IFI governance

Background

What does real accountability mean in practice?

11 April 2014

Presentations

Dr Juan Almendares, Madre Tierra

  • We must compare reason and reality; reason might be investment and business, but the reality is what happens to the people
  • There is serious militarisation in Honduras, in reduces the ability to talk or communicate about this situation
  • There is serious poverty and suffering, especially in Aguan,; activists are persecuted and oppressed

Kate Geary, Oxfam

  • IFC has supported Dinant in two ways – directly and through FICOHSA
  • IFC is eager to look forward and find solutions, but we need to do this in historical perspective if we are to ensure accountability
  • A loan was made without attention to the context
    • Staff probably knew these things, but didn’t want to make waves, the CAO found systemic waves
    • The IFC response was appalling, and it was signed off by President Kim, despite the letters to him asking for him to take it very seriously
    • It took the board to step in and make IFC acknowledge mistakes and remedy the situation
    • This week the IFC issued an extraordinary admission of fault, we welcome this and the positive steps such as producing a lessons learned document
    • These are not new issues, the issues are basic and well understood; these are not just some “trade-offs”; the IFC has a long way to go to build trust

Bharat Patel, MASS

  • Tata Mundra is the biggest power project in Indian SEZs in the biggest district in the country, but it is in a very rich ecology of marine life and mangroves;
  • The fisherfolk engage in a traditional way of fishing (foot fishing). The fisherpeople are migratory – live at the shoreline for 8-9 months of the year; with very large productivity but in a sustainable way
  • $4 billion project with financing from many IFI
  • No proper due diligence on social impact, but IFC approved it anyway;  no effective compensation for fisherfolk; the complaint went to CAO in 2011, especially about the impact on marine ecology  from effluent and port to bring in coal; water temperature increase has stopped foot fishing; there is also a decline in lobster due to mangrove
  • No employment for locals, and fly ash is causing negative impacts on communities; there is also increased alcoholism and increased domestic violence;
  • No cumulative impact study on the projects in the area; there have also been health impacts including respiratory ailments in children and elderly
  • IFC is resolute in not accepting it is making a mistake on the ground; and we had scepticism in approaching the CAO, but approaching the CAO paid off
  • National Institute of Oceanography is supposed to conduct a survey, but it hasn’t been done yet

Jelson Garcia, BIC

  • Important to know the chronology of the events – it took 7 years of demanding accountability until now, community organisations are important, it takes time and energy,
  • There are structural flaws in how IFC management deals with accountability issues
    • CAO is very useful, and can reinforce the stances of the community
    • But a strong audit report does not guarantee doing the right thing
    • Members of the board not unified, and don’t compel management to do the right thing
    • Counting on sympathetic board members and access to international NGOs is not a good strategy
    • Three things needed: systemic weakness of board intervention, leadership/management ethics, quality of response instead of PR
      • Board should get access to CAO audit and management response before the president signs it off
      • Any further disbursement on investments at CAO should require board review
      • Action plan needed on every management response to an audit – including with an exit option and budget for working on this
      • Leadership selection should require a history of accountability check
      • IFI jointly financed projects – the IFIs should convene together and have joint  compliance work

Discussion

Q: Is a good social assessment at the project ID phase enough to solve the problems? Accountability needs to have some meat, I am not sure the board should design an action plan with management – the board should demand action, and have authority to question things later?

Juan – we are talking post-facto, but we need political/historical analysis; need to know the historical context of poverty; policy has to change because the project increases poverty and structural violence; need research that includes people’s participation

Jelson – I disagree, this is not micromanagement with the board weighing in, when management is recalcitrant, we need other means

Sas – it shouldn’t be up to the board to get this right?

Q: social assessment need not be complicated, just read the newspaper! This was negligence and institutional culture with perverse incentives. Role of the board – the board is a problem itself, EDs take instruction, defend national interest, and sometimes are not very sharp.

Q: I was an ED at IDB, and we started palm oil in Honduras, we need to get at the truth. We must improve the human and sustainable development of Honduras. Dinant and FIs in Honduras are making a social and economic contribution to Honduras. But we need to respect human dignity and ask for justice.

Juan: there are different ways of searching for the truth, I don’t believe in coups, I believe in the truths of people, people are being oppressed; truth should be consist with the ethics

Meg Taylor: Compliance function is increasing and will important; the board has different interests too; I am not sure compliance can always deliver for communities; there is a difference between executive board and full board – there is a question of politics

Kate: what does the IFC think? Personally I am not sure the IFC takes accountability seriously until there is a monetary cost associated with it

Mark, IFC: I’ve been at IFC for 20+ years and had a long history, critiques are sometimes over the top and overly harsh, we have evolved massively and we keep raising our standards; our mandate is to promote private sector development; we have admitted mistakes before, remember the management and board constantly change; don’t assume we are evil

Juan: appreciate the international solidarity with Honduran people, we need to keep discussing the human rights in Honduras, and the key thing is the needs of Garufuna and campesinos

Bharat – I have a ray of hope and I feel it will be better in Mundra

 

 

More background on this issue

Rights

Background

20 November 2015 | Minutes

UK civil society meeting with Minister of State Desmond Swayne

Notes from a meeting on 7 September 2015 between the Minister of State of the UK Department for International Development (DFID) and civil society representatives, focusing on the World Bank's safeguards review.

