Karen Hudes – World Bank Lawyer Whistle Blower “We are headed for a currency war”

You really need to listen to Karen Hudes.  Her CV is outstanding. She was a guest on Coast to Coast tonight and I looked her up on youtube. This was a short conversation in which she shares the corruption she witnessed at the World Bank:

She pointed out on Coast to Coast regarding America not being able to choose the President of the World Bank if we did not play along with their schemes.

Joining John B. Wells, former Senior Counsel to the World Bank and whistle-blower, Karen Hudes, will discuss what happened when she warned the Treasury Dept. and U.S. Congress that the U.S. would lose its right to appoint the President of the World Bank. She was recently arraigned and arrested by DC police.  Coast to Coast

Karen Hudes Website

Here “About Us” page shares this:

Who is Karen Hudes?

Karen Hudes studied law at Yale Law School and economics at the University of Amsterdam. She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.

What did Karen Hudes blow the whistle on?

In 2007 Karen warned the US Treasury Department and US Congress that the US would lose its right to appoint the President of the World Bank if the current American President of the World Bank did not play by the rules. The 66 year old Gentlemen’s Agreement that Europe would appoint the Managing Director of the IMF and US would appoint the World Bank President ended in 2010 http://www.imf.org/external/np/cm/2010/042510.htm

In 1999 Karen reported the corrupt take-over of the second largest bank in the Philippines. Lucio Tan, a crony of Joseph Estrada, then President of the Philippines, acquired stock owned by government employees in Philippines National Bank (“PNB”) valued more than 10% of PNB’s outstanding capital without disclosure, as required by Philippines securities laws. Tan owned Philippines Airlines, in default on its loans from PNB. The government of the Philippines loaned $493 million to PNB after PNB’s depositors made heavy withdrawals. $200 million of a loan from the World Bank and a $200 million loan from Japan were cancelled. Estrada was ultimately impeached, and in 2007 an anti-corruption court in the Philippines required Estrada to refund graft he had plundered. The Bank’s Country Director in the Philippines reassigned Karen when she asked him to sign a letter warning the Philippines’ government that the Bank could not disburse its loan without a waiver from the Board of Executive Directors since the loan conditionality was not met. The World Bank’s Internal Audit Department refused to correct the satisfactory evaluation of the Bank’s supervision performance or the flawed report of the Institutional Integrity Department to the Audit Committee of the Board of Executive Directors. When the Audit Committee requested an audit of internal controls over financial reporting, KPMG, the external auditors, circumscribed the scope of their audit in violation of Generally Accepted Accounting Principles and Generally Accepted Auditing Standards.

Two days after informing the Board’s Audit Committee of the cover-up in the Philippines, Karen was reprimanded and placed on probation. The Dutch Ministry of Foreign Affairs requested the World Bank’s Audit Committee to look into the cover- up. Instead, the Chair of the World Bank’s Audit Committee requested an inquiry into the World Bank’s Institutional Integrity Department. The Senate Committee on Foreign Relations followed up with three letters to the World Bank. The World Bank forged documents and fired Karen in contempt of Congress. The World Bank also fired the Staff Association’s lawyer. The Staff Association stated that what had happened to Karen had damaged staff morale and prevented others from reporting misconduct. The World Bank’s Ethics’ Officer left in frustration after her request for an investigation by the World Bank’s Institutional Integrity Department was turned down.

Mr. Paul Volcker headed the 2007 inquiry into the Institutional Integrity Department. The Volcker Panel was discredited after sixteen staff employed in the Institutional Integrity Department received significant damage awards in compensation for abuses of authority to intimidate them during the Volker Panel investigation. A staff-member of the EU’s anti-fraud agency, Office Lutte Anti-Fraude, on the Volcker Panel wrote to Karen:
“My Director General and I met with a number of European Executive Directors of the World Bank a few weeks ago to discuss the Volcker Panel report. At the meeting there was also discussion about governance issues. My impression was that the European Executive Directors are well apprised of all relevant issues at the Bank and no further comment by OLAF is warranted even if it was within our legal competence.”

Karen informed Senator Bayh, “[t]he ongoing cover-up is an indictment of the probity of US oversight at the Bank and I would encourage the Senate to request GAO to look into it.” Senators Richard Lugar, Evan Bayh and Patrick Leahy requested GAO to investigate “internal resistance to increased transparency and accountability at the World Bank.” http://citizenoversight.com/pdf/blwb.pdf In 2008 Karen’s Congressman, Representative Chris Van Hollen, noted “that [Karen’s] claims and concerns have already been provided to the GAO…. and to the relevant congressional committees.” In 2009 GAO stated that it could not commence the inquiry “because of challenges we recently faced in gaining access to World Bank officials.” Senator Lugar asked what was delaying the GAO review during hearings on the World Bank’s capital increase.

Mr. Pieter Stek, then Executive Director for the Netherlands, and Chair of the Board Committee on Development Effectiveness, said:
“In a multilateral institution which should be governed by the rule of law and high standards of probity the charge of concealment from the Board of Executive Directors of information relevant to the exercise of its duty of supervising management and the persecution of the person who brings this to light is extremely serious. If correct, which I believe, this poisonous cocktail undermines good governance and ultimately the effectiveness of the Bank in fulfilling its mandate. I shall continue to assist Ms. Hudes in her efforts to have due process brought to bear, preferably by the Bank itself, on these issues of governance.”

David Brooks wrote:
“Then there are violations, when someone intentionally breaks the rules. Errors can be very hard for outsiders to detect. It was people inside the companies who were most likely to report fraud, because they have local knowledge. And yet 80 percent of these whistleblowers regret having reported the crimes because of the negative consequences they suffered. This is not the way to treat people who detect error.” http://brooks.blogs.nytimes.com/2011/06/13/living-with-mistakes/?comments#permid=34

In a recent post she wrote:

The World Bank: Rejecting “The Rule of Law”

“The proverb, ‘What you don’t know can’t hurt you”, originated in 1576 as, ‘So long as I know it not, it hurteth mee not.’ But the opposite is true.  Unpleasant hidden truths do the most harm.  The best way to fight corruption is to expose it.  Think of the World Bank as ENRON.” … Karen Hudes

by Karen Hudes (with Jim Fetzer)

Karen Hudes

When, thanks to Mark Novitsky, a federal whistleblower, I learned that Karen Hudes, who earned her J.D. at Yale, our most distinguished School of Law, and an M.Phil. in economics at the University of Amsterdam, which is also a formidable institution, had been removed from her position as Senior Counsel for the World Bank because of her efforts to expose corruption and reaffirm the rule of law in the form of appropriate standards of accounting, I was dumbfounded.  

What initially appear to be obscure issues of international finance, moreover, have the potential to sever ties between us and our NATO allies and weaken the national security of the United States.  The stakes involved are therefore extremely high for every American citizen.

During the World Bank and IMF Annual Meetings last October, with her encouragement, the Development Committee informed President Jim Yong Kim of the need for “a more open, transparent and accountable World Bank Group.”  The reasons that motivated that request included the following series of disturbing developments:

Advertisements

One comment on “Karen Hudes – World Bank Lawyer Whistle Blower “We are headed for a currency war”

  1. Pingback: IMF in Contempt of Congress | Icliks Incoming

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s