Wasting time talking about people

There has been endless speculation in the media, fueled by CSO activism bordering on fantasy and hissy-fits, about names rumored and leaked to be in the running to replace Robert Zoellick on July 1.

Now is the time to tell the owners of the Bank, who will nominate candidates, and the Board, who will choose from among the three they shortlist, what profile the next World Bank president should have, beyond the generic criteria that the Development Committee endorsed.

Interest in managing the Bank, and a track record of success at managing, would be a start.  This would show commitment to implementing a new vision of the role of the Bank–and Bank Group–in the changing world of inclusive and sustainable globalization.  I use that term, a Zoellick invention, because that includes fighting poverty, protecting the environment, and promoting economic and social justice.  Acting consistently with recent WDRs and managing for results in these areas would be the best way to rebuild the Bank’s brand for focusing on results.

The Bank’s external stakeholders may want to think about whether the Bank’s matrix structure serves our clients as well as it could.  IEG has recently been very critical of how it works, including on how it brings out the best in staff (or not) and whether managerial accountability for quality, efficiency and results is clear.

For several years, trust funds have been the safety valve on a “flat budget”.  This has led to an unseemly rush to donor capitals to fund even ‘core’ Bank knowledge and supervision work. Donors are stressed financially, but want to use this backdoor influence to shape the Bank’s agenda.  This naturally worries Board members who aren’t donors about the dilution of their influence.  The fragmentation of donor support has led to probing questions about the value trust funds are achieving, and whether the Bank would take all this on were their ‘free’ money not available.

It would be better for stakeholders interested in the future of the Bank, and where it goes in the next five years, to debate these issues, in the context of the vision the Bank’s owners have for its future.

On March 23, we’ll know who the contenders are, and it would be good to have some agreement on what yardsticks will be used to measure them. That would do more for a transparent and merit-based selection than the unrealistic cheerleading and character assassination that characterizes much of what is in the press, and on the Web, so far.

3 thoughts on “Wasting time talking about people

  1. The UK Governor of the WBG, Andrew Mitchell, has publicly made known his aspiration that the UK should become the world’s “aid superpower”. Since 2002 the UK’s become the single largest bi-lateral contributor of donor trust funds (money buys influence). 2002 was the year the UK International Development Act was passed. It permits the government to make funds available to IFIs for “relevant purposes”, including, specifically, hiring “technical personnel”. Unfortunately, this legislation is wide open to abuse with prejudicial effect on tenured WBG employees, as set out below.

    First, in his evidence before the House of Lords’ on-going enquiry into the ‘Effectiveness of Development Aid’, Sir Tim Lankester, Permanent Secretary (PS) of DfID until 2002, said: “…Aid is a very complex business. It requires enormous skill and attention in designing projects and programmes, and it is quite wrong that the Government is reducing its staffing on this….. If you are going to have an increasing programme, you need to retain the staff. …. If the Government wants a strong programme and an increasing programme, they cannot afford to reduce the staff at this time.”

    Agrred. And surely this same principle and logic should apply to WBG programmes and projects? Not so. In 2002, on the eve of vigorously expanding technical assistance (TA) and advisory services, the IFC Management Group (MG) took bizarre steps quietly to abolish an identifiable Technical Services Department from its organizational and management structure; fired tenured industry/technical experts assigned therein falsely claiming their skills were no longer needed in the organisation, and, allegeing a corporate reorganisation aimed at improving efficiencies and effectiveness, chose to retain non-technical contract managers to deliver TA prorammes and projects. These contract managers were then required to hire short-term consultants (classified as ‘staff’ whilst under contract) to design and implement TA activities paid through mobilisation of donor trust funds. For want of technical expertise and know-how these contract mangers then hired more consultants to peer review original consultants’ reports.

    This modus operandi is a win-win situation for the WBG – and donors. Not only does it nicely perpetuate on-going need for trust fund contributions that donors are only too happy to pour into WBG coffers for myriad projects and programmes (often of questionable quality and value that duplicate similar activities already on foot), it also has the effect of delaying project implementation – hence disbursement of funds which can be pooled and invested longer to generate greater returns which can be refunded to donors, sometimes many years later. Meanwhile, keeping the WBG sweet for their creativity in finding ways to spend taxpayers’ money donors cough up and pay the WBG hundreds of millions of dollars in administrative fees annually. In other words, the 2002 reorganisation to use it as an example, enabled IFC to make administrative savings on the regular budget by dipping their hands into UK and other donor trust funds pretending IFC and the wider Bank group has specialist in-house “technical expertise” that donors value and do not themselves have.

    Keeping up this charade, the World Bank’s Independent Evaluation’s Group (IEG) has claimed that: “Five of the eight donors said they use trust funds because they lack the funds or expertise to scale up their bilateral programs to deliver the amount of aid they are committed to provide. Trust funds allow these donors to associate their resources with the technical expertise and management capacity of the trustee international agency”.

