Bretton Woods

Letter to the General Assembly from the
President of the World Bank,
requesting the International Court of Justice to
give an advisory opinion on the question
whether the authority of the Board of Executive Directors
should not be restored under Section 4(a) of Article V of
the Articles of Agreement of the
International Bank for Reconstruction and Development
[Letterhead of World Bank President]

[date]

Dear Mr. President,

This is to request the General Assembly to seek an advisory opinion from
the International Court of Justice (“ICJ”) on the question whether the authority
of the Board of Executive Directors should not be restored under Section 4(a) of
Article V of the Articles of Agreement of the International Bank for
Reconstruction and Development. The competence of the ICJ is based on
Article 65, paragraph 1, of its Statute, according to which the ICJ “may give an
advisory opinion on any legal question at the request of whatever body may be
authorized by or in accordance with the Charter of the United Nations to make
such a request”, and secondly that the General Assembly may request the
advisory opinion pursuant to Article 96, paragraph 1, of the Charter, which
provides: “The General Assembly or the Security Council may request the
International Court of Justice to give an advisory opinion on any legal
question.” Article 96, paragraph 2, of the Charter provides further that “other
organs of the United Nations and specialized agencies, which may at any time
be so authorized by the General Assembly, may also request advisory opinions
of the Court on legal questions arising within the scope of their activities”. The
ICJ has jurisdiction to give the advisory opinion so authorized by the General
Assembly.

This request of the International Bank for Reconstruction and Development
(IBRD) concerns the economic welfare of the citizenry of the members of the
General Assembly and arises within the scope of the World Bank’s and the
General Assembly’s respective purposes. It is fitting and proper that the General
Assembly authorizes the request for an advisory opinion into matters impeding the
purposes of the United Nations. The ICJ is the “principal judicial organ of the
United Nations” (Article 92 of the Charter) and exercise of the ICJ’s jurisdiction in
this matter is proper and consistent with the ICJ’s judicial function.

His Excellency
John William Ashe
President of the General Assembly
New York

Moreover, there is no reason for the ICJ to abdicate its judicial task,
particularly when the beneficial consequences of such opinion are compelling, and
would prevent impoverishment and penury for humankind as a result of an
imminent economic crisis of unprecedented magnitude.

The Gold Standard

          The initial purpose of the IBRD was to finance the reconstruction of war-
torn Europe. After this was accomplished, the IBRD became the primary
financier of development projects. The purpose of the International Monetary
Fund (IMF) was to allocate access to international currency reserves within the
system of par values (set values for each member’s currency in terms of gold),
convertibility of members’ currencies, and fixed but adjustable exchange rates.
After World War II, the U.S. dollar became the main currency for international
capital flows outside of Europe.

By the early 1960s, the U.S. dollar’s fixed value against gold was considered
to be overvalued. Increased domestic spending on Great Society programs and
military spending on the Vietnam War gradually worsened the overvaluation of
the dollar. In 1971 the United States informed the IMF that it would no longer
buy and sell gold to settle international transactions. This resulted in the 1973
decision of the European Community countries and the United States to introduce
a joint float of European currencies against the U.S. dollar. Nevertheless, the U.S.
dollar maintained its role as “international money.” The role of the IMF became
less well-defined but in principle turned into one of surveillance and support for
currencies in maintaining a stable link with major currencies.

The banking system is under enormous stress as witnessed by the risk of
permanent gold backwardation: when all offers to sell gold for dollars are
withdrawn regardless how high the bid price may go. On July 7, 2013, gold
leasing ended when “GOFO” (the difference between the rate offered for future
leases and the rate that applies to leases already in force) became negative. The
gold basis (the difference between the nearby futures price and the spot price of
gold) also became negative. This indicates a shortage of deliverable gold and gold
hoarding.

To recapitulate, just like in 1971, negative GOFO indicates the risk of
permanent backwardation. Without restored confidence in international currencies,
a chain-reaction leading to a barter economy commences, bringing serial
bankruptcies, unprecedented unemployment, and shortages of food, fuel, and

medicine. This would result in famine, pestilence, and a break-down of law and
order. When the value of US Treasury paper erodes, no amount of bond buying by
the US Federal Reserve will be able to stop the collapse of the fiat dollar. The
monetary reserves of the world’s currencies will be extinguished, representing the
largest destruction of fiduciary values in all history. Much depends on how the
banking system will hold up while the new gold strategy is being implemented.