IFI governance

Background

10 October 2014 | Minutes

UK civil society meeting with UK World Bank Executive Director Gwen Hines

Notes of a meeting with World Bank executive director Gwen Hines in October 2014.

IFI governance

Background

12 April 2014

An overview of the World Bank Group's new country engagement model

Trade

Background

11 April 2014 | Minutes

The future of Doing Business

IFI governance

Background

11 April 2014

What does real accountability mean in practice?

Accountability

Background

11 April 2014

Compliance Advisor Ombudsman (CAO) and dispute resolution process

IFI governance

Background

10 April 2014 | Minutes

CSOs - Inspection Panel meeting and discussion

Rights

Background

10 April 2014 | Minutes

Smart assessment: Capturing and managing human rights risks

IFI governance

Background

9 April 2014

IFC – Dinant and lessons learned

IFI governance

Background

8 April 2014

CSO roundtable with World Bank Group executive directors

Rights

Background

7 April 2014

Multilateral Development Banks & human rights: Issues, challenges, opportunities

Rights

Background

17 May 2013 | Minutes

Notes of IFC-CSO discussion of CAO financial markets audit

IFC has responsed to a letter from a number of NGOs sent to President Kim. These notes are from a 19 April 2013 meeting at IFC headquarters in Washington DC.

UK

Background

9 October 2008 | Minutes

Highlights: Meeting of UK NGOs with UK Alternate Executive Director to the World Bank

Meeting between UK NGOs and UK Alternate Execituve Director to the World Bank Caroline Sergeant on 5 September 2008.

IFI governance

Background

30 September 2008 | Minutes

UK NGO meeting with the Secretary of State for International Development, on the World Bank

Summary of meeting: the main agenda items were (1) World Bank governance; and (2) Climate change.

Latest articles on this issue

Rights

News

Calls for the World Bank to suspend funding to Honduras amid continued human rights concerns

Civil society responds to World Bank president Jim Yong Kim statement on human rights abuses and displacement by calls for the World Bank to suspend funding to Honduras amid continued human rights concerns.

29 June 2016

IFI governance

News

World Bank’s risk rating record for policy lending slammed by internal evaluator

A report by the World Bank’s Independent Evaluation Group has criticised the Bank’s track record in rating the risks of development policy loans.

9 February 2016

Rights

News

Renewed warnings over World Bank safeguards “dilution”

Further concerns have been raised over dilutions of the World Bank’s proposed new safeguards framework, as controversy arose over a Bank waiver of the indigenous peoples policy for a Tanzania project.

29 June 2016

Finance

Analysis

What is left of the rise of the South?

While the recent reforms to the IMF and World Bank governance reforms and the establishment of new Southern-led IFIs are symbolically important, they are thus far not a rupture with the Western-dominated international financial architecture.

5 April 2016 | Guest analysis
Graffiti remembrance of Berta Cáceres in London

Private Sector

News

IFC investments through financial intermediaries linked to human rights abuses in Honduras, again

A new complaint was lodged with the CAO regarding an IFC financial intermediary investment in Honduras, while another financial intermediary case, previously linked to the IFC, escalate into violence.

5 April 2016

Infrastructure

Commentary

Powerless: a call for World Bank community engagement in Nepal

Following a longstanding conflict over a World Bank-funded power line in Nepal, communities call for a fair dispute resolution process and meaningful consultation.

5 April 2016 | Comment

IFI governance

Analysis

IFC claims “absolute immunity” to avoid justice. But will it hold up in court?

This briefing provides an overview of the immunity of international organisations in US law, looking at a lawsuit brought against the IFC regarding the Tata Mundra coal power plant in India.

5 April 2016 | At Issue

IFI governance

Analysis

Where’s the remedy? Development banks must do more to remedy harm caused by the activities they finance

A report assessing the effectiveness of 11 development bank’s accountability systems found that they are not effective at consistently providing remedy to those harmed.

10 February 2016 | Guest analysis

Rights

Background

UK civil society meeting with Minister of State Desmond Swayne

Notes from a meeting on 7 September 2015 between the Minister of State of the UK Department for International Development (DFID) and civil society representatives, focusing on the World Bank's safeguards review.

20 November 2015 | Minutes

Accountability

News

IMF updates CSO guidelines

In mid-September the IMF concluded a consultation on its 2015 guidelines on the IMF staff engagement with civil society organisations.

28 September 2015