US Moral leadership in the fight against corruption is on the line at the World Bank
Washington, D.C.– U.S. loses World Bank leadership.
U.S. Loses Leadership of The World Bank.
Karen Hudes is a graduate of Yale Law School, who spent 20 years at the World Bank as an attorney fighting poverty. On November 10, 2011 Mr. Tom Karr, Assistant General Counsel of the Securities and Exchange Commission, called Hudes at the request of the SEC's Inspector General to discuss compliance of the World Bank under the securities laws.
The 187 countries that own the World Bank ended the 66 year old Gentlemen's Agreement that the US nominates the President of the World Bank after the World Bank stonewalled a study into transparency at the World Bank that Senators Lugar, Leahy and Bayh asked the Government Accountability Office to carry out. Hudes reported corruption in the Philippines ending in the impeachment of the former President of the Philippines, Joseph Estrada, cancellation of $400 million in loans, the take-over of the second largest bank in the Philippines by the owner of Philippines Airlines, and a $500 million bail-out. The World Bank reported to its Board and shareholders that supervision on the project was "satisfactory."
After Estrada was impeached, Senator Lugar wrote three letters requesting an end to the cover-up. In contempt of Congress, the World Bank refused to answer Senator Lugar’s questions. Instead, the World Bank altered documents to fire Karen in retaliation. The US Congress had also raised concerns about the World Bank’s accounting practices and “whether the Bank’s Board of Executive Directors always is in possession of accurate and timely information.”
The Chairs of the World Bank’s Audit Committee, Ethics Committee, and Committee on Governance asked Karen whether it was US policy for the President of the World Bank to conceal information from its Board of Executive Directors. The World Bank’s Audit Committee appointed KPMG to audit the World Bank’s internal controls. When KPMG refused to end the cover-up, the former Controller of the World Bank put Karen in touch with the International Federation of Accountants.
Karen told President Obama’s Organizing for America that there was bipartisan support to preserve the US’ moral authority at the World Bank. Organizing for America told her “appropriate persons,” were reviewing the information about corruption at the World Bank. “The Bank runs the risk of being caught with its pants down (in an area where it is lecturing the developing world on how to dress),” warned Pieter Stek, the former Dutch Executive Director and chair of the World Bank’s Audit Committee. Luigi de Magistris, the Chair of the European Parliament's Committee on Budgetary Control, told Karen, "I share the opinion expressed by the Members of the Committee that it was very interesting and inspiring to learn about your case at the World Bank."
The Bank's shareholders are now decentralizing jobs away from the World Bank's headquarters.
Karen Hudes is now available for interviews.