Amid growing scrutiny arising from various corruption scandals affecting the multilateral development banks (MDBs), the role of a powerful Treasury Department official appears to be central for the future of these U.S. taxpayer-supported institutions. William E. Schuerch, deputy assistant secretary for international development, debt and environmental policy, is something of an anomaly at Treasury, observers say - a Democrat-holdover with one of the department's premier slots dealing with global finance. Schuerch exercises day-to-day control over nearly 20 percent of the voting shares of the World Bank's board of governors, and is a key player in deciding who is chosen as senior staff at the multibillion-dollar institution. He plays similar roles at the Inter-American Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development and other sister
institutions.

A consummate Washington insider and 14-year veteran of the professional staff of the House Appropriations Committee, Schuerch also held senior posts at the U.S. Agency for International Development (USAID) in the early 1990s. His Rolodex is said to contain a virtual "who's who" of the international-finance community, and this hardball practitioner of realpolitik is admired for remembering names and for rewarding those who best defend U.S. policy choices as he understands them.

The problem, reform advocates allege, is that Schuerch selectively enforces the rules. For example, in a move applauded by the reform community, he opposed one high-profile project in which communist China was about to violate international and MDB standards for development. Critics claim that Schuerch expresses less concern when similar violations of supposedly binding World Bank safeguard policies affect projects proposed by such major U.S. multinationals as Exxon, the power-plant behemoth AES Corp. and other energy power players. They point out that after 12 years on the books, nearly half of which were on his watch, Treasury has not implemented key portions of U.S. law governing the international financial institutions. These include requiring a system for disclosure of information to other countries about MDB proposals posing public-health and safety risks, and the need for assessments of any action proposed by the MDBs that are potentially harmful in these areas.

Nearly half the money lent by the MDBs in recent years remains outside the Treasury's narrow interpretation of those loans that require public assessment. Failure to conduct bank business in the sunlight, critics say, also contributes to the risk that the corruption endemic to much of the Third World will taint MDB projects. In 2001, Schuerch persuaded USAID to drop numerous reform recommendations, including stricter financial disclosure by a broad set of MDB employees.

Martin Edwin Andersen is a reporter for Insight.