September 16,2005

Grassley works to protect whistleblowers at the World Bank

WASHINGTON — Sen. Chuck Grassley is monitoring efforts by the World Bank tocontrol internal fraud and corruption and has asked the bank’s President to report on protectionsfor whistleblowers who help to identify waste, fraud and abuse, noting that the World Bankreceived $1.2 billion just last year in federal tax dollars.

Grassley is a long-time champion of whistleblowers both in the public and privatesectors. He was the principal author of whistleblower amendments to the False Claims Act in1986 and a co-author of the Whistleblower Protection Act of 1989. In 2002, he fought for thewhistleblower protections that were included in the Sarbanes-Oxley corporate reform legislationenacted after Enron’s collapse. Over the years, Grassley has worked to protect individualwhistleblowers facing reprisal and to help make sure whistleblower information was used tobring about necessary reforms and hold wrongdoers accountable.

The text of Grassley’s letter to World Bank Group President Paul Wolfowitz followshere.

September 16, 2005

The Honorable Paul Wolfowitz
The World Bank Group
1818 H Street, N.W.
Washington, DC 20433

Dear Mr. Wolfowitz:

First and foremost, congratulations on your appointment as President of the World BankGroup. The World Bank is an important institution that provided nearly $9 billion in assistanceand $11 billion in loans in 2004 to support the developing world and to help billions of peoplearound the world. Unfortunately, these funds are too frequently squandered due to fraud, wasteand abuse.

As a senior member of the United States Senate and as Chairman of the Committee onFinance, I have fought long and hard over the last two decades to protect the rights of numerouswhistleblowers that have exposed fraud, waste and abuse of American taxpayer dollars. In 1989,I co-authored the Whistleblower Protection Act which strengthened and improved protections forthe rights of Federal employees, established measures to prevent reprisals, and help eliminatewrongdoing within the United States Government. I strongly believe that whistleblowers areparamount to ensuring that both government and private entities operate in a manner which isethical and free from fraud, waste or abuse.

It has come to my attention that the World Bank Group has been working to create a comprehensive internal system to help control fraud and corruption. In February 2005 the WorldBank Group issued its annual report entitled, Fiscal Year 2004 Annual Report on Investigations and Sanctions of Staff Misconduct and Fraud and Corruption in Bank-Finance Projects (AnnualReport). This report details various activities by the Department of Institutional Integrity (INT)to help prevent fraud and corruption in development projects that are financed by the WorldBank Group around the globe. Of particular interest to me was a section labeled, "Internal Investigations and Sanctions" which discussed the World Bank Group's protection of whistleblower rights.

Good faith whistleblowers often face an uphill battle from the moment allegations arebrought forth and, accordingly, should be afforded the utmost protection during and after thereview of any allegation. I am pleased to see that the World Bank Group maintains a policy inplace preventing retaliation against whistleblowers, however, the policy could go further to detailthe protections that are available and to define key terms that are subject to variousinterpretations. Specifically, the Annual Report outlines four ways in which whistleblowers areprotected, including: (1) anonymity, (2) confidentiality, (3) the ability to be transferred, and, (4) aprohibition on retaliation by staff members. While these protections represent a good start, moreprotections are necessary to create a whistleblower system that is truly effective.

To assist in further developing these protections, the Annual Report also states that in FY2005 the World Bank Group will be "undertaking a review of its policies and procedures relatingto protecting whistleblowers from retaliation." It is my understanding that this review wasconducted by Professor Robert Vaughn at the American University Washington College of Lawand was completed in April 2005 (Vaughn Report). The results of this report should outlinewhat policies and procedures need to be expanded or revised. Unfortunately, it is myunderstanding, that the report has not been made available outside of a selective group at theWorld Bank. Accordingly, I request that you provide me with a copy of this report along withany documents that further outline the policies and procedures for protecting whistleblowers atthe World Bank Group.

In 2004 the United States Government provided $1.2 billion to the World Bank Group inorder to help alleviate global poverty and to support countless other programs in manydeveloping countries. These dollars should be scrutinized to the greatest possible extent toensure that these funds go to their intended goal of helping to fight global poverty. Meaningfulpolicies to protect whistleblowers that bring forth allegations of fraud, waste and abuse areessential to prevent the loss of these important funds. Successful implementation of policies andprocedures to protect whistleblowers is critical to the integrity of the World Bank Group. Asystem that truly values transparency will foster public trust in the mission of the World Bank.I thank you in advance for your assistance in this matter and for providing the documentsI have requested no later than September 23, 2005. Additionally, my staff will contact youroffice this week to arrange for pick-up of the Vaughn Report.


Charles E. Grassley
United States Senator