MISTICA: [GKD] Corruption claim against GDG: Appeal for investigation on

From: Bibiana Apolonia (
Date: Tue Jul 24 2001 - 09:57:11 AST

Development Gateway for "misuse of Bank funds or positions"
Date: Fri, 20 Jul 2001 21:56:49 -0300
Precedence: bulk
Reply-To: mistica

Me parece que la lectura de este correo es elocuente
sobre ciertos hechos -pasados- presentes
acerca de la intencionalidades
de -personas- en y de organismos internacionales.

Me alegra sobremanera -por Uruguayos/as-
actitudes que dificilmente sulen suceder en Argentina.

----- Mensaje original -----
De: "Roberto Bissio" <>
Para: <>
Enviado: Jueves 19 de Julio de 2001 20:54 PM
Asunto: [GKD] Corruption claim against GDG

> World Bank Fraud and Corruption Investigations
> Hotline
> P.O. Box. PMB 137
> 4736 Sharon Road, Suite W
> Charlotte, NC 28210
> Montevideo, 18th July 2001
> Dear Sirs,
> Please consider the following
> Appeal for investigation on Development Gateway for "misuse of Bank funds
> or positions"
> Summary
> We believe that in the formation of the World Bank's Development Gateway
> internet initiative several irregularities have been committed that should
> be reported and investigated. These include a misuse of Bank funds and
> positions, gross waste of Bank funds, cost mischarging or defective
> pricing and perhaps even fraud and misleading of public opinion.
> The Bank has allocated around $7 million to this scheme, creating a
> website which is shortly to be transferred to be managed by a new
> foundation.
> We are concerned that Bank funds are being spent without proportion to the
> expected results to create a website intended as a public relations tool.
> While it is a legitimate activity for the Bank to defend itself from
> criticism, it is a clear misuse of funds to divert to public relations
> monies intended to combat poverty. Further, it is a gross violation of
> editorial ethics to misrepresent a propaganda operation as a genuine
> independent Internet portal about development in the Internet. Potential
> donors are being misled to make grants to a supposedly independent
> Foundation that in fact is just an appendix of the Bank.
> The Gateway was not requested by any of the Bank's intended beneficiaries
> and will only benefit a private entity created by the Bank and whose
> governance is still largely unknown. That entity, formally a US
> foundation, is using Bank monies to contract services from the Bank
> without any bidding process like those the Bank usually requires from its
> grant recipients.
> We are also concerned that senior World Bank managers, especially the
> Bank's President James Wolfensohn and the former Vice President for Human
> Resources, Richard Stern, have used their positions at the Bank to create
> a new organisation in which they will hold positions and presumably
> extract private benefits, distracting time from their core tasks and using
> the diplomatic energy of their positions at the Bank to promote the
> initiative and raise funds for it. This appears to contradict the
> guidelines on "misuse of Bank funds or positions".
> The document called Ethical Guide For Bank Staff Handling Procurement
> Matters In Bank- Financed Projects states that: "In dealing with
> procurement matters, Bank staff shall [...] avoid strictly any conflict of
> interest or even the appearance of a conflict of interest in any matter
> related to the performance of the staff member's duties; [and ...]
> disqualify him/herself from outside employment or activities, including
> dealings with former or future employers and employment after separation,
> that conflict with his/her Bank duties and responsibilities. "
> Whilst the Development Gateway is not a classical Bank procurement
> situation, the same standards should surely apply to the Global
> Development Gateway but this has not been the case in practice according
> to the evidence we offer below.
> No similarly detailed definition is offered by the Bank of the concepts of
> "waste of funds", "cost mischarging" and "defective pricing", probably
> because they are obvious. In this case, 7 million dollars have already
> been spent and some 30 million dollars a year are budgeted for a website
> that will not be sustainable even if the declared targets are met. The
> money already spent and the sums requested to continue the activity are
> disproportionate with the product they are supposedly paying for.
> It is obvious that many public-interest or educationally oriented
> activities may require permanent subsidies. But in this case it should be
> taken into account that no external actor has demanded the creation of
> such a site, that two regional consultations with civil society
> organizations (in Africa and Latin America) failed to support the proposed
> Gateway and that solid criticism was raised and never properly answered
> during lengthy on-line consultations. Many international websites on
> development already have been created by multilateral agencies and NGOs.
> In all countries where the Development Gateway plans to establish
> "national gateways" Internet portals already exist, as can easily be found
> by looking in the Yahoo directory. Instead of contributing to develop
> national capacities, the Development Gateway plans to establish subsidized
> state-run media operations that will compete unfairly with existing
> efforts. There is already solid criticism against the Bank (an
