Odious Debts

GAP Questions World Bank Financial Cyber-Security

Government Accountability Project (GAP)
November 20, 2008

FOR IMMEDIATE RELEASE

Letter Sent to Bank President Questions Failure to Sanction Misconduct

(Washington, D.C) – In the wake of recent news reports demonstrating serious breaches of the World Bank’s information security system, the Government Accountability Project (GAP) has sent a letter to Bank President Robert Zoellick requesting an accounting of steps taken to address the issue.

According to media reports and internal sources, the Bank’s records, which contain sensitive financial information from borrowing and donor countries, were repeatedly and illicitly accessed. World Bank spokespeople denied the seriousness of the incursions. Apparently, sanctions were only applied belatedly to an India-based company, long after the damage had been done.

At the same time, the Bank has delayed sanctioning five state-owned Chinese companies implicated in wrongdoing. In that case, the World Bank reportedly offered a deal to a reporter if he would delay publication of his story about the sanctions until after the G-20 Summit in Washington last weekend.

The G-20 summit was significant to the World Bank, as the institution prepares to assume a prominent role in addressing the global financial crisis. This latest development, which undercuts the Bank’s financial records security, raises troubling questions about its future effectiveness in dealing with the crisis.

“If the World Bank cannot be absolutely confident about its cyber-security, which safeguards highly sensitive information, is it in a solid position to help resolve the financial crisis?” asked GAP Communications Director Dylan Blaylock.

GAP’s letter, sent and received yesterday, is available on GAP’s Web site at: http://www.whistleblower.org/doc/2008/GAPLetter1119.pdf

Background

Beginning last month, FOX News’s Richard Behar reported that a vendor implicated in a bribery investigation of former Bank Vice President Mohamed Muhsin had apparently installed spyware on World Bank work stations. The ‘key-logging’ spyware would have enabled the company, Satyam Computer Systems, Ltd., to penetrate as many as 40 World Bank servers, gaining access to sensitive financial information about pending loans and contracts.

The World Bank’s statements minimizing the breaches and attacking accounts of them were plainly contradicted by internal Bank memos showing top information technology officers in a state of high alert and alarm. On Friday, November 15, another FOX News story reported that, through a World Bank connection, the spyware had also penetrated the information security system at the International Monetary Fund (IMF).

Click here to read the FOX News article [PDFver here]

Satyam, one of India’s major information technology companies, was contracted to work at the World Bank at the behest of Muhsin in 2003. A formal investigation of Muhsin concluded in 2007 that he had been improperly influenced by Satyam: “reasonably sufficient evidence” demonstrated that Muhsin had secured as much as $100 million in contracts and purchase orders for Satyam in exchange for stock options at preferential prices.

Despite Muhsin’s banishment from the Bank, Satyam was allowed to continue working until September 2008 without penalty or effective monitoring. For five years, through the terms of both ‘anti-corruption’ presidents of the Bank, James Wolfensohn and Paul Wolfowitz, the firm operated inside the Bank with impunity. This permissiveness of improper influence is at odds with international anticorruption conventions, which the Bank routinely exhorts its borrowing countries to respect. The United Nations Convention Against Corruption criminalizes:

[T]he promise, offering or giving to a foreign public official or an official of a public international organization, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity, in order that the official act or refrain from acting in the exercise of his or her official duties, in order to obtain or retain business or other undue advantage in relation to the conduct of international business (Article 16).

The World Bank’s Public Sector Governance Group, which seeks to educate borrowing countries about fraud and corruption, has declared: “Corruption sabotages policies and programs that aim to reduce poverty, so attacking corruption is critical to the achievement of the Bank’s overarching mission of poverty reduction.” The high-minded rhetoric is squarely at odds with real practice at the institution.

“We have asked Mr. Zoellick how the world’s governments and taxpayers can be certain that corruption will prohibited and sanctioned by the World Bank, when it has apparently allowed such serious misconduct, resulting in such serious consequences, to continue for so long.” stated Blaylock.

Government Accountability Project

National Office

1612 K Street, NW Suite #1100 • Washington, D.C. 20006

202.408.0034 • http://www.whistleblower.org


For further information:

Contact: Bea Edwards, International Reform Director

Phone:    202.408.0034, ext 155

Email:     beae@whistleblower.org

or

Contact: Dylan Blaylock, GAP Communications Director

Phone:    202.408.0034, ext. 137

Email:     dylanb@whistleblower.org


Government Accountability Project

The Government Accountability Project is the nation’s leading whistleblower protection organization. Through litigating whistleblower cases, publicizing concerns and developing legal reforms, GAP’s mission is to protect the public interest by promoting government and corporate accountability. Founded in 1977, GAP is a non-profit, non-partisan advocacy organization based in Washington, D.C.

Categories: Odious Debts

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