by Emad Mekay
(IPS) WASHINGTON -- A U.S. Congressional committee that pledged to probe alleged accounting irregularities and mistreatment of whistleblowers at the World Bank said March 24, that it has found evidence supporting the allegations and will proceed with a full investigation.
The Joint Economic Committee (JEC) at the U.S. House of Representatives said in a statement that it found documentation of accounting irregularities at the World Bank in the 1990s.
"The new information corroborates allegations of accounting errors amounting to tens of millions of dollars made by former World Bank employees in interviews with committee staff," said the statement.
According to the allegations, some errors also caused increased interest charges on some World Bank loans.
The committee said that it has been unable to determine whether affected borrowers were individually compensated for the full cost of these errors.
"The evidence shows that multi-million dollar accounting errors were made by the World Bank in the 1990s, and that some errors resulted in overcharges to borrowers," said JEC Chairman Jim Saxton.
"The allegations have been supported by conclusive evidence that will be made public at the appropriate time. This evidence raises a number of troubling questions about World Bank operations."
"I am also concerned with the way these accounting issues were handled by World Bank managers. Our inquiry has come a long way in a short period of time, but many additional questions have arisen that need to be answered," Congressman Saxton said.
According to the committee, the Washington-based public lender was aware of the problems in its accounting system.
"The new information also raises questions about the extent to which the World Bank has a policy of publicly disclosing internal accounting problems," said the statement.
When the allegations were made earlier this month, a World Bank spokesperson had denied the accusations and said they were unfounded.
On Thursday, a World Bank spokesperson said the committee has not yet requested information from the Bank.
"We have not received any requests for information from the committee, nor have we had the opportunity to review the new information the committee refers to," the spokesperson said. "That said, we will be happy to provide the committee with whatever information it requires for its review, and will be as open and cooperative as possible."
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, especially the United States, the world's largest economy. 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 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 in 2003.
The Government Accountability Project (GAP), a public-interest law firm that defends whistleblowers and promotes government and corporate accountability, said that three employees had 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 in a new job without duties, or even a desk, and was eventually laid off.
GAP accused the Bank in a statement earlier this month 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.
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