> intergovernmental body) engaging in media activities. Through this new
> "Gateway" further state control of the media is promoted, contradicting
> the Bank's declared policies.
> Further details
> 1. In his Memorandum to the Executive Directors, dated June 27, 2001, The
> World Bank's president James Wolfensohn, informs that "the World Bank
> Group is considering contributing [to the Development Gateway] an
> additional $5 million over the next three years from its Development Grant
> Facility, subject to Board approval. A request for the first tranche of
> this contribution, $1 million for the FY02 has been endorsed by the
> Development Grant Facility Council." This makes it clear that the grants
> allocated to the Gateway were intended for development purposes.
> 2. Yet, an internal Bank document (SecM2001- 0048) of January 26, 2001,
> titled Strategic Directions for External Affairs: Facing Challenges,
> Defining New Opportunities, states (page 12) that "the External Relations
> Department aims to [adopt] cyber-campaigning approaches using the Internet
> and mass electronic mail responses to reply to critics. The Development
> Gateway offers an opportunity for a quantum leap in the development
> community's ability to network online and engage with new audiences." The
> text is clear in the revealing what the real purpose of the Gateway is: to
> influence public opinion in favor of the "development community", which in
> this case means clearly the Bank itself. We consider that it is a
> deviation of funds to spend for public relations monies intended to combat
> poverty. Further, it is a gross violation of editorial ethics to
> misrepresent a propaganda operation as a genuine independent editorial
> activity.
> 3. The creation of a new "Gateway Foundation" to run the portal was
> announced by the Bank as a reaction to the criticism that a portal run and
> funded by the Bank would not be a credible source of independent
> information. Yet, the Foundation will contract the Bank to provide staff,
> infrastructure and services necessary for it to function. Any legitimate
> independent recipient of Bank funds is required to conduct an open bidding
> process before contracting services from third parties. Why was the
> foundation exempted from this rule? On what basis has the Bank decided to
> fund an entity even before it was properly created? If it is true that
> this "Independent Foundation" is contracting back to the Bank, staffed by
> the Bank, situated in the Bank, entirely designed by the Bank and largely
> capitalized by the Bank, we may be facing a case where eventual donors and
> perhaps even the American authorities that granted it legal status as a
> non-profit organization, may have been deceived in their good faith to
> accept a non-existing independence.
> 4. According to its business-plan, the Gateway should achieve in five
> years, five million pageviews a month. This is a huge amount of money for
> a very limited achievement. If such a site carried one "banner"
> (advertisement) per page and was paid for it the high sum (according to
> present-day standards) of $50 per CPM (thousand ads displayed), it would
> receive, after five years a quarter million dollars a month and still be
> operating at a huge loss (i.e. receiving large subsidies), even while
> having achieved its pre-defined target. The present and futures subsidies
> of the operation are mainly going to benefit a highly paid staff,
> currently working for the Bank and in the future for a Bank-subsidized
> foundation. The signatories of the present claim have had the experience
> of building a Southern-based national portal in Uruguay now delivering one
> million pageviews a month in two years with less than half a million
> dollars of total expenditure. ( To spend over
> a hundred of million dollars (according to the expenditure projections) in
> a website of global interest expected to achieve in five years just five
> times the present usage of a local interest portal in a developing country
> of only 3 million inhabitants seems to be a case of overspending that
> needs scrutiny.
> 5. Frank Vogl, vice-chairman of Transparency International, senior ethics
> advisor to the Ethics Resource Center and World Bank's Director of
> Information and Public Affairs from 1981 to 1990, recently stated that "we
> do not believe this (the training of journalists) is an arena that aid
> agencies - bilateral or multilateral - should enter. These agencies are
> government- owned and work first and foremost for governments. There are
> good reasons not to support state-owned media. Therefore, I suggest that
> it is inappropriate for state-run agencies, including the World Bank,
> which is totally publicly owned, to engage in media training programs. I
> appreciate that this is something that the World Bank and the World Bank
> Institute may find hard to swallow, because they have some expert staff
> who have sought to train journalists in developing countries. The Bank
> needs to understand it lacks broad credibility in this specific field, and
> its engagement is inconsistent with its own research that finds state
> media so wanting. If the Bank wants to be engaged in this area, then it
> should provide funding to the excellent independent institutes of
> journalism training that abound." (see the whole text at
