Senator Bayh's Long Bye Bye

05/30/2010 05:12 am ET | Updated May 25, 2011
  • Sunil Chacko Medical Doctor, Science, Technology and Finance Specialist; University Professor

To be passed over for the Vice Presidential ticket by the likes of John Edwards and Joe Lieberman must hurt. But it must bother Senator Evan Bayh even more because it appears to have happened to him with more regularity than other prominent Senators or Governors in the Democratic Party. Perennially the Vice Presidential hopeful (see here and here and here), Senator Bayh has never thus far secured the coveted ticket to the second-highest position in the Executive Branch. He has now announced his intention not to seek re-election to the U.S. Senate despite having a campaign war-chest of over $12 million, perhaps a clever move considering the current mood of the electorate especially in his home State of Indiana.

So, Evan Bayh is off to the private sector in February 2011. But he leaves behind a problem that may forever haunt him for it seems to go to the heart of the personality issues that may have denied him the Vice Presidential slot multiple times. With much fanfare, Senator Bayh announced that he had managed to get the entire U.S. Senate to agree, in the bipartisan spirit that he usually trumpets, an amendment to ensure a G.A.O. Evaluation of the World Bank and, in effect, the $500 to $600 billion that has already been spent by major donors on the World Bank, with the U.S. being the largest shareholder (see here and here and here).

Thereafter the Bayh Amendment was unceremoniously stripped off from the Senate bill by the Senate staffer Tim Rieser, according to several Congressional sources who confirm that there was no House-Senate Conference Committee for the bill that year, so it could only have been the staffer who deleted the Bayh Amendment from the bill despite its unanimous approval by the entire U.S. Senate. Meanwhile, the Huffington Post and Politico reported on the high salaries that Congressional staffers (see here and here) are drawing, almost on par with U.S. Senators, and staffers never need to run for election.

Once his Bayh Amendment disappeared despite its approval by the US Senate and even without a House-Senate Conference Committee where blame might have been dispersed, Senator Bayh did not cry foul. Rather, probably to save face, Senator Bayh wrote a letter to the G.A.O. requesting the study on the World Bank and he was joined by his Indiana colleague Senator Dick Lugar and also Senator Patrick Leahy. That was two years ago, and the G.A.O. has now confirmed to me that they are unable to conduct the study because the World Bank has refused cooperation and will not provide information. So much for transparency and accountability! But even now, Senator Bayh has not released the reply from the G.A.O. indicating that it is unable to perform the study because of non-cooperation by the World Bank. However, that did not stop the U.S. Senate from funneling over a billion dollars every year, and now the Senate is preparing to provide tens of billions more in a capital increase for the World Bank. That disconnect between the Senate's oversight and funding roles is stunning.

Senator Bayh is still in the Senate. Despite his Amendment having been dumped and his letter to the G.A.O. not having resulted in anything, Senator Bayh still has a chance to ensure that he is not forever remembered as someone who promised much but delivered much less. Senator Bayh can restore the Bayh Amendment to the current legislation or certainly to the legislation on the massive capital increase the World Bank is seeking. That would be the only way the G.A.O. could actually do the study - if it were one pre-condition for massive new funding by the Congress to the World Bank.

The World Bank's Commitments to the Securities and Exchange Commission, and the Thwarting of the G.A.O. Study

In 1949, the Securities and Exchange Commission, the S.E.C., gave the World Bank a temporary exemption from registration under Section 12 and from reporting requirements under Section 15(d) of the Securities Exchange Act of 1934, but the S.E.C. can revoke the exemption at any time (see here and here). In a move reminiscent of other complaints to the SEC in recent years, a World Bank lawyer on appeal with a 20 year track record at the Bank has sent a formal complaint to the S.E.C.'s Lead Attorney Mr. Thomas J. Karr citing the blocking of the G.A.O. Study and asking for that temporary S.E.C. exemption to be revoked.

Captive "Independent" Evaluation Group

Presumably, the World Bank has been claiming that it has its own "independent" evaluation group and does not require a G.A.O. evaluation. However, that may be the only captive evaluation group that claims independence, and it has all its members on the payroll of the very institution on which it is supposed to pass judgment. The results of those "independent" evaluations speak volumes - it is business as usual, except for periodic changes in names and faces among the "evaluators," mostly drawn from internal ranks.

A New Method for Selecting the Next President of the World Bank

Unlike the previous two World Bank heads, Paul Wolfowitz and Robert Zoellick, who were hand-picked by then-President George W. Bush from among campaign advisers to his own year 2000 U.S. presidential campaign, (see here and here) the next World Bank CEO is to be picked from an open, merit-based process, according to a high level commission appointed by the World Bank itself. But the Bank's current management has not set in place a new process to select the next Bank President despite that he/she must be appointed by June 2012. That new merit-based process for selecting the next Bank President too should be a pre-condition for new funding, not just by the U.S. but by the major shareholders/donors such as Japan, the European Union and others. Again, Senator Bayh could add that to his Amendment.

But will Senator Bayh re-introduce his Bayh Amendment or just disappear into the night with that whole sorry episode forever as an albatross around his proverbial neck?