The Kiss A$$ Ladder to Success—Part II

According to the longest serving General Counsel of the World Bank, Aaron Broches, corruption intensified during the bank presidency from 1968-81 of former US Secretary of Defense Robert McNamara.

Paul Volcker, Federal Reserve Chairman during the savings and loan crisis, was appointed to head an inquiry regarding the Paul Wolfowitz "affair" (See Part I) and the lack of a serious investigation by Volcker began an international questioning of honesty of American leadership. Though most Americans view Volcker positively, his investigation did not address the corruption at the World Bank and as a result Europeans called for an end to the 66-year "Gentlemen's Agreement" that allowed the US to appoint the President of the World Bank. The only amusing thing about those words is this: When it comes to corruption in government and finance, the only place dirtier than America is Europe. Had the media reported Karen Hudes' warnings to Congress and the Treasury Department about corruption at the World Bank, America could have avoided the resultant tarnish to its international reputation.

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The World Bank stands--much like a traffic cop--at numerous world intersections directing traffic--money traffic. It has 188 member nations and shares with the International Monetary Fund (IMF) a Board of Governors. Each organization has a resident board of 24 directors: seven are appointed by seven countries with the largest economies, 17 directors are appointed by constituencies of the remaining member countries. In the past ten years, the World Bank financed over $1.6 billion in contracts from US exporters. For those who have wondered what's causing the gold and silver markets to fall like rocks, one cause may well be (probably is) a looming currency war caused (at least partially) by corruption at the World Bank. "It has unsettled the precious metals markets," says Hudes. She warned of it long ago:

"I worked in the Legal Department of the World Bank from 1996-2007. But in 2007, I was fired in retaliation for reporting corruption up the chain of command at the World Bank, through the US Treasury Department, and to the US Congress," Hudes says. "My report was quite specific, namely: that the World Bank is out of compliance with the law, because its financial statements to the holders of its $135 billion in bonds, which are denominated in 52 currencies, are not in accord with Generally Acceptable Accounting Principles and Auditing Standards."

Let's see, 2007; Karen's report would have gone to Timothy Geithner... obviously a staunch supporter of ridding the world of banking of corruption (smile). Who does the audits for the World Bank? KPMG. For Wikipedia's listing of KPMG's record of truth and integrity in the financial markets, go HERE . More specifically:

In 2005, the Dutch Ministry of Foreign Affairs asked for an investigation by the World Bank Audit Committee, regarding lapses in a Philippines financial sector project following the East Asia Financial Crisis. Hudes reported the lapses. "It was, after all, part of my job," she says. The simplicity with which Karen views her responsibilities is refreshing from a person in public service. She once told me, "My motive was very simple: if I didn't do what I did, nobody else was going to." One thing is clear about her. She has total respect for and commitment to the Rule of Law. Regarding the Philippines Banking Sector Reform Loan and the flawed report of the Institutional Integrity Department (INT): The Volcker Report was discredited when it came to light how sixteen staff members in the Institutional Integrity Department were punished for whistle-blowing to the Volcker Panel. [http://www.commondreams.org/newswire/2010/04/06-3]).

Hudes informed the US Senate about the corrupt take-over of the Philippines National Bank. The US Senate Foreign Relations Committee was concerned about our reputation for integrity and honesty... bear in mind, this was in 2005 when America still had a reputation for integrity and honesty (the pre-Wall Street derivatives days). Hudes told the US Congress and the UK Parliament that KPMG withheld from its audit team that the World Bank was not cooperating with a US Government Accountability Office inquiry into the World Bank corruption which was requested by Senators Lugar, Leahy and Bayh in 2008. After Senator Lugar wrote to the World Bank about Hudes' disclosures to the Senate Committee on Foreign Relations of improper accounting methods being used, Karen Hudes was fired from her job. Congress has put in place requirements for substantial reforms at the World Bank to eliminate retaliatory actions like the firing of Whistleblowers but how credible is this Congressional action when Karen Hudes has just been arrested for trespassing while attempting to attend a meeting she had full credentials to attend? However, Congressional action taken says that before any American contribution to the World Bank capital increase can be disbursed under § 7082 of the Consolidated Appropriations Act, 2012 (Pub. L. 112-74) an investigation must satisfy the Senate and House Appropriations Committees that inappropriate retaliation against Whistleblowers has ceased. The US Congress also learned from Hudes that then-Secretary of the Treasury Timothy Geithner had misled the Senate and House Appropriations Committees (no surprise there for most of us--I've been asking myself lately, "to where did Timmy disappear?"). She commenced her Sarbanes-Oxley lawsuit within three months after she was terminated and bought a World Bank bond shortly after that. As a bondholder, she was able to penetrate the World Bank´s immunity. The bond gave her standing. The IMF/World Bank Development Committee settled Hudes' bondholder case in the DC Circuit Court of Appeals in December in her favor. When the US Judicial Conference refused to recognize the settlement, Hudes informed Justice Roberts and the Chief Justices of State Supreme Courts that:

