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Procedures for World Bank’s new accountability mechanism lacks transparency and inclusivity
In a press release issued early last week, the World Bank has announced that the review of its independent accountability mechanism, the Inspection Panel, has been completed and that a few major reforms were added to the Inspection Panel. Accordingly, a new accountability mechanism – an “expanded” one as the Bank says, called ‘World Bank Accountability Mechanism’ will be in place from September 2020 and will constitute two separate roles – the Inspection Panel (IPN) will focus on the review of compliances of projects with Bank’s operational policies and a separate Dispute Resolution Mechanism (DRS) will resolve the grievances of affected communities, in a time bound manner, instead of compliance review. While housed under one umbrella, the DRS will organisationally be separate from the IPN to ensure its effectiveness and to avoid conflict of interests.
New Roles, Governance Structure
Independent Accountability Mechanisms (IAMs) of Multilateral Development Banks have different governance structures and varied roles with assigned functions. It is necessary to see the new reforms of WB’s IPN in comparison to the previously established roles of both Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC) and Accountability Mechanism (AM) of Asian Development Bank (ADB), since most of the complaints from Indian communities have been registered with these IAMs.
There were only four IAMs that offered both compliance review and dispute resolution services – namely CAO of IFC, the Complaints Mechanism (CM) of European Investment Bank (EIB), AM of ADB, and Independent Review Mechanism (IRM) of African Development Bank (AfDB). Now WB’s new IAM will also offer both compliance review and dispute resolution.
The CAO reports to the President of the World Bank Group, while the dispute resolution component or ‘problem solving function’– the Office of the Special Project Facilitator in ADB’s AM report to the Bank President, and the compliance review component – Compliance Review Panel in AM report to the Board of Directors. The new IAM of WB will be governed by an ‘Accountability Mechanism Secretary’ (AM Secretary) who will be appointed by and report directly to the Bank’s Executive Directors. While administratively integrated in this new mechanism, the IPN members will remain fully independent and continue to report directly to the Board on all compliance investigation matters. Which effectively means, the DRS staff will report to the AM Secretary who then will report to the Board, whereas the IPN will directly report to the Board (Whereas, the CAO staff along with its three functions – dispute resolution, compliance and advisory- report to the CAO Vice President).
Organisationally in the new IAM, the IPN will have no role in DRS. The IPN will continue to be constituted and operate as established in the IPN Resolution.
Operationally, the new IAM will apply the existing eligibility criteria of IPN for compliance for its dispute resolution function. There will be no change to the current practice of recommending eligibility, when a complaint is registered, based on the IPN’s current eligibility criteria. During the eligibility phase, the IPN recommends eligibility for compliance. After the Board has approved the eligibility for compliance, the AM Secretary will offer an opportunity for dispute resolution to the parties. If Borrower and Requesters voluntarily agree to go for a dispute resolution, the case will be referred by the AM Secretary to the DRS. The AM Secretary will inform the Board, the IPN and Management of the parties’ decision. In case the parties agree to use the DR process, the compliance process of the IPN will remain in abeyance. If the parties do not agree, the AM Secretary will inform the Board, the IPN and Management and the case will be taken up by the IPN for a compliance investigation. The Parties to the DR process would be the Requesters and the Borrower’s relevant project implementing agency.
While ADB’s AM has a slightly different approach – one can approach its problem solving function office – the Office of the Special Project Facilitator and file a complaint regardless of whether ADB operational policies and procedures have been violated ( this mandate is required only if one is approaching the Office of the Compliance Review Panel).
Meanwhile, the CAO’s Ombudsman function responds to dispute resolution complaints and if they are not solved, they are transferred to the compliance review function.
Extended Eligibility time limit for Requesters to file Complaints
Except the IPN, almost all other IAMs had established their own mechanisms much earlier. They all have longer eligibility time periods for complaints registrations than the IPN. Yet, In the case of the CAO, the eligibility ends when the institution’s engagement with the client or the project ends. Whereas for AM, the latest date by which a complaint can be filed is 2 years after the loan or grant closing date. This date is known in advance, disclosed to the public, and can be found on the ADB website. Their brochure also shows the timeline in which a complaint is processed and responded to.