Interference with IBRD’s Board of Executive Directors

          In 1944 delegates from forty-four countries attended a conference in a ski
resort in Bretton Woods, New Hampshire to establish a multilateral institutional
framework for the international financial and monetary system. The delegates
considered a draft agreement prepared in April 1942 by Harry D. White of the
U.S. Treasury and a draft that was prepared in June 1944 by the United Kingdom,
principally by Lord John Maynard Keynes, who chaired the U.K. delegation to the
Bretton Woods Conference. Lord Keynes recognized the special role of
international lawyers in founding the Bretton Woods institutions:
“We, the Delegates of this Conference, Mr. President, have been trying to
accomplish something very difficult to accomplish…It has been our task to
find a common measure, a common standard, a common rule applicable to
each and not irksome to any. We have been operating, moreover, in a field
of great intellectual and technical difficulty. We have had to perform at one
and the same time the tasks appropriate to the economist, to the financier, to
the politician, to the journalist, to the propagandist, to the lawyer, to the
statesman–even, I think, to the prophet and to the soothsayer…I am certain
that no similar conference within memory has achieved such a bulk of lucid,
solid construction. We owe this not least to the indomitable will and energy,
always governed by good temper and humor of Harry White. But this has
been as far removed as can be imagined from a one-man or two-man or
three-man conference. It has been teamwork, teamwork such as I have
seldom experienced. And for my own part, I should like to pay a particular
tribute to our lawyers. I have been known to complain that, to judge from
results in this lawyer-ridden land, the Mayflower, when she sailed from
Plymouth, must have been entirely filled with lawyers. When I first visited
Mr. Morgenthau in Washington some three years ago accompanied only by
my secretary, the boys in your Treasury curiously inquired of him–where is
your lawyer? When it was explained that I had none–“Who then does your
thinking for you?” was the rejoinder. That is not my idea of a lawyer. I
want him to tell me how to do what I think sensible, and, above all, to devise

means by which it will be lawful for me to go on being sensible in
unforeseen conditions some years hence. Too often lawyers busy
themselves to make commonsense illegal. Too often lawyers are men who
turn poetry into prose and prose into jargon. Not our lawyers here in Bretton
Woods. On the contrary they have turned our jargon into prose and our
prose into poetry. And only too often they have had to do our thinking for
us.”1

Aaron Broches, who was then a young counsellor at the Dutch Embassy,
went on to work in the legal department of the IBRD, ultimately as its longest-
serving General Counsel from 1959-1978. Aaron Broches considered the most
important function of the legal department to be that of ensuring that the
Presidency and Board of Executive Directors observed their respective powers
laid out in IBRD’s Articles of Agreement. Mr. Broches’ ability to mediate
between the presidency and board was severely challenged when Robert
McNamara assumed the presidency of the IBRD. After his retirement, Mr.
Broches counseled, “When the President of the World Bank comes from the
Pentagon, the role of the General Counsel becomes all the more critical in
preserving the authority of the Board.”2

On October 3, 2007, Ms. Karen Hudes3 informed Mr. Kenneth Peel in the
US Treasury Department that “Senator Lugar’s office suggested that I contact you
about an escalating perception that the US does not respect rule of law in its
oversight of the World Bank. Now the members of the World Bank’s Board are
subjected to intimidation for trying to restore rule of law at the Bank.”


1Lord Keynes, Chairman, Delegation of the U.K., Address at the Closing Plenary Session, July
22, 1944) in Proceedings of the U.N. Monetary and Financial Conference, Doc. 542, Vol. II,
Bretton Woods, N.H., July 1-22, 1944, at 1240-41. Lord Keynes went on to say, “We owe a
great debt of gratitude to Dean Acheson, Oscar Cox, Luxford, Brenner, Collado, Arnold, Chang,
Broches and our own Beckett of the British Delegation.”

2 Conversation between Aaron Broches and Karen Hudes, October 5, 1995.

3 Karen Hudes was Senior Counsel in IBRD’s Legal Department from 1986-2007. On May 25,
2011 Ms. Hudes testified before a hearing of the European Parliament’s Committee on
Budgetary Control on whistleblowing. The European Parliament’s Legal Department
recommended that the European Parliament inform the World Bank about the material to be
used at the hearing and that all Members of the European Parliament attending the hearing
receive a full version of Ms. Hudes’ written contribution, including this chronology of
internal control lapses. https://s3.amazonaws.com/khudes/chronology17%5B1%5D.doc

          Earlier that day, Ms. Hudes had informed Keith Luse and Nilmini Rubin in
Senator Lugar’s office, Jay Branegan on the staff of the Senate Committee on
Foreign Relations, Jim Greene in then Senator Biden’s office, Tom Crohan in
Senator Kennedy’s office, and Jayme Roth in Senator Bayh’s office:

“I have just returned from Holland, and learned there that Messrs. Wijffels
and Melkert have informed the Dutch public that they were subjected
to investigations of their private lives as a form of diplomatic blackmail.
According to Mr. Wijffels, other executive directors on the World Bank’s
Board have been similarly intimidated. This does not augur well for the
upcoming Annual Meetings that will start October 20th. I attach translations
and links to the stories in Dutch.

