World Bank Refuses to Divulge Procedural Info in Letter to GAP

For Immediate Release

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Dylan Blaylock
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World Bank Refuses to Divulge Procedural Info in Letter to GAP

Day before Response, Key Figure Resigns from Corporate Position

WASHINGTON - In response to a detailed letter from the Government Accountability
Project (GAP) asking for clarifications of World Bank debarment policy
in the wake of the recent episode involving Satyam Computer Services,
World Bank Managing Director Juan Jose Daboub replied with a short
non-responsive paragraph. His note rejects transparency at a time when
the Bank is under fire for concealing allegations of corruption
involving an IT firm that solicited contracts throughout the UN system,
even as the World Bank banned it from future work.

The United
Nations awarded a multi-million dollar contract to Satyam on July 18,
2008, months after the World Bank first claimed to have suspended
Satyam. Representatives of both the United Nations and World Bank sit
on the U.N. Interagency Procurement Working Group - a panel explicitly
designed to increase procurement efficiency by providing a forum for
exchanging relevant information on vendors.

On January 14, GAP
sent Daboub a letter with 11 questions regarding Bank policy for
debarring vendors it contracts directly for its own operations - a
process that has long been shielded from public scrutiny. By answering
these questions, it was GAP's hope that the Bank would progress toward
openness and accountability on this issue of paramount importance to
Bank operations. Satyam was the World Bank's primary IT outsourcing
vendor, responsible for a wide range of ‘back office' IT services. In
January, the company, India's fourth largest in the IT sector,
precipitously collapsed when the CEO confessed to a $1 billion-plus
fraud. Click here to read GAP's original letter: http://www.whistleblower.org/doc/2008/DaboubLetterFinal.pdf

Instead of answering any of the questions directly, Daboub chose to respond with the following (in full):

I
am in receipt of your letter dated January 14, 2009. With respect to
the matter referenced in your letter, I would like to point out that
not only did the World Bank take appropriate action consistent with its
own Corporate Procurement Policy, but the Bank also referred the case
to the U.S. Department of Justice for a determination of whether U.S.
laws had been violated. As a whistleblower organization you will no
doubt understand that because of the involvement of Bank staff in the
matter, the Bank has also remained cognizant of the due process rights
of its own staff members.

To see Daboub's actual letter, click here: http://www.whistleblower.org/doc/2008/DaboubResponse.pdf

"This response means nothing," said Bea Edwards, GAP International
Program Director. "Mr. Daboub replied to questions about the Bank's
corporate procurement policy by saying that the Bank is in compliance
with its corporate procurement policy. We can only conclude that the
policy allows the Bank to conceal corruption from other organizations
in the UN system."

Background on World Bank/Satyam and the Debarment of Mohamed Muhsin

Included
in GAP's initial questions to Daboub was an inquiry into the debarment
of individuals found guilty of misconduct. Specifically, GAP was
concerned about the effectiveness of the permanent barring of Mohamed
Muhsin from employment at the Bank. Muhsin was debarred in 2006 for
accepting improper benefits from Satyam, while he was the Bank's CIO.
On his watch, Satyam received over $100 million in contracts, 32 of
which were sole-sourced. The Department of Institutional Integrity
(INT), the Bank's investigative unit, began examining Muhsin's
relationship with Satyam in 2005, and in 2006, INT transmitted to the
US Department of Justice information regarding the financial
association between Satyam and Muhsin to determine whether US laws had
been violated.

Specifically, GAP wrote in its letter:

"What
is meant when the Bank bars an individual for disciplinary purposes
from future employment at the Bank, as Mohamed Muhsin has been barred?
Are companies that employ the individual also barred? Are such
companies eligible to benefit from financing through Bank projects?"

A free and independent press is essential to the health of a functioning democracy

GAP
asked this question because Muhsin, a Sri Lanka national, sat on the
board of directors of that country's John Keell Holdings, Ltd. JHK
received a $75 million loan from the International Finance Corporation
(IFC) of the World Bank in February 2008. The same month, Satyam, one
of Muhsin's favored IT vendors, was suspended from competing for
further work at the Bank for, as the Bank delicately puts it, ‘paying
improper benefits' to Muhsin.

The Daboub letter, received by GAP
on February 2, was preceded the day before by a report in the Sri Lanka
Sunday Times that Muhsin is resigning his position on the JHK board,
effective March 1. Muhsin told the Times that he had recently assumed
the post of Director and Chief Operating Officer of the Africa and
Middle East practice of the Centennial Group, a privately held firm
closely tied to the World Bank, implying that his new responsibilities
explained his JHK resignation. But Muhsin has held the Centennial
position for nearly a year, at the very least.

Click here to read the Sunday Times report: http://sundaytimes.lk/090201/FinancialTimes/ft303.html

Click here to read the Centennial document from February 2008 showing Muhsin's connection on p. 10: http://www.emergingmarketsforum.org/meetings/africa/2008/2008%20Africa%20First%20Glance.pdf

"We
have a number of additional questions now about JHK and the Bank," said
Edwards. "But we are especially interested in why his association with
JHK became inconvenient for one or both of the parties two weeks ago."

 

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The Government Accountability Project (GAP) is a 30-year-old nonprofit public interest group that promotes government and corporate accountability by advancing occupational free speech, defending whistleblowers, and empowering citizen activists. We pursue this mission through our Nuclear Safety, International Reform, Corporate Accountability, Food & Drug Safety, and Federal Employee/National Security programs. GAP is the nation's leading whistleblower protection organization.

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