For IPN, this time requirement will be changed so that any request filed up to fifteen months after the closing date of the loan financing the project can be accepted by the IPN. This requirement will be applicable only to new projects approved by the Board after these changes take effect.
Formal recognition of the Inspection Panel’s advisory role
Advisory services focus primarily on the lessons that the IAMs learn about the functioning of MDB operational policies. The advice can be given as recommendations in specific compliance reports, lessons learned sections in annual reports and in other publications. The CAO has a robust advisory policy, where the CAO provides independent advice to the President of the World Bank Group and management of IFC and MIGA. CAO advice focuses on broader social and environmental concerns, policies, procedures, strategic issues, and trends. CAO’s focus is on preventing future harm and improving IFC/MIGA’s performance systemically as their policy states,
The IPN did not have explicit advisory authority. The IPN does provide informal advice through statements in its compliance reports and its publications, including its annual report and Emerging Lessons series. The press release states that this advisory role has been formalised from 2018.
Formalization of the Inspection Panel’s practice of coordinating with co-financiers’ accountability mechanisms on joint complaints
The World Bank engages in co-financing arrangements with other MDBs. In these cases, requesters could file requests for investigations regarding the same set of issues with the IAMs at two institutions. This always led to two challenges. The first challenge arises when one IAM receives a request regarding a project whose agreements stipulate that the policies of another institution govern the project, like the case is with Asian Infrastructure Investment Bank (AIIB). The second arises from differences in the procedures of the two IAMs, such as different time limits for eligibility and different rules on sharing draft reports with the requesters. None of the IAMs have developed any explicit policies or practices on how to deal with these situations. Instead, they have dealt with these situations by signing a case-specific MOU detailing how they will cooperate in investigating the same project. The World Bank is yet to clearly state whether these challenges have been addressed or they remain the same, irrespective of formalising arrangements with co-financiers’ IAMs.
Sharing IPN report with requesters before consideration of the Board
This procedure came into effect from 2018, but is officially declared now under the enhancements for IPN. Earlier, IPN’s investigation report was not shared with the requesters until after the Board had approved it. The requesters maintain that this had created two problems. First, the practice was unfair because requesters were being treated differently from Management. Second, requesters lack the knowledge to engage effectively with Management about the action plan.
Independent and proportionate risk-based verification of Management Action Plans
All the IAMs, except the IPN, are expressly authorized to monitor the implementation of the management action plans (MAPs) developed to address the IAMs findings of non-compliance and the outcomes of dispute resolution procedures. All IAMs that engage in dispute resolution have authority to monitor the implementation of the outcomes of the dispute resolution if the parties so request. In addition, the IAMs including CAO and those at the AfDB, ADB, EIB, EBRD and IDB have authority to monitor the implementation of management action plans developed in response to findings of noncompliance. The authority of the IAMs does vary. In some cases, the IAMs are authorized to monitor all cases in which they have made findings of non-compliance. This is the case with CAO and ADB’s CRP. In the case of the AfDB’s IRM and the IDB’s MICI this authority requires prior Board authorization. It is usually given at the time the board approves the IAM findings on compliance and is based on a recommendation from the relevant IAM.
From September 2020, the IPN can now verify MAPs in those cases where proportion and risk criteria will include (i) urgency of redress, (ii) risk of repetitive harms, (iii) number and vulnerability. The IPN recommendation, generally, will be made after substantial implementation of the MAP or, if the monitoring report indicates lack of implementation, at any stage of implementation. In exceptional cases, upon IPN recommendation, with input from Group Internal Audit, the Board can discuss and assign verification at the stage of approval of the MAP or shortly after. This process will avoid an automatic “one-size-fits-all” approach. The benefit of this option is that the Board would be assured of receiving independent reports on the adequacy of the management action plans, but restricted to few cases only.