"A stakeholder analysis derived from accurate game theory modeling shows a clear fork in the road for the United States: rule of law and the transatlantic alliance; or, corruption and the ascendancy of China."

Well, most Americans know how that story is ending: in the ascendancy of China. The US, it seems, would rather hold on to its power-based corruption... though the power seems to be dwindling, lately. The following paragraphs sound like disjointed statements. To some degree, they may be. Each represents a factual occurrence caused by corruption at the World Bank. Each represents an example of the corruption Karen Hudes has identified and is trying to change. It would take a book to explain the total significance of what Karen is doing to gain compliance with the many laws all banks must comply with and an article is not the proper venue for long explanations. There is no room to segue (move subtly) from one subject to another with informative material that prepares the listener or reader for what's coming next. The information is important, so rough segue or not, it is included. What is going on at the World Bank is reflective of what's going on around the world, including the United States. Various articles about Karen Hudes that have hit the alternative media this week point out that one reason it is so difficult to end the corrupt regime at the World Bank is that there has been virtually no press coverage. In America, our access to accurate news is weak because, as Karen points out, the number of corporations that own the bulk of US media outlets has been reduced from 60 to 5 in less than 20 years. A few power brokers use interlocking corporate ownership to control 50 percent of total wealth and 60 percent of global revenues own the media. That's why they walk around with smirks as they violate laws knowing no one's going to do a damned thing to them for their lack of honesty. Those of us who have been amused to find how sensitive the media was to the invasion of privacy and violations of the First Amendment when the Department of Justice got its hands on the phone records of 100 AP reporters and saw them suddenly waken from their stupor regarding this administration's malfunctioning moral compass must also understand the serious implications. We have watched as the media ignored Benghazi... nothing of interest to the media there; just four people were killed including our Ambassador--and, as Hillary said, "What difference does it make now, anyway?" We watched as they ignored Fast and Furious... they found nothing of interest regarding the thousands of Mexicans and Americans killed as a result of that venture. They inundate us with information which, though serious, is worth a day rather than a week of news coverage, and we shake our heads over the lack of media interest in how the IRS has been targeting conservative groups. But let a politician abuse the First Amendment rights of the media and the talking heads suddenly awaken. We're talking about the World Bank in this article... but we need to apply what Karen Hudes says is going on at the World Bank and understand that it is causing major problems here--and everywhere else. She put her job--possibly her freedom--on the line because of a lack of moral compass in the international world of finance. In this case, what Hudes points out is that the concentration of power she explained above regarding ownership of media outlets impacts the elements most important to an informed electorate: ownership of the media. She points out other things, too. Under blue sky securities laws, (go HERE for definition of blue sky security laws) the 50 American states regulate the $180 billion in bonds issued by the World Bank. The Secretary of the Treasury, the Chairman of the Federal Reserve and the Chairman of the Securities and Exchange Commission as members of the National Advisory Council on International Monetary and Financial Policies regulate World Bank compliance with federal securities laws. The international violations of our securities laws make it apparent that Ben, Tim (now Jack Lew), and the SEC Chair (which seems to be ever-changing under the Obama administration) aren't regulating the World Bank's compliance with our federal securities laws. We need to support Hudes if we want to straighten things out in our own country... like, potentially, the security of your pension fund. If she's not there to hold their feet to the fire, who will? In 2010, the United Kingdom's Serious Fraud Office inquired of the Securities and Exchange Commission about KPMG's unqualified audit of the International Bank for Reconstruction and Development. Regardless, the National Advisory Council--Bernanke, Geithner and the SEC's Mary Jo Shapiro--accepted KPMG's unqualified audit. Without