World Bank Fraud and Corruption Investigations
Hotline
P.O. Box. PMB 137
4736 Sharon Road, Suite W
Charlotte, NC 28210
USA
Montevideo, 18th July 2001
Dear Sirs,
Please consider the following
Appeal for investigation on Development Gateway for misuse of Bank funds
or positions
Summary
We believe that in the formation of the World Bank's Development Gateway
internet initiative several irregularities have been committed that should
be reported and investigated. These include a misuse of Bank funds and
positions, gross waste of Bank funds, cost mischarging or defective
pricing and perhaps even fraud and misleading of public opinion.
The Bank has allocated around $7 million to this scheme, creating a
website which is shortly to be transferred to be managed by a new
foundation.
We are concerned that Bank funds are being spent without proportion to the
expected results to create a website intended as a public relations tool.
While it is a legitimate activity for the Bank to defend itself from
criticism, it is a clear misuse of funds to divert to public relations
monies intended to combat poverty. Further, it is a gross violation of
editorial ethics to misrepresent a propaganda operation as a genuine
independent Internet portal about development in the Internet. Potential
donors are being misled to make grants to a supposedly independent
Foundation that in fact is just an appendix of the Bank.
The Gateway was not requested by any of the Bank's intended beneficiaries
and will only benefit a private entity created by the Bank and whose
governance is still largely unknown. That entity, formally a US
foundation, is using Bank monies to contract services from the Bank
without any bidding process like those the Bank usually requires from its
grant recipients.
We are also concerned that senior World Bank managers, especially the
Bank's President James Wolfensohn and the former Vice President for Human
Resources, Richard Stern, have used their positions at the Bank to create
a new organisation in which they will hold positions and presumably
extract private benefits, distracting time from their core tasks and using
the diplomatic energy of their positions at the Bank to promote the
initiative and raise funds for it. This appears to contradict the
guidelines on misuse of Bank funds or positions.
The document called Ethical Guide For Bank Staff Handling Procurement
Matters In Bank- Financed Projects states that: In dealing with
procurement matters, Bank staff shall [...] avoid strictly any conflict of
interest or even the appearance of a conflict of interest in any matter
related to the performance of the staff member's duties; [and ...]
disqualify him/herself from outside employment or activities, including
dealings with former or future employers and employment after separation,
that conflict with his/her Bank duties and responsibilities.
Whilst the Development Gateway is not a classical Bank procurement
situation, the same standards should surely apply to the Global
Development Gateway but this has not been the case in practice according
to the evidence we offer below.
No similarly detailed definition is offered by the Bank of the concepts of
waste of funds, cost mischarging and defective pricing, probably
because they are obvious. In this case, 7 million dollars have already
been spent and some 30 million dollars a year are budgeted for a website
that will not be sustainable even if the declared targets are met. The
money already spent and the sums requested to continue the activity are
disproportionate with the product they are supposedly paying for.
It is obvious that many public-interest or educationally oriented
activities may require permanent subsidies. But in this case it should be
taken into account that no external actor has demanded the creation of
such a site, that two regional consultations with civil society
organizations (in Africa and Latin America) failed to support the proposed
Gateway and that solid criticism was raised and never properly answered
during lengthy on-line consultations. Many international websites on
development already have been created by multilateral agencies and NGOs.
In all countries where the Development Gateway plans to establish
national gateways Internet portals already exist, as can easily be found
by looking in the Yahoo directory. Instead of contributing to develop
national capacities, the Development Gateway plans to establish subsidized
state-run media operations that will compete unfairly with existing
efforts. There is already solid criticism against the Bank (an
intergovernmental body) engaging in media activities. Through this new
Gateway further state control of the media is promoted, contradicting
the Bank's declared policies.
Further details
1. In his Memorandum to the Executive Directors, dated June 27, 2001, The
World Bank's president James Wolfensohn, informs that the World Bank
Group is considering contributing [to the Development Gateway] an
