The World Bank's headquarters occupy a $314 million glass-and-steel leviathan
on prime Washington real estate, just a few blocks from the White House and the
Treasury Department. The main complex takes up a whole city block, and, along
with several satellite buildings, is an insulated work environment for the
Bank's more than 8, 500 employees drawn from around the globe. The Brave New
World-like interior houses several private dining rooms, a cafeteria serving
food from all over the world, even a two-story waterfall.
In offices lining miles of corridors, Bank executives and staff scrutinize
loan requests from developing countries around the globe for everything from
oil pipelines to power plants to medical equipment. Last year, the Bank's loans
totaled $25.5 billion, distributed throughout Asia, Latin America, Africa, and
Eastern Europe.
While this money is ostensibly lent to sovereign states in order to alleviate
poverty, much of it quickly finds its way back to an army of companies and
consultancies, both domestic and foreign, all fiercely competing for a piece of
the international aid pie.
And in Washington, where there is money, there are lobbyists. In fact, the
World Bank is a magnet for private-sector advocates seeking to shape publicly
funded projects, who form a complicated and diffuse system of influence trading that
operates largely out of public view.
"The name of the game is information, and ultimately relationships,
" says the Bank's external affairs counselor, John Donaldson, himself a former
congressional staffer.
"The more people work with us, the more they get known, and the more they end up
on short lists."
Yet mention lobbying to a World Bank official and you will likely be met with
indignant disdain and sputtered denials.
After all, the Bank likes to think of itself as an institution insulated from
politics, populated only by technocrats and economic master planners. Its
efforts are aimed at helping countries, not companies, officials say. The very
notion that the Bank's policies could be influenced by corporate lobbyists goes
against its self-image as a bureaucratic machine for combating world poverty.
"Any approachers are strained through the fine muslin of international tendering
standards,
" says Bank spokesman Phillip Hay.
But
"approachers" nonetheless slip through and influence the process by which the Bank
lends
money to countries at key junctures along the way. Within the Bank's
labyrinthine structure, there are joints and fissures, judgment calls to be
made, and priorities to be assigned.
"There are always negotiable points,
" says Julius Kaplan, a partner in the D. C. office of New York's Cadwalader,
Wickersham
& Taft who has been dealing with the Bank for 30 years.
"Lobbying comes up in almost every single project, in one way or another."
And when directly lobbying the Bank fails, companies and even countries will
sometimes turn to the institution's largest shareholder, the U.S. government.
"The ability to put heat on the whole internal loan apparatus is something that
the U.S. can do,
" says Peter Madigan, a former deputy assistant secretary for legislative
affairs at both the Treasury and State departments who is now a name partner in
the lobbying firm Boland
& Madigan. In their quest for international aid funds, lobbyists may hit various
executive branch agencies from Treasury to State to the National Security
Council.
Bank officials occasionally hear directly from members of Congress, who call
up to urge special consideration for companies in their home districts. An
approach that direct typically backfires, says Donaldson.
The World Bank's mission and role in the world economy has changed
dramatically since it was first established at a meeting in Bretton Woods, N.
H., in 1944 by the Allied powers in World War II to lend money to war-ravaged
Europe. The Bank's shareholders today include 181 countries, which vote on Bank
projects based on the number of shares they hold. The United States' 16. 67
percent stake gives it considerable influence--including the power to appoint
the Bank's president.
MISSION IMPOSSIBLE?
In the decades since its founding, the Bank has often come under criticism for
sponsoring massive infrastructure projects that sometimes hurt the very people
they were supposed to help.
During the late 1970s and 1980s, for instance, the Bank financed massive
resettlement projects in Indonesia and Brazil that, liberal watchdog groups
say, displaced hundreds of thousands of people and resulted in the massive destruction
of precious rain forests.
James Wolfensohn, who became president in 1995, imposed new mandates requiring
the Bank to take into account the environmental and social effects of its
projects and at the same time promote private-sector development.
But this public-private mandate is tricky to navigate for the Bank's staff,
especially when companies with millions or even billions of dollars at stake
try to influence the institution's key lending and development policies.
