World Bank President: More Corruption? Wolfowitz and Nazarbayev?

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More Corruption? Wolfowitz and Nazarbayev? More allegations of corruption are rearing their head, and some more serious than petty cronyism. While we already know that the World Bank has increased lending to some pro-U.S. corrupt governments, documents are coming to light which indicate that Wolfowitz has allowed the World Bank to be involved in covering up shady dealings between a U.S. businessman (James Giffen) and the President of Kazakhstan, Nursultan Nazarbayev. If confirmed, this would have implications far beyond Wolfowitz keeping his job: the Bank, the U.S. government, and the government of Nazarbayev could all be in hot water. Details below the fold.

For those unfamiliar with Kazakhgate, Giffen (an investment banker on Wall Street) was charged with creating Swiss bank accounts to pay for things like boarding school tuitions and expensive jewelry. The money apparently came from oil companies that wanted access to Kazakhstan's oil and gas reserves. Giffen was charged under the Foreign Corrupt Practices Act and his trial is still up in the air. Giffen's defense is that he was in constant communication with the CIA, so for the Department of Justice to prosecute now is absurd. In a notice of forfeiture the DoJ claims that the $84 million will be returned to Kazakhstan through an NGO (chosen through a competitive WB bidding process) and the whole process will be overseen by the WB. In other words, let's not air our dirty laundry in public by bringing this man to trial, let's have the World Bank cover this up and quietly return the money to Kazakhstan's citizens.

In a letter to WB VP Shingeo Katsu the Government Accountability Project is asking some basic questions (like "is it usually World Bank procedure to smooth over potentially explosive bribery material?") As more documents come to light, there will certainly be more such questions.

The March 2003 DoJ indictment can be found here.
The April 2003 DoJ indictment can be found here.

Sameer Dossani ~ May 14, 2007

Comments

New initiatives to turn funds obtained from corruption and money laundering into funds to fight poverty should be understood before they are criticised.

One of the initiatives is the StAR (Stolen Assets Recovery) Program. The Bank is pursuing the StAR Initiative jointly with the United Nations Office on Drugs and Crime (UNODC). The Bank and UNODC will forge partnerships with other agencies, such as the regional development banks, the IMF, OECD, the Norwegian Agency for Development Cooperation (Norad), the G8, Switzerland, and developing countries, to ensure this is a truly global effort.
Proposals on the table for further discussion include:

Persuading all jurisdictions, especially those containing financial centers, to ratify and implement the United Nations Convention Against Corruption (UNCAC);
Helping developing countries build capacity for requesting mutual legal assistance for asset recovery;
Developing partnerships to share information and experience; and
On a voluntary basis, offering expertise to monitor the use of recovered assets in order to ensure transparency and development impact.
The need to take concerted action to recover stolen assets was a strong message coming out of the multi-stakeholder consultations the Bank held recently on its Governance and Anti-Corruption Strategy, which was endorsed by the Board of Directors in March.

Do not attribute bad intentions and assume that it is a cover up by the World Bank.

Uninformed criticism based on the blanket assumption that the World Bank can do no good erodes your credibility.

Shining StAR ~ May 15, 2007, 03:20 PM

If there's a reasonable explanation, fine. Let's see the documents please, instead of departmental propaganda.

The question that you're not addressing is why Giffen (and the oil interests that he represents) and the Kazakh officials involved should be allowed to get off Scott free. The answer to this may have little to do with the Bank, and much to do with an alleged private meeting between Wolfowitz, Nazarbayev and one of Nazarbayev's advisors who was acting as a translator (all other translators/staff/witnesses were asked to leave the room). In such a meeting, was Wolfowitz's agenda to carry out the Star program agenda, or to follow instructions from friends in the White House?

Sameer Dossani ~ May 15, 2007, 05:15 PM

Let me see if I get this straight.

Guy gets indicted by US DOJ for violation of the Foreign Corrupt Practices Act.

Notwithstanding guy was indicted by US, US was part of a conspiracy in the deals that violated said Corrupt Practices Act.

Trial has not occurred yet, but money discovered, and to be returned to originating country.

Money to be returned through an NGO picked by the World Bank.

World Bank in on conisracy, even though World Bank had nothing to do with original act that caused the violation of US law.

Hmm. Sounds a little shaky to me. Sounds like someone is throwing our a theory that defies the evidence presented.

DC Worker ~ May 15, 2007, 09:48 PM

Just an FYI, the matter of USA v. James Griffen is presently pending in the discovery stage in the United States District Court in Manhattan. The Case No. is 1:03-CR-00404-WHP-1. At its present stage, the Court is entertaining discovery issues prior to trial, and materials are being delivered. Due to the complexity of white collar crimes, these matters take a great deal of time to reach the Jury.

Thus, there is nothing "in the air."The case is proceeding to trial. The Defendant is free on $10,000,000.00 bond right now.

DC Worker ~ May 15, 2007, 10:09 PM

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