The World Bank has forced five employes to resign and disciplined at least two others after an internal investigation found violations of the bank's contracting practices and conflict-of-interest guidelines.
Bank officials declined to comment on the specifics of the probe, but spokesman Dinesh Bahl confirmed that a special three-member panel investigated the matter "and on the basis of their inquiry, action has been taken, and this action has involved a number of individuals."
The World Bank, which is owned by 150 countries, is the largest nongovernmental borrower of funds in the world's capital markets. Its largest shareholder is the U.S. government, and last year it lent $16 billion to about 30 developing countries.
Although no evidence of criminal conduct was reported by the bank investigators, evidence was found that the bank's strict ethical and procedural guidelines were violated in several instances, which were the basis for the bank's action, according to a source familiar with the findings of the probe.
Among those who left the bank as a result of the investigation were:
* A high-ranking procurement official who allegedly "failed to observe the guidelines, rules and regulations for procurement," according to a source close to the bank. This official, during an interview, denied that he had violated any bank rules. He said the case involved a $1 million contract that was awarded on a sole-source basis to Paradyne Corp. of Largo, Fla., to provide a prototype telecommunications system for the bank.
* An employe who violated conflict-of-interest guidelines by accepting an expenses-paid trip to Europe from a contractor that provides computer services.
* Three employes who attempted to conceal the fact that a contractor's file at the bank had incomplete documentation.
Among others that the bank disciplined was the manager of one department in which the violations took place, according to a source close to the bank.
A bank spokesman, Bill Brannigan, said the cases "did no damage to the institution in terms of unwarranted expenditure or the acquisition of defective or substandard goods." He said, "The irregularities occurred in the conduct involved" in obtaining services for the bank, "rather than the material results."
Because of the bank's unique legal status -- it is an international agency whose 6,000 staff members have various forms of diplomatic immunity -- as well as the sensitive nature of its political and financial decisions, the bank has instituted a rigorous system of internal controls.
In addition to the investigative panels, the bank has an internal tribunal of seven international judges and legal scholars who convene in Washington twice a year to hear disputes between the bank and its employes. The recent cases did not involve the tribunal because the employes involved did not challenge their dismissals, a source said.
The procurement official who resigned said he left only because he felt he had lost "the confidence of senior management." He said the Paradyne telecommunications system, which links the bank with its offices around the world, was delivered "on time and without any cost increase."
A Paradyne official, Miriam Frazer, said yesterday that equipment the company provided to the bank "is performing satisfactorily. The World Bank has made no claims against the company with respect to procurement irregularities with that contract."
The World Bank probe began last year after several employes raised questions about the conduct of some of their colleagues.
According to a source close to the bank, the employes who left as a result of the probe all were Americans.
Staff researcher Ferman Patterson contributed to this report.