Since the Bank is often among the earliest investors in undeveloped regions,
many of the world's largest corporations consider it a gateway to new markets
and untapped resources.
But observers both inside and outside the Bank wonder whether it is
appropriate for companies concerned about their bottom line to be trying to
influence the Bank's decisions on how to allocate its relatively scarce
resources to the world's poorest countries.
This is exacerbated by the fact that although the Bank is a public
institution, there are no registration requirements for those who try to lobby
it.
"The problem is that there are different interests between what the corporate
sector wants to achieve in developing countries and what a public institution
wants to achieve in developing countries,
" says Lisa Jordan, executive director of the Bank Information Center, a
D.C.-based nonprofit organization that tracks the Bank's record on social and
environmental issues.
"Is the Bank in developing countries to further corporate interests or to help
the poor?"
EXXON PUSHES PIPELINE
The clash between these goals is embodied by a lobbying campaign now being
waged over an oil project in sub-Saharan Africa.
A consortium of oil companies wants the Bank to contribute funding toward a
proposed $3.5 billion pipeline project, which the Bank argues will give the
impoverished country revenue to help bolster social and educational programs.
An international coalition of environmental and human rights groups is
fighting the project by trying to block Bank involvement.
The consortium--which is led by the Exxon Corp. of Irving, Texas, and includes
British and Dutch-owned Royal Dutch/ Shell Group and French oil giant Elf
Aquitaine--has lobbied both the Bank and the Clinton administration to win
support for some $190 million in Bank loans for a project that includes an oil
field and refinery in Chad that would be connected to the Atlantic Ocean by a
650-mile oil pipeline through Cameroon.
Even the small amount of World Bank money sought by the oil companies--about 5
percent of the total--will make the project more attractive to other outside
investors.
With the Bank due to make its decision this summer, in recent months lobbyists
for Exxon have been trying to shore up support in the administration. Oil
company representatives met with senior Treasury and State Department officials with
oversight of the Bank last month, according to government officials
involved in the process.
The Treasury official who was lobbied was William Schuerch, deputy assistant
secretary for international development, debt, and environmental policy. He is
the chief administration official in charge of overseeing the Bank and is
frequently visited by lobbyists, according to Treasury Department officials.
Schuerch declined to be interviewed.
And in an unusually bold step, Exxon lobbyists have been visiting the Bank's
various executive directors to push their case, according to World Bank
officials familiar with the project. The 24 executive directors, who represent
the Bank's member countries, must approve all projects. The office of U.S.
Executive Director Jan Piercy, whose staff has met frequently with Exxon
representatives about the pipeline, declined repeated requests for interviews
about its contacts with Exxon.
Exxon officials also declined to be interviewed or to reply to a list of
written questions submitted to the company.
It is almost unheard of for a company to lobby all the directors, says Andrea
Durbin of Friends of the Earth, a group opposing the pipeline.
"It gives an indication of how high the stakes are for this project."
The increased influence that Durbin's group and other nongovernmental
organizations (NGOs) have had on Bank policy in recent years is another
manifestation of the Bank's struggle to fulfill its mandate to alleviate
poverty while facilitating private-sector investment. On the pipeline project,
for example, lobbying by the environmental coalition played a role in the
Bank's decision to demand that Exxon redo its environmental impact statement.
The NGOs oppose the project on the grounds that it could cause massive
environmental damage, force indigenous people from their homes, and cause
interethnic strife, as well as foster continued corruption in the Chad and Cameroon
governments, which have have been widely condemned for their human
rights records.
"It is really hard to make a case that oil exploration in West Africa benefits
local communities, because local communities rarely receive the profits,
" Durbin says.
But Robert Calderisi, World Bank spokesman for Africa, says the potential
benefits from the pipeline project are too big to pass up.
"It has the possibility of transforming one of the poorest countries on earth,
" he says. While acknowledging the potential for corruption by the countries
receiving their money, Calderisi says the Bank had worked safeguards into its
proposed loans to ensure that the money will be properly spent.
