Wednesday, March 7, 2012

GAP: IDB Whistleblower case leads to shady dealings going public (UNDP's Grynspan involvement detailed)

by Bea Edwards
on March 06, 2012 ( The Whistleblogger / 2012 )
Click here for this on GAP page

So ethics guru Bernardo Kliksberg is back in the news. On March 1, FOX News' George Russell published a detailed piece about Kliksberg’s peculiar departure from the Inter-American Development Bank (IDB) in January 2007, just before the Social Capital and Ethics Initiative “coordinated” by him ran completely out of steam. The Norwegian and Canadian Governments funded this effort, and a whistleblower at the IDB disclosed repeated and costly ethical violations by Kliksberg, using the funds of the initiative.

It seems that Kliksberg, the author of More Ethics, More Development, among other treatises, is himself guilty of diverting funds from the IDB’s ethics initiative.

This takes, in the immortal words of Sarah Palin, cojones.

Russell’s piece reports that the IDB then repaid the Norwegian and Canadian Trust Fund for the amount Kliksberg demonstrably diverted: $109,000, equivalent to half of the funds available for the initiative in 2006. After that, the cone of silence descended around the Kliksberg affair, and it remains concealed beneath highly improbable and contradictory official statements. It only came to light because the whistleblower brought suit in the IDB’s internal tribunal. She protested the loss of her job, which the IDB tried to represent as the inevitable consequence of the demise of the Ethics Initiative.

The failure of the IDB to protect the whistleblower in this case sent a terrible message to Bank staff: if your whistleblowing causes an interruption of your project, your job will be the first casualty of your disclosure. That should pretty much shut down everyone with any survival instinct at the IDB, no?

For his part, Kliksberg simply caught the Acela to New York and assumed control of another international trust fund. That would be the fund contributed so generously to the United Nations Development Program (UNDP) by Spanish taxpayers through the Government of Spain. Established in April 2007, the Spain-UNDP Trust Fund held $62 million by 2009. (Just a heads up, UNDP people: you need to keep a close eye on those deposits. In our experience dealing with corruption, the diversion of funds tends to be a lifestyle, not an incident).

Despite the rhetorical commitments to transparency and accountability with which the IDB decorates its website, this episode is shrouded in secrecy and stinks of institutional cover-up. Kliksberg contends that Bank management never told him he was under investigation and never informed him he was found guilty as charged. Nor did the IDB inform UNDP, claims UNDP. But not informing Kliksberg that he was under investigation and later censured violates the procedures of the IDB’s internal justice system in ways that even the Bank – which is notoriously cavalier about adhering to its own anti-corruption regulations – would hesitate to try.

Now, I'm not saying this couldn’t have happened. After all, stealing from an ethics trust fund is also a violation of something, and rather than making Kliksberg repay Norway and Canada, the IDB coughed up the money out of its own public coffers. This decision had the effect – whether intentional or not – of removing the fraud from the public record by depriving the governments of a cause of action.

But Kliksberg told Russell that the IDB conducted an extensive investigation, and the only result was a note in his file advising anyone considering a contract for him to first consult with the Human Resources Department. So…

  • Question One: How did the IDB conduct a thorough investigation of the Trust Fund deficits without asking Kliksberg himself about his financial practices (and without freezing his access to funds and his e-mail account)?
  • Question Two: Did Kliksberg’s stature as an Ethics Expert allow him to escape sanction for ethics violations involving the Trust Fund?
  • Question Three: Why would the IDB not inform the Spanish Government about the risk Kliksberg represented to the integrity of its Trust Fund at UNDP if he were hired to manage it?

Nothing about the official steps taken by the IDB makes sense, from an accountability perspective. After Kliksberg took down the Social Capital and Ethics Initiative at the IDB, the Bank took steps to ensure that there was no record of what had happened – no letter outlining Kliksberg’s ethical violations and misconduct in the HR files, and no judicial action against him either in Washington, Norway or Canada. The only record of what happened is the letter to the Norwegian and Canadian Governments committing the IDB to repaying the trust fund.

The Ethics Committee concluded that there was sufficient evidence to establish that the former Technical advisor for the Fund violated certain provision of the Bank’s Code of Ethics. The former Technical Advisor [Kliksberg], a Fund consultant, was found to have used employees hired with Fund resources to perform work in furtherance of his personal endeavors. Based on these conclusions, the Bank did not renew his contract and his employment at the Bank has, therefore, ended.

This letter, of course, was not intended to see the light of day. And if not for a whistleblower claim and an intensive investigation by a journalist, it wouldn’t have. Nevertheless, with reference to accountability at the IDB, the Bank website has this to say:

The Inter-American Development Bank has developed a major overhaul of its anti-corruption framework to ensure that allegations of corruption in Bank financed activities are investigated and sanctioned more quickly, and whistleblowers enjoy stronger protections than before. The IDB is also strengthening the support it provides to countries to battle corruption.

But hey! In this particular case, the whistleblower lost her job and got paid something for her trouble only after more than two years without work. In contrast, the guilty party enjoyed the privilege of confidentiality provided by the Bank to protect his reputation in spite of his own thievery. The simple fact here: the IDB ensured that an unscrupulous consultant enjoyed strong protections, while the whistleblower was abandoned, and a trust fund at the IDB as well as another fund at UNDP were left for him to use at his discretion.

Outstanding. But here’s some consolation: at least someone got protection. Too bad it wasn’t the whistleblower.

Bea Edwards is Executive Director and International Director for the Government Accountability Project, the nation's leading whistleblower protection and advocacy organization.

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