November 8, 2005

Sheila Fraser
Auditor General of Canada
Office of the Auditor General of Canada
240 Sparks Street
Ottawa, Ontario
K1A 0G6
Canada

Dear Ms. Fraser,

We are writing to request that your office undertake an audit of Canada's participation in the Bretton Woods Institutions. The last time the Office of the Auditor General undertook such an audit was in 1992.

Several factors point to the need for the government to review the objectives, extent and results of Canada's participation in the Bretton Woods institutions, namely the World Bank Group and the International Monetary Fund. These include: the evolution in the roles and operations of the institutions and the reported failure of the institutions in reforming policies and practices to bring about positive development and environment outcomes. In the 13 years since your last audit, the World Bank and IMF have turned 50, then 60. Each anniversary focused global attention on their poor performance. The World Bank put in place processes to assess its policies and practices - the World Commission on Dams, the Extractive Industries Review and the Structural Adjustment Participatory Review Initiative. All three reports have been shelved and business continues as usual. For example, the World Bank announced a renewed commitment to mega-projects in 2003 when it announced its high-risk, high-reward strategy.

Since 1992, the institutions have created accountability mechanisms, the Inspection Panel in 1993, the Compliance Ombudsman Advisor Office in 1999 and the IMF Independent Evaluation Office in 2001, which have been consistently critical of the institutions performance to its own policy objectives. The roles of the organizations have continued to expand: the IMF, for example, just announced two new mechanisms for engagement in low-income countries.

As you note on your website, Canadians expect that their tax dollars will be spent responsibly and that programs and services will be managed with due diligence. They also expect government and its officials to be honest, forthcoming, and accountable for their actions. Canada's estimated commitment to the Bretton Woods Institutions in 2005/2006 totals $373.8 million including the $51 million Canada is contributing to reimburse the World Bank for lost revenue due to debt cancellation.

The 1992 audit recommends that the government further improve the information on the objectives and results of participation and on the associated financial commitments and risks to which Canada is exposed. However, an analysis that we did on last year's annual report on the Bretton Woods Institutions shows that very little information is released on the results of participation and what role Canada plays to ensure its environment and sustainable development commitments are not being undermined through engagement in the Bretton Woods Institutions.

We request you to undertake an audit on the institutions and have attached some of our reports, which suggest that there are some serious problems in regards to the impacts of these institutions and government accountability for them.

Sincerely,

Graham Saul
International Program Director
Friends of the Earth Canada
Co-Chair of the Halifax Initiative Coalition

On behalf of it members:

Canadian Catholic Organization for Development and Peace
Canadian Conference of Catholic Bishops
Social Affairs Office
Canadian Council for International Co-operation (CCIC)
Canadian Friends of Burma
Canadian Labour Congress (CLC)
Canadian Lawyers for International Human Rights (CLAIHR)
CAW - Canada
CoDevelopment Canada
C U S O
Democracy Watch
Falls Brook Centre
KAIROS: Canadian Ecumenical Justice Initiatives
MiningWatch Canada
North-South Institute
Oxfam Canada
RESULTS Canada
Rights & Democracy
Sierra Club of Canada Nuclear Campaign
Social Justice Committee
Steelworkers Humanity Fund
Toronto Environmental Alliance
World Interaction Mondiale

Enclosed:
 
Halifax Initiative Coalition Analysis of the Report on Operations Under the Bretton Woods and Agreement and Related Act, 2004
Whose Minding the Store? Legislator Oversight of the Bretton Woods Institutions, 2004
Case Study on Glamis Gold's Marlin Mine, 2005
Marketing the Earth: the World Bank and Sustainable Development, 2002
The Global Environment Facility: the First 10 Years, 2002