But even Bank officials question the institution's ability to control how its
funds are spent. According to press accounts earlier this month, an internal
World Bank report was highly critical of its own conduct in Indonesia, where
massive corruption, human rights abuses, and eventually financial collapse
occurred even as the Bank lent $25 billion to the Suharto regime over the
course of three decades.
IT'S NOT A MARKETING EFFORT'
While most dealings with the Bank are not so controversial as the Exxon
project, any outsider trying to make inroads there is likely to encounter a
lengthy, mysterious, and frequently frustrating process.
"A lot of companies have looked at trying to do business with the Bank and have
given up because they have put a huge amount of money into bidding on a project
and it all disappears into a black box, and at the other end of the box it
comes out and the bid has been given to somebody else,
" says James Orr, executive director of the Bretton Woods Committee, a coalition
of 600 companies and CEOs that do business with the Bank.
In many cases, even finding out who is in charge of a particular project or a
decision can be a massive undertaking. Among the titles one encounters are
" task manager,
"
"resident representative,
" and
"country officer,
" while the key contact on a given deal may be found either at the Bank's
Washington headquarters or in the country where the project is located.
Whom to approach--and when--also varies, depending on what a lobbyist is
looking for.
One of the most common missions for World Bank lobbyists is to influence bid
specifications on a project. Such advocacy is akin to lobbying an
appropriations bill in Congress, where the trick is to be as indirect and
discreet as possible.
For multinationals seeking procurement contracts, the path to doing business
with the Bank is often shrouded in abstract policy talk when the company's real
agenda is simply to sell its products for use in the billions of dollars worth of projects
the Bank supports around the globe.
This was exactly what D.C. consultant Sy Rotter says he had in mind last April
when he set up a meeting between members of the board of his client, auto giant
Daimler-Benz, and a variety of senior World Bank officials. At the daylong meeting,
Daimler executives shared their thoughts with the Bank honchos about
such issues as road design, recyclable auto parts, and alternative fuel
engines.
"By all accounts it was a successful meeting because it focused on the overall
objective of reaching a mutual understanding of the importance of this type of
partnership, rather than focusing on specific negotiations" for equipment sales, says
Rotter, who founded his World Bank lobbying firm,
the Washington Liaison Office, 23 years ago. Of course, he adds, selling
Daimler buses was the company's ultimate goal.
Since then, Daimler-Benz has merged with Chrysler Corp. and now, says Rotter,
has a full time in-house staffer to deal with the Bank.
Lobbying a development bank requires degrees of subtlety. Sometimes the client
company is not even directly involved.
<>BR
Recently, lobbyist Diane Willkens, who heads Development Finance
International, has been trying to win business for her client, Sun Microsystems
Inc. The California computer and software manufacturer is eyeing a $6 million
national identification project in Bolivia sponsored by the Inter-American
Development Bank, a World Bank-style institution that concentrates its lending
in Latin America.
Willkens says she has recommended consultants to the IADB to shape how the
project--and the procurement guidelines it will entail--will be structured.
Though the consultants are not affiliated with Sun, she hopes they will suggest
bid specifications for equipment that are
"friendly" to her client.
"That's the game that everybody is playing. Let's get consultants on these
projects that prefer an American solution,
" says Willkens.
"It's not a marketing effort. If you go in with a marketing effort, you lose."
Lobbyists like Willkens and Rotter specialize in being a company's eyes and
ears at the Bank. They alert their clients to upcoming projects before they
become public, make introductions to key Bank people, help them structure their
bids, and troubleshoot problems.
As in all lobbying, business is built on access and contacts. And lobbyists
aren't shy about promoting their expansive Rolodexes.
"I know more than 3,000 people at the Bank,
" says Randy Grodman, who runs D. C.-based International Development
Opportunities.
Most of these consultants declined to disclose their fees, saying that they
charge an aggregate amount based on time and effort and usually require a
retainer. When she does charge hourly, Willkens says that her fee is $250 an
hour and her associates receive $150. Grodman says his firm, which also usually
works on retainer, charges $200 an hour on average.
