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Busting Graft From The Other Side

It perennially runs neck-and-neck with Louisiana as the country's most corrupt state. But last week Illinois took a big step toward coming clean. It launched a website that makes it easy for anyone to report corruption in state and local government -- and get paid to do it. And guess what? The site's a winner -- clean, simple and easy to use.

It starts out saying:

A whistleblower is someone who exposes wrongdoing, fraud, corruption and/or waste.

Taxpayers deserve an honest and efficient government. In 1991, then State Treasurer Pat Quinn, led the movement to enact a state whistleblower protection act.

The Illinois Whistleblower Act protects every citizen -- including state and local government employees -- when they blow the whistle on government corruption.

Our state law rewards citizens who blow the whistle.

In 2008, the Illinois Whistleblower Reward and Protection Act expanded the 1991 law to cover all levels of state government. Since the act was strengthened, a whistleblower can get up to 30% of the amount recovered as a reward upon completion of a successful whistleblower suit.

In just one page, the site walks state employees and others through the steps to file a complaint and how to make it stick.

Whistleblower programs work. We've said before that at least a third of the FCPA enforcement investigations now underway probably started with whistleblower complaints. Just as important is how the programs give stakeholders a voice.

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Another big institution struggling with its own corruption is the World Bank. It finally released a report last week by its Independent Evaluation Group. The Bank's International Development Association (IDA), which loans and grants $40 billion to the 78 poorest countries, was hit with the lowest possible rating for fraud-detection procedures. The Wall Street Journal said the 690-page report was ready last fall. But it wasn't released until now because of "lengthy discussions between World Bank management and the independent evaluation unit over whether the single designation of 'material weakness,' the lowest of four ratings, was justified." The report can be downloaded here.

The independent evaluation criticized the IDA for emphasizing project performance and completion over compliance. Job descriptions and performance evaluations, it said, "do not usually contain specific references to internal control-related duties, responsibilities, and accountability. Concerns about the adequacy of current incentives to promote accountability, compliance and quality were also reflected in several units? responses."

The World Bank has debarred 351 entities for violating its fraud and corruption provisions. It kept the names secret until January this year, when pressure from the Wall Street Journal and others forced it to be more transparent. A copy of the list of debarred organizations is here.

The World Bank has a whistleblower program (here). The independent evaluation, however, said "staff fear reprisal for reporting infringements and unethical behavior." And unlike Illinois, the Bank doesn't advertise financial rewards for successful complainants. That probably limits its usefulness. We also wonder whether the Bank requires its debtors to have whistleblower sites? If any readers know the answer, maybe they can send a comment or an email.
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Full post as published by The FCPA Blog on April 19, 2009 (boomark / email).