Of course, the Volcker Panel report has not dealt with INT’s record of
whistleblower harassment, and only serves to discredit US probity in its
oversight of the World Bank.

I would like to speak with you about my discussions with Pieter Stek on
September 25 and 26 and with Riny Bus in the Dutch Ministry of Foreign
Affairs on September 24th.

Wijffels angered at “digging” into his past (Novum)
9/22/2007 Herman Wijffels says that his past was delved into “in a shocking
manner” this year. According to the man who formed the current Dutch
cabinet, this took place during his work at the World Bank, where he chaired
the committee that looked into the controversial dealings of Bank President
Paul Wolfowitz.

Wolfowitz had to step down following Wijffels’ inquiry into Wolfowitz’
possible conflicts of interest. Wolfowitz had given his girlfriend, who also
worked at the bank, a very large raise.

According to Wijffels, “third parties” tried to surface issues from his past
which might have discredited him. The former head of the Rabobank did
not want to provide details. But Wijffels said that the White House had
played a large role in the struggle over the leadership at the World Bank.

“In my case, there was nothing to find, but my colleagues on the Board of
the World Bank were dismayed. There were definite attempts at
disqualification,” said Wijffels.

     Television Interview with Ad Melkert 9/29/07 VPRO Buitenhof ‘Politics
on the World Stage’

Ad Melkert, Deputy Director of the United Nations Development
Program, and former Dutch Executive Director at the World Bank,
confirmed during a fifteen minute interview with Clairy Polak on this Dutch
Public Broadcast program that Herman Wijffels’ private life and bank
accounts were subjected to investigation. Mr. Melkert added that ‘very
aggravating attempts’ were also made to discredit him. These attempts were
especially intense during the period of May through July, 2007.”

A 2004 stakeholder analysis of IBRD’s rule of law and governance warned
that the US would no longer appoint the President of the World Bank under the
“Gentlemen’s Agreement” if the IBRD was not brought into compliance.4 The
188 members of the World Bank revoked the Gentlemen’s Agreement on April 25,
2010.5 Ms. Hudes advised state attorneys general of the United States that the
2004 stakeholder analysis was “predict[ing] a crisis that could lead to a currency
war which would affect all United States citizens.”6

IBRD does not refute a single occurrence in IBRD’s litany of escalating
impunity in contempt of Congress: IBRD disregarded the Joint Economic
Committee’s (JEC) 2005 inquiry into IBRD’s “corporate governance irregularities”
and “accounting problems” and failed to follow the JEC’s advice that professional
financial and accounting employees be given independent access to IBRD’s Board
and its Audit Committee;7 IBRD failed to protect Ms. Hudes against retaliation for
challenges of illegality or other misconduct that could threaten the bank’s mission
through external arbitration pursuant to the 2005 Lugar-Leahy amendment, 22
U.SC. §262o-4;8 IBRD stonewalled Senator Lugar’s and Congressman Van
Hollen’s four requests for the advice of the executive search firm following Ms.


4 Letter dated February 26, 2007 to US Treasury Department, page 17

See http://kahudes.net/wp-
content/uploads/2012/10/151.pdf

5 Development Committee Communique of April 25, 2010
http://www.imf.org/external/np/cm/2010/042510.htm

6 Letter dated August 11, 2011 to Georgia Department of Law, page 17
http://kahudes.net/wp-content/uploads/2012/10/201.pdf

7 Letter dated April 8, 2005 from the Joint Economic Committee of the US Congress to IBRD
http://kahudes.net/wp-content/uploads/2012/10/101.pdf

8 May 30, 2006 email from IBRD denying Hudes’ request for external arbitration
http://kahudes.net/wp-content/uploads/2012/10/105.pdf

Hudes’ disclosure of internal control lapses during her interview for IBRD’s
General Counsel position;9 IBRD fails to confront its five-year refusal to comply
with the Government Accountability Office (“GAO”) inquiry into corruption
requested by Senators Lugar, Leahy and Bayh .10 Congress reiterated its request
for the GAO inquiry during hearings on the IBRD capital increase .11

Authority of the IBRD’s Board of Executive Directors

          The Articles of Agreement of the International Bank for Reconstruction and
Development (IBRD) confer broad powers to the Executive Directors. All of the
powers of the IBRD are vested in the Board of Governors, and except for certain
reserved powers regarding membership and appeals from the Board’s
interpretations of the Articles of Agreement, these powers may be delegated to the
Executive Directors. Section 4(a) of Article V provides that “[t]he Executive
Directors shall be responsible for the conduct of the general operations of the
Bank, and for this purpose, shall exercise all the powers delegated to them by the
Board of Governors.”