How the procedures fell short
The World Bank’s Inspection Panel was the first accountability mechanism (1993) of its kind for the development finance institutions, which was established as a result of people’s struggles against the Sardar Sarovar Dam Project on river Narmada in India. The tenacious campaign around this project led to the formation of the Morse Commission, which strongly criticized the World Bank’s performance in the areas of environment and resettlement of people displaced by the construction of energy projects. Over the years, the Panel has played a major role in trying to adhere to accountability at the Bank and attempting to secure redress of grievances in some cases. Though established as an independent mechanism from the Bank management, the Panel majorly reported the eligibility of the complaint to the Board of Directors of the Bank and did not possess strong recommendatory powers.
When the review of IPN was first announced officially in 2017, Indian peoples movements, civil society and affected communities had called out to the Bank to keenly call forth to strengthen the IPN mandate. While appreciating the World Bank on this effort for a review on the occasion of Inspection Panel’s 25th Anniversary, the CSOs criticised the Bank for giving less than a fortnight to seek comments on this issue. They demanded to extend the deadline by at least two months in the interest of the sanctity of the process. They further stressed that wider publicity should be given to ensure better participation in the process. “The current consultation is designed and carried out to exclude affected communities, for whom the Inspection Panel is established,” the signatories said with much disappointment.
During the deliberations in a symposium organised in India at the 25th year of IPN, in which both the Inspection Panel and Compliance Ombudsman Advisor (CAO) participated remotely, the inadequacy of IAMs in functioning independently and efficiently; lack of capacity and powers to promote and ensure accountability; failure in intervening timely to ensure that the voices of the affected people are adequately heard, addressed and issues resolved; and lack of powers to stay the progress of project construction in cases of extreme violations, were highlighted.
A brief look into the newly released report of the Bank, ‘Report And Recommendations On The Inspection Panel’s Toolkit Review’ (March 05, 2020) shows that the external review “did not make recommendations but provided options in seven areas: (i) advisory services, (ii) Bank Executed Trust Funds (BETFs), (iii) co-financing, (iv) sharing findings with Requesters, (v) problem solving/dispute resolution, (vi) time limit on eligibility for requests and (vii) monitoring of Management Action Plans (MAPs)”. And that subsequently, a Working Group of the Committee on Development Effectiveness (CODE) that included members from all Executive Directors’ offices, was established to consider the areas identified by the Review.
When the Bank announced in 2018 that CODE was inviting submissions from relevant stake holders, the Indian civil society had strongly asked for transparent and wider consultative processes with extended time period for affected communities. Opening up the process; adhering to the principle of free, informed and prior consent; adequate time; holding consultations widely and not in national capitals/metros alone; unmasking the ritual format of such processes; IPN having suo moto powers; IPN having suo moto powers for timely intervention – even during the early stages of project appraisal; IPN having a pro-active role even to delay the progress of any project until the violations of the project have been comprehensively corrected and compensated; IPN having monitoring function; IPN having punitive powers and measures for demanding for a fresh Environmental and Social Impact Assessment (ESIA) wherever erroneous ESIA have been found, were the recommendations from the Indian groups.
During both times, the Bank did not acknowledge the receipt of the submissions from India. Despite the recorded exhaustive measures which were being adopted by the Bank to see through this review, this process has been quite the opposite in nature– opaque, extremely limited opportunities for concerned civil society stakeholders and especially for the affected communities to share relevant inputs. The information available in the public domain was restricting in its scope and the final draft proposal was not shared, despite requests being sent by concerned groups from outside India to the Bank. This was a striking drawback, especially in the wake of IFC having faced defeat at the United States Supreme Court on the Immunity Verdict last year, on the case filed by Indian farmers and fishworkers on serious violations caused by IFC-funded Tata Mundra Ultra Mega Power Project in Gujarat India.
With the assistance of the IPN and Management, CODE identified eleven projects whose stakeholders had experience in the IPN process within the last seven years to provide feedback. The selected projects took into consideration regional representation and included projects that had gone through all the different steps of the IPN process. The procedures for arriving at this decision and who all were the stakeholders from these eleven projects is not in the public domain. This tunnel vision and consequent decision making is flawed.
The entire process lacked transparency and inclusivity.
