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By BEA EDWARDS
June 08, 2009
With the world waiting for economic relief, the G-20 struck an agreement in April identifying actors who will ride to the rescue: Nearly $1 trillion will be given to the International Monetary Fund and the Multilateral Development Banks so that they can help "the vulnerable in the poorest countries." But these very institutions are culpable of accelerating the spread of poverty as the developing world confronts the crisis. In a frenzy of deregulation and poorly planned privatization, the IMF and the World Bank (the largest MDB) cut away both oversight of the private sector and social safety nets for the poor beginning in the 1980s.
As a consequence, by 1998, these institutions were presiding over a spectacular financial collapse in East Asia, Russia, the former Soviet republics and Brazil, which was in hindsight, a harbinger of things to come. Three years later, Argentina (the IMF's best student) went bust and half of its people were suddenly poor. After years of hewing to IMF financial dictates, citizens lost their jobs, bank accounts, savings and pensions overnight.
But let's forget the "poverty-fighting" track record of these organizations for a moment. Where does each stand in relation to the systemic problem that caused the panic in the first place — lack of oversight? The IMF and World Bank are themselves without any real external oversight. They are virtually impenetrable by the legislatures of their member governments. Labyrinthine bureaucracies, coupled with immunities from national and international laws, have become, for them, impunity.
Neither institution has answered for its track record because no one is entitled to ask. Neither Bank nor Fund officials can be subpoenaed by national legislatures, nor can they be obliged to testify in court. No government can demand internal documents from them. While each has some disclosure policies, these often remain unimplemented because the organizations cannot be sued. This is the stunning contradiction of the G-20 action: the signatories declared, "the era of bank secrecy is over," but then dumped a trillion dollars of public money into the most secretive financial institutions in the world.
To make matters worse, IMF and Bank staff members who witness corruption or fraud (and there are plenty) are not allowed to inform affected governments or the press, except under the most stringent constraints. If they do, they risk deportation back to their home countries. This assures perpetual corruption instead of beneficial reform.
One would think that steps to ensure whistle-blower protections would have followed in the wake of the Bank's biggest black mark in history — the resignation of president Paul Wolfowitz, forced by anonymous staffers who exposed his cronyism, favoritism, incompetence and improper political dealings. Lost in his girlfriend-salary scandal were the revelations of coordinated support he received from the Bank's general counsel, the Department of Institutional Integrity, human resources, and the Ethics Committee of the Board of Directors. The whistle-blowers in the Wolfowitz affair have since been relentlessly pursued.
But protections from retaliation weren't strengthened. The bank adopted a "whistle-blower protection policy" last year that staff members already recognize as a trap: confidentiality may be breached; investigative reports remain hidden; grievance hearings to address retaliation are neither impartial nor external; and guaranteed reinstatement rights (if a whistle-blower is vindicated) don't exist.
In the past year, the federal government has given away hundreds of billions of dollars without first ensuring an honest accounting for it. The results are not surprising — improper bonuses and wasteful spending has outraged the public. We cannot forget this episode so soon — if an institution is going to collect public money, then it must be accountable to the public. It must have the governance measures that ensure that corruption and fraud can be safely exposed by those who witness it. And neither the World Bank nor the IMF passes that test.
Bea Edwards is the International Reform Director of the Government Accountability Project, the nation's leading whistle-blower protection organization, www.whistleblower.org. MinutemanMedia.org
Source
"In the past year, the federal government has given away hundreds of billions of dollars"
ReplyDeleteThe real problem comes with the fact that governments are giving away money that they have expropriated from the citizens of whatever country is being discussed - in this case the US. Governments via their enforcers' threats of (or actual initiation of) physical force obtain funds from individuals and then spend it in a variety of ways that many (?most?) individuals would never were they permitted to keep their own money.
Currently we do not live in a society of liberty. While we have an enormous number of available actions (freedom) we are socially constrained by government in regards to a great number of these - not at liberty to take many actions. (Note that I am differentiating between freedom and liberty per definitions here: http://selfsip.org/solutions/NSC.html#freedom) Keeping all the money one earns in voluntary transactions with others - and even making many transactions at all - is not something governments legally permit those in their jurisdiction to do on their own.
In a true society of liberty, there would be no enforcement agents with authorized power to initiate physical force to obtain money or anything else. A financial institution would only operate with money voluntarily entrusted to them by individuals, most of whom would not do so with companies that didn't make their practices fully clear to all investors. The World Bank and International Monetary Fund (IMF) are two such examples that I expect most individuals would have nothing to do with voluntarily; they only exist by virtue of governments and their current power to expropriate their citizens' money.