The powers of the President to conduct the ordinary business of IBRD under
Article V, Section 5(b) are “under the direction of the Executive Directors.”
“Subject to the general control of the Executive Directors, [the President] shall be
responsible for the organization, appointment and dismissal of the officers and
staff.”

On June 4, 1947, the Executive Directors accepted in a Memorandum with
Regard to Organization and Loan Procedure that “[t]he Executive Directors are
responsible for the decision of all matters of policy in connection with the
operations of the Bank, including the approval of loans,” and “[t]he Management is
responsible for developing recommendations in all matters of policy requiring
decision by the Executive Directors.” “Whenever, in connection with the


9 Letters dated April 18, 2007 and June 12, 2007 from Keith Luse,

http://kahudes.net/wp-
content/uploads/2012/10/1101.pdf
and letter dated November 17, 2008 from Congressman
Chris Van Hollen to the World Bank http://kahudes.net/wp-content/uploads/2012/10/147.pdf

10 Letter dated April 17, 2008 to GAO requested by Senators Lugar, Leahy and Bayh
http://citizenoversight.com/pdf/blwb.pdf

11 September 15, 2010 Hearing of the U.S. Senate Committee on Foreign Relations, Senator John
Kerry Presiding, “Banking On Reform: Capital Increase Proposals From The Multilateral
Development Banks,”
http://www.foreign.senate.gov/hearings/hearing/?id=33c66777-5056-
a032-525a-a0a5806634e9

operations of the Bank, decision of a question of policy becomes necessary, the
President will submit such question to the Executive Directors with the
recommendation of the management as to the action to be taken…”

On September 1, 2009 Ms. Hudes advised the Board of Executive Directors:
“It is for the Executive Directors to determine if they are now obligated to avail of
the full range of powers in the original mandate of the Executive Directors
contained in the Articles of Agreement.” Thereafter, security guard personnel
employed by Allied Barton illegally barred Ms. Hudes from the World Bank.
Allied Barton is a subsidiary of the “super-entity” documented by three systems
analysts at ETH Zurich.12 Allied Barton, under contract authorized by the
Presidency of the World Bank, has no legal authority to disregard the decisions of
the Board of Governors or the Board of Executive Directors of the World Bank or
to disregard legislation of the United States Congress which provides for the
effects of retaliation against whistleblowers to be eliminated prior to disbursement
of the US portion of a capital increase for the IBRD pursuant to § 7082 of the
Consolidated Appropriations Act, 2012 (Pub. L. 112-74).

There is no obligation under the Articles of Agreement for Executive
Directors to wait for the President to recommend specific actions to be taken.
Canada’s Review of Internal Governance Conclusions and Proposals has noted that
the Board remains accountable under IBRD’s Articles of Agreement for delegated
tasks. Moreover the Board of Executive Directors must lead by example in the


12 STEFANIA VITALI ET AL., THE NETWORK OF GLOBAL CORPORATE CONTROL, 1-36 (2011) available at:
http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf (Last visited July 18, 2013) An
analysis of the financial markets reveals that the world’s finances are in the hands of just a few
mutual funds, banks, and corporations. The eight largest U.S. financial companies (JP Morgan,
Wells Fargo, Bank of America, Citigroup, Goldman Sachs, U.S. Bancorp, Bank of New York
Mellon and Morgan Stanley) are 100% controlled by ten shareholders and we have four
companies always present in all decisions: BlackRock, State Street, Vanguard and Fidelity. In
addition, the Federal Reserve is comprised of 12 banks, represented by a board of seven people,
which comprises representatives of the “big four,” which in turn are present in all other entities.
In short, the US Federal Reserve is controlled by four large private companies: BlackRock, State
Street, Vanguard and Fidelity.

fight against corruption to ensure transparency as an active partner with the
international community of nations.13

WHEREFORE, in view of the internal control lapses disclosed in this letter,
the International Court of Justice is requested to issue an Advisory Opinion that
would enable the Bretton Woods Institutions to avail of the full range of powers in
the original mandate of the Executive Directors contained in Section 4(a) of Article
V of the Articles of Agreement of the IBRD without requirement for the President
first to recommend specific actions to be taken.

Respectfully submitted,

Dated: August 5, 2013

 

President of the World Bank

13 International Organization of Supreme Audit Institutions, 20th UN/INTOSAI Symposium in
Vienna, Austria, February 11-13, 2009. “INTOSAI-Active partner in the international anti-
corruption network; Ensuring transparency to promote social security and poverty
reduction.” http://www.intosaijournal.org/insideintosai/insideapr09.html

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