8 November 2006
An article from Ethical Corporation on the Global Transparency Initiative's Charter for International Financial Institutions...
A new transparency charter aims to illuminate the corridors of power at international financial institutions and development banks.Its decisions affect communities all over the world, but when it comes to explaining them to the public the World Bank has a poor record.
Now freedom-of-information campaigners are calling on the bank, and other international financial institutions (IFIs), to become more transparent.
The Global Transparency Initiative is a coalition of non-governmental organisations demanding greater access to the internal records of international banks. In September the group launched a transparency charter for IFIs, which it hopes will be incorporated into reformed policies on disclosure.
The charter’s central demand is for information on banks’ internal procedures to be released automatically – not just on request, as is the case now. As well as trumpeting the principle of “automatic disclosure”, it calls for details of bank-funded projects to be published before key decisions are taken.
Campaigners bemoan a “culture of secrecy” at the World Bank. Board decision-making processes are rarely made public, and voting records infrequently published. When information is disclosed, the procedures for doing so are slow and bureaucratic.
“The World Bank has an overly complex regulatory approach to disclosure,” according to Jeff Powell of the Bretton Woods project, a group that engages with IFIs to improve their accountability. But the bank does recognise the need to reform, he observes.
Powell was speaking at the transparency charter’s UK launch on 2 November in London, attended by representatives of GTI, including accountability advocates One World Trust and Article 19.
Silence is golden
The World Bank is not the only IFI with a reputation for reticence. Latest research from GTI finds levels of disclosure at international development banks in general to be alarmingly low.
Of 120 identical requests for information the coalition submitted to banks in five countries, barely one-fifth (22%) were answered. A further 8% of requests made to the financial institutions and their government implementing agencies in Argentina, Bulgaria, Mexico, Slovakia and South Africa were partially answered. The remainder of requests, all made under freedom of information legislation, did not receive a response.
As well as the International Finance Corporation and the International Monetary Fund, both parts of the World Bank Group, institutions to receive requests included the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank and the International Bank for Reconstruction and Development.
This poor performance proves transparency guidelines are necessary, says GTI. Another reason is that governance systems in institutions such as the World Bank and IMF make it difficult for citizens in developing countries to hold donors to account.
Unbalanced governance
Both the IMF and World Bank are accountable to shareholder governments, with votes allocated according to contributions. Rich countries may have just 15% of the world’s population, but hold over two-thirds of the voting power in these forums.
“This level of accountability and oversight is inadequate,” argues Monica Blagesceu, accountability programme manager at One World Trust, because people whose governments have fewer votes in these institutions experience the impacts of development projects.
Improving IFI transparency could have knock-on benefits for governance in developing countries, claim campaigners. At the moment, parliaments in sub-Saharan Africa cannot access certain information – for instance, an overview of loan conditions. This can have detrimental affects on debates about national economic policy in those countries.
But convincing IFIs to adopt the charter may involve a feat of persuasion beyond the campaigners’ current abilities. Around 50 civil society groups have endorsed its principles. But no banks have indicated their support.
Until that happens, the charter will be nothing but a worthy assertion: a right to know without knowledge.
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