By Abid Aslam

WASHINGTON, Jul 18 (IPS) - The World Bank has misused funds and is seeking to mislead public opinion through its 'Development Gateway' Internet initiative, according to charges submitted Wednesday to the lending agency's fraud unit.

The complaint alleges "misuse of Bank funds and positions, gross waste of Bank funds, cost mischarging or defective pricing and perhaps even fraud and misleading of public opinion."

It singles out James Wolfensohn, the Bank's president, and Richard Stern, a former vice president, for having "used their positions at the Bank to create a new organisation in which they will hold positions."

Merrell Tuck, the Bank's deputy chief spokesperson, acknowledges that the lending agency's department of institutional integrity has received the complaint. "As a matter of policy, we will not comment on allegations that we receive through our hotline," she says, referring to the fraud unit.

At issue is a Bank effort to build the Internet's premier portal on poverty and sustainable development. The Development Gateway has been in the making for nearly two years, at a reported cost of some seven million dollars. Officials say the site will grow to encompass more than 130 topics and serve as the leading entry point on the World Wide Web for people interested in development issues.

On the contrary, the venture is a mere "public relations tool", says the complaint filed by two Uruguayan civil society leaders.

"While it is a legitimate activity for the Bank to defend itself from criticism, it is a clear misuse of funds to divert to public relations monies intended to combat poverty," they say. "Further, it is a gross violation of editorial ethics to misrepresent a propaganda operation as a genuine independent Internet portal about development."

The scheme also involves fraud, the complaint charges, because "potential donors are being misled to make grants to a supposedly independent Foundation that in fact is just an appendix of the Bank."

The Gateway, a prototype of which already exists on the World Wide Web, is run by the Development Gateway Foundation. Stern, who was at the World Bank until the end of last year, is its acting chief executive officer.

"We believe that he used his position during the final months of last year in a way that transgressed a reasonable understanding of his role as Vice President for Human Resources and which appears to have resulted in a new position for him outside the Bank," in violation of agency ethics rules, the complaint says of Stern.

Wolfensohn "is rumoured to be lining up to be the director of the Gateway Foundation," the document adds. "It is unclear what remuneration or benefits he may receive in this role while remaining as Bank President (or thereafter), but we believe that again there is a conflict of interest."

The Foundation's stated independence also is regarded with suspicion.

"If it is true that this 'independent Foundation' is contracting back to the Bank, staffed by the Bank, situated in the Bank, entirely designed by the Bank and largely capitalised by the Bank, we may be facing a case where eventual donors and perhaps even the American authorities that granted it legal status as a non-profit organisation, may have been deceived in their good faith to accept a non-existing independence," the complaint reads.

Roberto Bissio, coordinator of Social Watch and Latin American secretary of Third World Network, and Carlos Abin, executive director of the Uruguay-based Intstituto del Tercer Mundo (Third World Institute), wrote the complaint. Bissio has written extensively on information technology and development and is a member of the UN Development Programme's civil society advisory committee; Abin is a lawyer.

The two also have established the Internet portal uruguaytotal.com, which they claim delivers one million page views per month after two years in operation and less than half a million dollars in expenditure.

By contrast, they say, the Development Gateway's business plan projects more than one hundred million dollars in spending over the next five years, in hopes of attracting only five times the Uruguayan site's number of visits.

This, they say, is a recipe for financial losses for years to come - losses that will have to be offset with subsidies by the Bank. The Gateway's other backers include wealthy nations' governments and corporations.

To spend so much on "a website of global interest expected to achieve in five years just five times the present usage of a local interest portal in a developing country of only 3 million inhabitants seems to be a case of overspending that needs scrutiny," they write.

The Development Gateway has attracted controversy since its inception. Its attempts to reach out to civil society groups have had mixed results.

Alex Wilks, of the British group Betton Woods Project, says the Gateway would do little to promote dialogue with poor communities in developing countries. As it is, he notes, some 70 percent of all external visitors to the Bank's web site are from the United States.

The South African Non-Governmental Organisation Network, Congress of South African Trade Unions, and South African Non Governmental Coalition rebuffed the Bank earlier this year, issuing a statement that they "firmly and unequivocally" declined to participate.