> These same concepts apply also to the creation of "portals" or "websites",
> which are essentially editorial and journalistic activities. The Bank
> already has a "window", called InfoDev, to support Internet-related
> initiatives and it also has its own website to address the need of
> informing the public about its activities. Overfunding an unnecessary
> activity is a misuse of funds. Creating and promoting a "trademark" and a
> website with public monies and then giving away that asset to a private
> institution not accountable to the public is a dubious operation that
> requires close scrutiny.
> 6. Richard Stern, World Bank Vice President for Human Resources until the
> end of last year, is now acting CEO for the Gateway Foundation. We believe
> that he used his position during the final months of last year in a way
> that transgressed a reasonable understanding of his role as Vice President
> for Human Resources and which appears to have resulted in a new position
> for him outside the Bank. We believe it was inappropriate for him to spend
> his time last year while employed by the Bank working to found a new
> institution from which he may now or in the future receive remuneration
> and recognition. This appears to be in contravention of the above
> statement from the Ethical Guide, covering "outside employment or
> activities".
> We request that you examine Mr Stern's activities over the last year in
> connection with the Gateway. In particular his activities at the Annual
> Meetings in Prague and thereafter where it is reliably reported that he
> was active in meetings to promote the idea of the Gateway, for example in
> the UK. Witnesses to Richard Stern's attendance at meetings in Prague and
> in the UK can be provided on request. We assume there were many other such
> meetings in other countries, but cannot confirm this at this time.
> 7. We believe that similar arguments can be extended to Mr Wolfensohn, who
> is rumoured to be lining up to be the director of the Gateway Foundation.
> It is unclear what remuneration or benefits he may receive in this role
> while remaining as Bank President (or thereafter), but we believe that
> again there is a conflict of interest involved in the Bank spending $7
> million on establishing an initiative, floating it off as an 'independent'
> entity, then providing up to three directors and the CEO for the
> Foundation.
> 8. This procedure is hard to justify in the Bank, a publicly funded
> institution which is supposed to work to promote the public interest. The
> principles in the Ethical Guide for Bank Staff should apply to all such
> institutions. Particularly so for an organisation which, like the Bank,
> works in many countries to promote good governance and anti-corruption
> initiatives. (Ref, Wolfensohn's speech at The 9th International
> Anti-Corruption Conference, Durban 10 to 15 October 1999
> jdw.pdf ).
> 9. Clearly the Bank, which is talking about transparency and good process
> in the use of public sector funds, must at all costs avoid perceived or
> actual conflicts of interest regarding the use o f Bank time and money.
> Bank President Wolfensohn stated that "we have looked, in terms of our
> approach, at the issue of governance, at the issues of legal and judicial
> reform. We have also said that the same applies to financial systems. You
> cannot have e q uity, you cannot have opportunity unless you have a
> smoothly and appropriately administered financial system. And that was
> most recently proven in Korea, Thailand and Indonesia in the Asian crisis.
> And, of course, one needs to confront, in all of these pl a ces, the issue
> of corruption." Comprehensive Legal And Judicial Committee Plenary
> Session, 5 June 2000.
> These allegations are troubling in themselves, but all the more so as we
> and many others have been arguing for over a year that the Gateway
> represen ts an unneeded, heavily-subsidised initiative which will compete
> unfairly and in a damaging manner with existing country- and
> topic-focussed internet sites. (See, for example Roberto Bissio's 20 July
> 2000 message archived on:
> We therefore request you to investigate this matter seriously. Please get
> back in touch with us if you require further information.
> Roberto Bissio and Dr. Carlos Abin
> About the claimants:
> Mr. Bissio, a journalist, is coordinator of Social Watch
> ( and Latin American secretary of Third World Network.
> He is a member of UNDP's civil society advisory committee and has written
> extensively on the role of information technologies in development.
> Dr. Abin is Executive Director of the Instituto del Tercer Mundo
> ( As a lawyer he has advocated diverse actions in defence
> of the environment, freedom of communications and defence of human rights.
> Both claimants are Uruguayans, working from Montevideo: c/o ITeM, Jackson
> 1136, Montevideo 11200, Uruguay - Phone: +598 (2) 4196192, fax: +598 (2)
> 4119222.

> Annex:
> Ethical Guide For Bank Staff
> Handling Procurement Matters In Bank- Financed
> Projects
> Date: April 23, 1998
> To: Procurement Family and Accredited Staff
> From: Katherine Sierra, Director and Head,
> Operational Core Services

> --------------------------
> Roberto Bissio
Jackson 1136, Montevideo 11200, Uruguay
> Instituto del Tercer Mundo
> Fax: +598(2)401-9222
Tel: +598(2)409-6192

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