Possible investigation has IDB squirming

0 Comments | Insight on the News, Jan 7, 2003 | by Martin Edwin Andersen

The damage-control department at the Inter-American Development Bank (IDB), reportedly embarrassed by the criminal referral of a retired bank official in an alleged kickback scheme, may be in for more bad news. In December the bank revealed that allegations of wrongdoing by a longtime employee, first reported by INSIGHT, had been referred to the office of the U.S. Attorney for the District of Columbia. Now, the watchers has learned, other allegations of corruption at the bank may be investigated if, as is possible when a referral is made to a U.S. attorney's office, a grand jury takes up the IDB referral.

Channing Phillips, spokesman for the U.S. attorney's office in Washington, tells the watchers that following a specific referral by an outside agency such as the IDB, a grand jury can, as part of its normal procedures, "take a look to wherever the evidence leads." According to Phillips, whether the IDB case goes to a grand jury depends on whether the local U.S. attorney or another Justice Department component claims jurisdiction.

While IDB Auditor General William Taylor's office moved swiftly in response to this magazine's reporting, it is reported also to be working overtime to plug leaks about other potential problems inside the multilateral institution. For example, sources close to the IDB assert that at least two witnesses interviewed by Taylor's shop have additional information about high-level corruption.

However, by press time, the watchers is told, these witnesses had not shared what they may know with IDB sleuths. "Everybody is afraid," a well-placed observer tells the watchers. "They fear losing their jobs." Not only that, this source says echoing sentiments shared by others, they fear that coming forward might risk loss of visas that many IDB foreign-national staff hold. "If they lose their visas, they have to go home."

As the IDB criminal referral moves through the legal process, the watchers is told that the multilateral development banks may come under tough new scrutiny by powerful members of Congress ready to call for the General Accounting Office to conduct in-depth financial and accounting probes of the IDB, the World Bank and the Asian Development Bank.

A former World Bank employee with more than 35 years of experience working in international development sent the watchers the following message: "I have been amazed over the years at how the U.S. press lets the international organizations off when it comes to investigative reporting. You are the one exception I know of. Every international organization is a can of worms that arrogantly refuses to be accountable to anyone."

MARTIN EDWIN ANDERSEN IS A REPORTER FOR Insight. READERS CAN REACH HIM WITH TIPS ON GOVERNMENTAL WASTE, FRAUD AND ABUSE OF POWER AT INSIGHTWATCHERS@AOL.COM