It is further stated in the recommendations that the new Mechanism will be headed by an “Accountability Mechanism Secretary” (AM Secretary) who will be appointed by and report directly to the Bank’s Executive Directors. The AM Secretary will be responsible for planning and overseeing the processes of the Accountability Mechanism in line with agreed procedures and will be responsible for keeping the records of the AM proceedings. She/He will also oversee the Dispute Resolution Service. All staff of the Accountability Mechanism will report to the Accountability Mechanism Secretary with the exception of the Inspection Panel members, who will continue reporting to the Board of Directors. The DR process would have a one-year time limit in order to provide assurance that the process is not prolonged and incentivize the parties to reach an agreement. This administrative challenge is going to present problems with the affected communities who would find it challenging – in the first place to finish the eligibility process of their complaint in English language, the wait during delayed timeline of these complex processes and now having to identify whether they need a compliance review or a dispute resolution.
While it is appreciated that requesters of complaint can submit their grievances beyond project closure (for new projects with effect to the new change in IPN), a distinct DRS will be operational in six months, and an independent and proportionate risk-based verification of Management Action Plans would be established as an additional assurance, they still do not address the fundamental questions ever posed at the Bank by the communities. Will these changes impact the affected people in any positive way? The tight schedules and methodologies lacked a genuine effort for meaningful consultation. Currently, the onus of identifying Bank’s lending to a particular project, understanding the Bank Operational/Safeguard Policies, knowing about the existence of IPN and developing a complaint in a manner acceptable to IPN is on affected communities. This structure disempowers the communities for they are never consulted in advance with full disclosure of impacts, lenders and of compensation/rehabilitation for their losses in most of the projects. Hence in projects, IPN has knowledge about serious impacts, it should have powers to take suo moto investigation as well as actions. Particularly in cases of high risk or ‘Category A’ projects, knowing the potential irreparable consequences, the IPN should proactively look out for the involvement of the potentially affected communities and facilitate their observations/complaints. Sadly, none of these reflect in the “enhancements” mentioned in the review report for the mechanism which boasts of 27 years’ wealth of documented information and engagement with affected communities and civil societies all around the world.
People’s Convention Vows to Challenge Undemocratic & Destructive Global Finance: Resolves to Build Political and Economic Alternatives
People’s Convention Vows to Challenge Undemocratic & Destructive Global Finance:
Resolves to Build Political and Economic Alternatives
Mumbai, June 23: “The international financial institutions like AIIB (Asia Infrastructure and Investment Bank) must function in a deeply democratic manner respectful of national sovereignty, or else be shut down for they constitute a threat to the nation’s economic and political security. These financial institutions are harbingers and promoters of the neo-liberal reforms responsible for the hijacking of the democracy itself; regressive changes to environmental, labour, land, accountability laws; promoting privatisation and cartelisation; and burdening every citizen with huge debt, and destruction of minimal welfare measures.”
This was unanimously conveyed by over 1000 delegates from 200 organisations who gathered from all over India at the three day Peoples’ Convention on Infrastructure Financing, organised in the backdrop of the forthcoming AIIB Annual General Body meeting hosted by India in Mumbai. The Convention debated, discussed and challenged in 20 parallel workshops, the functioning of the international financial institutions and complicity of the Indian ruling and political class in pushing big and unnecessary hyper inflated infrastructure projects like industrial corridors, bharatmala, sagarmala, bullet trains, smart cities and others.
In the political resolution adopted at the end of the Convention delegates resolved to challenge the undemocratic and economically unsound functioning of IFIs including AIIB, World Bank, IFC and others. The Convention also resolved to push for people-centered alternatives in all sectors of the economy, and to advance an inclusive model of development in which finance and infrastructure support the vulnerable and the poor communities, instead of supporting primitive accumulation of natural resources and maximising the profits of the multinational corporations and global elite further contributing to the increased inequality in the society.
Delegates vowed to return to their communities to build massive resistance to the ongoing destruction of the environment and livelihoods of the poor and the working classes, and to work to create decent jobs, promote sustainable farming, equitable access to public services, advancement of the entrepreneurial skills of artisanal and natural resource dependent communities, and of labour-intensive small and medium enterprises. The Convention reasserted its belief in democratic decision-making and the advancement of cooperative federalism as a method of resisting the prevailing hegemony of undemocratic and unaccountable financial institutions such as the AIIB.
