similar to jury selection, and the parties share the costs of the process.

"This is exactly the right message and the right time for the World Bank to turn over a new leaf. It's terrific that these accountability reforms are outlined by an internal World Bank report," said GAP International Program Director Melanie Beth Oliviero.

"Now both external and internal assessments have shown the World Bank the correct path to ensure against fraud and corruption. With new management in place, it is opportune for the World Bank to enact this plan. By doing so it can rise to meet existing intergovernmental organization standards."

The World Bank is made up of two development institutions owned by 184 member countries - the International Bank for Reconstruction and Development and the International Development Association. The World Bank Group includes the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Centre for Settlement of Investment Disputes. The Vaughn Report can be viewed on GAP's website.

• 104 Globalization
• 185 Corruption
• 194 World Financial Institutions