    The problem is when WBG management resorts to such tactics, they are unalwfully breaching their own Board-approved Trust Fund Operational & Budget Policies. The IFC Policy [in 2002] provided: ” Trust Funds are intended to enable IFC to extend the range and quality of its TA and advisory programs. They should not be used to provide substitute funding for costs that would ordinarily be regarded as a regular part of IFC’s costs of dong business – either through paying for IFC’s staff costs, or retaining consultants to undertake work they would ordinarily carry out. The test for appropriate use of the Trust Funds resource should be additionality (e.g., extending range of TA services, gaining access to specialized expertise enhancing quality of result)”

    When I took up this polcy issue and related thereto matters exposing the venality and corruption of the WBG’s internal justice system that was engaged to cover-up this unlawfulness, I was told that ” the UK Government cannot become involved in specific cases of this nature” – i.e. compliance with the rule of law, impelidly representing it doesn’t apply to the WBG.

    Matthew Parish, an ex-WBG lawyer, in his book ‘Mirages of International Justice: The Elusive Pursuit of a Transnational Legal Order’ has written: “The efficacy of these institutions is illusory…The British Government has no interest in exposing the charade; as long as there is an approximate consensus that international co-operation can make a difference, domestic pressure to take self-damaging unilateral action is relieved…..It is not immediately clear why the UK Government and other States allow this pretence and dysfunction, the state of affairs that currently prevails, to continue”

    Here’s more on pretence and dysfunction to which he refers.

    In her evidence to the International Development Select Committee on 16 November 2010, Nemat Shafik, DfID’s then Permanent Secretary who was a former WBG Vice President, member of the IFC MG and a Non-Executive Director of the DFID Management Board in 2002 (i.e. who was a party to the IFC reorganisation decision) stated:

    “I believe the Committee, in its visit to Washington, may have talked to people at USAID. I think they will acknowledge that one of the biggest mistakes they made was contracting out all the expert work; they became contract managers. For me, that would be a terrible place for DFID to be.”

    “Chair : And it doesn’t make the admin costs lower either.”

    “Chris White: No.”

    “Minouche Shafik: Exactly. From a value for money point of view, it’s terrible”.

    Really? The what about similar ‘value for money’ considerations in the WBG? Only a year earlier, at the 2009 WBG/IMF autumn meetings, Mr Mitchell, to whom she reported, put out the following statement: “It is incumbent on all of us to maximise the value of the resources available for development. And that starts with the Bank’s own spending. High administration costs risk undermining public support, not just for the Bank but for development more broadly. It must be clear – not just in what we say but what we do – that we are committed to bearing down on costs, that we are striving for economy and operating efficiently…..In the programmes too, we need to make value for money our watchword. We need to ensure that we stretch every penny. We must have systems that ensure goods and services are bought in the most economical way possible”.

    I wrote to Dr Shaik in December 2010 concerning the rank hypocrisy of her statements to Parliament. She did not reply to confirm or deny whether the IFC decision of 2002 was also a ‘mistake’. In February 2011 she resigned when appointed a deputy managing director of the IMF.

    And here’s what her successor, Mark Lowcock had to say when giving evidence to the Public Accounts Select Committee on “DFID Financial Management” on 4 July 2011: “The World Bank is in an unusual situation because its administration budget is not paid from the money we give it. It is essentially paid from profits it makes by lending to better off countries”.

    That statement is patently incorrect. It’s also inconsistent and antagonistic with findings in the WBG Independent Evalaution Department’s report on use of trust funds published in 2010. The Committee Chair had this to say to Mr Lowcock: “I read this Report [on DFID Financial Management] and thought it was quite negative. If I put a bad/good news thrust on it, the bad news is that you have not at present got a clue as to whether or not there is value for money in the spending that you undertake, and the good news is that you do recognise that. Having taken that bit, although I am very disappointed about not a lot happening even in the last year or so, we want to hear a lot from you today about what you are going to do about your lack of financial management and control and value for money approach, and some idea about when quite a lot of that is going to be implemented.”

    Notwithstanding this excoriating rebuke, on 11 December 2011 DFID’s Director-General Policy had the brass neck to return to the Public Accounts Committee and state: “We have a headquarters-to-headquarters relationship with [the WBG], which is quite a strong one. We are a peer reviewer of its new 10-year strategy, so it’s asking for our advice on what that should involve, and we are very much sharing our knowledge and experience. We sent the guidance that we produced on value for money and how to do better cost-effectiveness and efficiency to the World Bank, and it is very keen to respond to that and adopt it”.

    What’s needed is anxious scrutiny of the way WBG trust funds are used. And, in terms of the next WBG President and Chair of the Executive Board, what’s needed is a leader committed to principles of honesty and integrity who’ll restore the rule of law in this badly governed institution; a leader who’s prepared to put a stop to extravagant waste and inefficiency and duping taxpayers into believing their money’s being well spent. Nothing could be further from the truth.

  2. Hi Skepticji. The site is a collaborative effort, with posters from a variety of different NGOs. These include the Bretton Woods Project, Centro de Derechos Humanos y Ambiente (CEDHA), Campagna per la Reforma del Banco Mundial (CBRM), Avaaz, and New Rules for Global Finance, although many are writing in a personal capacity. If you google the names of contributors you can find out more. There are also posts from other sources, including from within the World Bank. We welcome posts from a variety of contributers, so please keep checking the site to see what comes up.

    In terms of funding, Bretton Woods Project paid the costs for the web hosting in the interest of having an open forum to which people can contribute. If it’s of any interest the cost was £83!

  3. You folks talk about non-transparent undemocratic process.

    Yet your webs-ite provides vert little information about your own organization, the people behind it, how it is funded, etc. Would be wonderful to know more about the organization behind this web-site.

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