Speaking to the media, prominent activist and Goldman Environment Awardee Prafulla Samantra said,“The Peoples’ Convention is further strengthening our strategies and vision to oppose and reject international finance which does not confine to the democratic principles and causing immense and irreversible damage to people, depriving of their livelihood and snatching away their resources and causing damage to environment, accelerating climate change”.
The three-day convention was attended by different trade unions, networks of hawkers, fishworkers, slum dwellers, adivasis, dalits, farmers organisations and peoples movements. The convention was attended by senior activists, academics and financial analysists including Medha Patkar, economist Prof. Arun Kumar, financial analyst Sucheta Dalal, activists Ulka Mahajan, Com. Roma, Shaktiman Ghosh, Leo Colaco, T Peter, Dr Sunilam, Ram Wangkheirakpam, Leo Saldanha, Rajendra Ravi, Gabriele Dietrich, Surekha Dalvi, Sanjay M G, Ashok Chaudhary, Gautam Bandopadhyay, Bharat Patel, Jesu Rethinam, Seshagiri Rao, Meera Sanghamitra, Maglin Philomin, Soumya Dutta, Awadhesh Kumar, Umesh Nazir, Raju Bhise, Prof H.M. Deserda and many others.
“Financial institutions have declared a war on people, land, water and coasts. Workers rights are sacrificed at the altar of development. We are left with no option than to reject and oppose this onslaught by the financial institutions, both national and international” said Jesu Rethinam of National Fishworkers Forum.
Asian Infrastructure Investment Bank, the two-year-old multilateral bank, is investing in all major sectors, including energy, without robust policies on environmental-social safeguards, transparent public disclosure and an accountability/complaint handling mechanism. Out of the total 24 projects, it has financed, USD 4.4 billion has already been approved. India is the biggest recipient from AIIB with more than 1.2 billion USD supporting about six projects including Transmission lines, Capital City Development at Amravati, rural roads etc. with another 1 billion USD in proposed projects.
WGonIFIs, a network of movements, organisations and individuals to critically look at and evaluate the policies, programmes and investments of various International Finance Institutions (IFIs), and joining the celebration of the people and communities across the world in resisting them. A list of the network is available here.
Last year, when the Asian Development Bank completed 50 years, the WGonIFIs observed it by holding actions of protests in over 140 locations spread in over 21 states in India against the investment policies of ADB and other International Financial Institutions.
For further details, please contact:
Working Group on IFIs | firstname.lastname@example.org
Mumbai Resolution: PCIF Declaration Final 23 June2018
Photographs for free use: https://www.flickr.com/photos/159098579@N03/albums/72157698223280385
Mukta Srivastava | +91 99695 30060
Shweta Tambe | +91 98693 40816
Maju Varghese |8826249887
Mecanzy Dabre | 9665006429
Himshi Singh | 9867348307
एशियन इंफ़्रास्ट्रक्चर इन्वेस्टमेंट बैंक और भारत का नेशनल इन्वेस्टमेंट एंड इंफ़्रास्ट्रक्चर फ़ंड के निवेश संकट की और एक इशारा
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Gaurav Dwivedi explains how the Smart Cities would be funded and implemented, and how the project would impact the functioning of the Urban Local Bodies.
Siddharth Chakravarty of The Research Collective explains the Blue Economy, its impact on the coastal economy, and the Role of IFIs.
It is noteworthy that currently, coal-based power projects are under threat due to lack of coal linkages and power purchase agreements, thus stalling many existing power projects and discouraging many companies from expanding to new coal power projects. This would give a boost to hydropower projects in many regions, especially in the Himalayan regions.
At the Kharghar meeting on IFIs in India, Civil Society researchers discussed Understanding IFIS – Investments, intelligence and trends in critical sectors.
Overlap of Issues on Key Sectors in relations with International Financial Institutions. IN Transport, the emphasis seems to be on high-cost travel and with pricing systems that push the poor into more inconvenient modes.
Overlap of Issues on Key Sectors in relations with International Financial Institutions. Smart Cities project will make pockets of the cities exclusive zones high-cost zones, which will again result in the marginalised being excluded into dense low-grade services area.