The World Bank lobbying field even has its own revolving door. Former Bank
procurement chief Donald Strombom says he set up one of the first such advocacy
firms, International Development Business Consultants, when he left the Bank in
1987.
Jean-Louis Imhoff, a former adviser to the French executive director at the
World Bank, heads World Business Inc. The company's vice president, Michele
Calderon, describes the company as a World Bank lobbying firm, representing
mostly French companies, though she declined to discuss specifics.
"It's all about intelligence,
" says Calderon.
"It's acquiring information that enables you to position yourself on the international
market better than your competitors."
PRIVATE-SECTOR DEAL MAKING
Some former Bank officials do not lobby the Bank directly, but can make use of
their contacts in the international community to set up large investment deals
in the developing world.
The Emerging Markets Partnership, for instance, is run by Moeen Qureshi, a
former prime minister of Pakistan whose duties at the Bank have included senior
vice president for both operations and finance. Also at the firm is Everett "Sam" Santos,
who formerly ran the infrastructure division of the International
Finance Corp., the private-sector lending arm of the Bank.
Investment firm Trinity International Partners is led by the team of E.
Patrick Coady, a former U.S. executive director of the Bank; Larry Mellinger,
former U.S. executive director of the Inter-American Development Bank, and Bush
White House Chief of Staff John Sununu.
Coady declined to discuss his firm's business, saying only,
"I haven't gotten a nickel out of the World Bank since I left in 1993." Trinity reportedly
specializes in putting together power generation deals in
developing countries, such as Turkey, that receive World Bank funds.
Sometimes, a company finds it necessary to lobby the World Bank even if it has
no interest in securing Bank funds. Yancy Molnar of International Business
Government Counselors, a firm representing about 60 U.S. multinationals, says that the
Bank wields so much influence in poor countries that it can sometimes
kill a project even if it is not involved in it.
Molnar cites one of his own clients, a company that is building an energy
plant in a Southeast Asian country where the Bank is funding a similar project.
His client is concerned that the Bank may decide his project is redundant and
advise local officials to quash it.
"The Bank plays such an influential role in these poor countries,
" says Molnar, whose task is to convince the Bank that both projects are
necessary.
Sometimes corporate lobbying efforts transcend a single deal and instead try
to affect the Bank's broader policies in a way beneficial to the company.
INDIRECT PRESSURE BY ENRON
Such was the case with Houston-based energy giant Enron, a company that has
partnered with the Bank on projects in Indonesia and India. Enron has been
especially aggressive in promoting its agenda at the Bank, according to one current and
one former official there.
One of the ways that Enron tried to pressure the Bank was by contributing
funding to a study by the Center for Strategic and International Studies
assessing the Bank's future. Enron Chairman and CEO Kenneth Lay, who has made a
point of getting to know top World Bank people, was co-chairman of the study
and used it as a platform to pressure the Bank to offer special financial-risk
guarantees that Enron was seeking for its power projects. Enron's Washington
lobbyist at the time, former Bush Commerce official Linda Powers, also
testified before Congress about the issue.
"Enron was very aggressive in pushing the Bank in this direction and holding
their feet to the fire in any way it could do it,
" says a senior Bank official.
After Enron's push for the guarantees caused a split among participants in the
study, including politicians, NGOs, and even other companies, Enron withdrew as
a sponsor. Enron officials declined comment on their lobbying.
The extent to which Enron and others work to influence the Bank's policies and
investment decisions sometimes places Bank executives and staff in an awkward
position, says John Donaldson, the Bank's external affairs counselor.
Under the Bank's new mandate, staffers are finding themselves having to attend
more and more to corporate lobbyists, even as they try to fulfill their basic
mission of alleviating poverty. It is a constant balancing act, says Donaldson,
and the staff frequently find themselves in uncharted waters.
"There's no rule book to determine where the line is" for what is considered appropriate
lobbying, he says.
"Often well-intentioned people can only rely on their judgment. Hopefully, they
make the right decisions."