Karen Hudes, would we know about this? She also helped make people aware that Germany asked to repatriate 300 tons of gold three months after the New York Federal Reserve refused Germany's request for a physical inspection of the Fed's vaults in which Germany's gold was stored. About half of the gold belonging to the German government is (or was) stored with the US Federal Reserve. The Federal Reserve told Germany that it was impossible and they would have to wait until 2020 for the transfer to occur. As a result, Germany demanded to physically inventory the gold to determine its actual existence--a totally reasonable request. The Federal Reserve denied Germany the audit using "security" and "no room for visitors" as reasons. According to Hudes, three German audit teams were shown five "representative gold bars." In other words, the existence of the German gold has never been verified. Gee, you don't suppose Ben and Tim and Mary would "borrow" another country's gold to help J.P. Morgan Chase cover its precious metals shorts and gold paper commitments, do you? Karen Hudes points out that in the US the risk of Secession and Civil War has increased significantly. A dozen states have begun the process of recognizing gold as legal tender. Texas is permitting its pensions to invest in gold, Utah has already passed legislation allowing gold and silver to be used in the marketplace and Georgia has passed legislation allowing people to make bank deposits in gold and silver. At the very least, a global currency war is looming while the "Let them eat cake" attitude at the World Bank allows corruption to keep the gold market unsettled. Retaliation against whistleblower Karen Hudes and contempt of Congress by the World Bank has caused further turbulence in the gold markets and undermined confidence in securities regulation in the United States. The risk of a currency war mounts as the impasse between the World Bank's membership, the 50 states and Congress on one hand, and the mega bank conglomerate, US Treasury Department, Federal Reserve, and Department of Justice on the other hand, intensifies. On March 27, 2013, Ms. Julia Pierson was made the first female head of the US Secret Service. On April 19th, 2013, the World Bank/IMF Development Committee issued Hudes a security pass to attend the Spring Meetings.The US Secret Service barred Hudes from the meetings the next day. In a letter to Pierson that had been cleared in advance with the Chair of the Development Committee and Board of Executive Directors at the World Bank, Hudes informed Ms. Pierson that: "It would be unfortunate if the US Secret Service again prevents me from attending the rest of the World Bank meetings when I am legally authorized to do so." The Secret Service tried to blame the District of Columbia for barring Hudes from the World Bank meetings. On the final day of the Spring Meetings, a staff-member with no authority signed a Barring Notice in which the DC police defied the Board of Executive Directors and the 188 Ministers of Finance on the World Bank's Board of Governors. Hudes pointed out to the DC police and the DC government that the Barring Notice was invalid. Hudes told the DC police that she was going back to the World Bank's legal department, and that the DC government, and Allied Barton, the World Bank's security firm, should let her know whether a staff-member with no authority could continue to defy the World Bank's Board of Governors before she went back to the World Bank. Allied Barton, the DC government, and the United States of America did not confirm what the rest of the world thought or warn Hudes that they still considered the Barring Notice to be valid despite the unauthorized signature. They thumbed their noses at the rest of the world and led Hudes off to DC jail in handcuffs. She goes to court on May 30th. It is a criminal, not a civil, charge. Karen Hudes was entitled to be at the World Bank on Monday, May 13th. She was in direct contact with the Commander of Washington, D.C.'s Second Precinct Police Department, Michael Reese. Commander Reese had invited Karen to copy him on many emails with the Board of Executive Directors and the Ambassadors of the World Bank's members. Was Reese was creating a trap for Karen Hudes? It looks like it. Commander Reese had Karen Hudes arrested. There are honest people out there... but they're dwindling in number because they too often get no support from those they're trying to serve honestly. Now would be a good time to write your elected officials--Senators and Representative--a letter and tell them to stop playing games with the World Bank and to support the reinstatement of Karen Hudes. Her court date is May 30^th. Just because "they" play Kiss A$$ Ladder to Success games doesn't mean we, the people, must.