The World Bank Considers Stepping Back from Accountability

by David Hunter

September 19, 2019

For nearly two years, the World Bank Board of Directors has fumbled what should be an easy decision to modernize its Inspection Panel, the primary institution that addresses the damage the Bank's lending can do to local communities. At issue is whether the Panel should be able to monitor the Bank's implementation of Management Action Plans developed and approved in light of Panel investigations. What to all outside observers would seem like an inherent part of closing any complaint – to ensure promised commitments were fulfilled – has been opposed by certain borrowers and Bank staff who believe they should not be held accountable for impacts on local communities in the first place.

Like other development financial institutions (DFIs), the World Bank's focus on large-scale projects leaves local communities bearing a disproportionate level of environmental and social risk. Too often, that risk turns into actual harm – harm that those who don't suffer it have persuaded themselves is absolutely necessary for the broader good. With the  goal of reducing this risk, 25 years ago, the Bank had the foresight and imagination to create the Inspection Panel, an experiment in giving a voice to those communities asked to bear the greatest burden for the Bank's promise of development and to bring those voices to the Bank's Board of Directors. Through this process, development can go forward, but with greater attention to what happens to those most vulnerable.

By nearly all measures, the experiment worked well. The Panel has acted professionally and objectively for over two decades. They have done their work effectively, handing nearly 140 complaints from more than 50 countries. As a result, many project-affected people have benefited – from the tens of thousands of people wrongly left out of the resettlement package in the 1996 Jamuna Bridge complaint to the dozens of women and girls subject to gender-based violence in the 2014 Uganda Transport Sector complaint

The process of "panel-proofing" a project has also strengthened the internal position of environmental and social staff within the Bank, who are often still pressured to downplay (and downgrade) the environmental and social risk categorizations of prospective projects. The Panel has been widely emulated, and more than 20 Panel offspring now help project-affected communities be heard in boardrooms at nearly every multilateral DFI in the world.

Despite its strong track record, the Panel remains suspect to many in Bank management and borrowing countries. A loose coalition has called into question what should frankly be an easy decision for the Board. The Board should want to know that the action plans it approves – in sometimes contentious, and always complex – Panel projects have been implemented. The Board should be assured that before the Panel closes a case, the community has received what the Board promised.

The Panel is ultimately the Board's (and the public's) instrument for hearing independent voices from affected communities, for learning about the Bank's implementation of environmental and social policies, and understanding the impacts on those communities that host Bank-financed projects. The Board controls the Panel process, including approval of what actions the Bank will take to respond to findings of non-compliance and of unwarranted harms to local communities. That the Panel cannot follow up on the implementation of that action plan before closing out a complaint undermines its (and the Board's) effectiveness and places yet another burden on local communities to ensure the harms are remedied. That's why nearly every other accountability mechanism monitors promised commitments as an inherent part of its role.

The arguments against Inspection Panel monitoring are not persuasive. Opponents propose authorizing the Bank's internal audit team to monitor implementation of the action plans. This is an expensive, ineffective, and ultimately insulting suggestion. The audit team has limited environmental and social expertise, would have no knowledge of the specific project or complaints that prompted the action plan in the first place, will not be known or trusted by the project-affected communities, and has no tradition of working with external stakeholders or transparency in issuing its reports. The internal audit team may be helpful in verifying that the Bank has implemented internal, systemic recommendations in the rare case that such recommendations are found in the action plan, but the Panel should be taking the lead even in those cases. After all, the community did not invite the audit team to help them; they invited the Panel. Moreover, placing the monitoring function with the audit team confirms the need for monitoring while implicitly and unjustifiably denying the Panel the ability to close out the complaints it receives.

A second argument against monitoring is that somehow the Panel has a conflict of interest. It is difficult to understand where a conflict lies for the Panel. The action plan is designed by Bank staff and approved by the Board. The Panel has no conflict that would prevent it from concluding that implementation of the Board-approved plan is inadequate. The scope of the monitoring is by definition limited to the scope of the action plan; it is not, nor should it be, designed to evaluate the Panel's report or identify areas of non-compliance missed by the Panel – those would have to be raised in a new complaint. Any new complaint that charged the Panel with errors may raise a conflict for the Panel, but such a complaint would not result from monitoring, and in all likelihood, would be received by a different set of Panel members.

Finally, concerns that a Panel authorized to monitor action plans will interfere with the role of Bank staff in implementation are overblown and not supported, either by the experience of other accountability mechanisms or by the track record of the Panel. The Panel has demonstrated that it can be trusted to exercise its monitoring role with professionalism and in proportion to the risks facing a community in a given project. Indeed, the Panel has monitored implementation with the Board's approval in several specific past cases as far back as the 1996 Jamuna Bridge claim, with no complaints from management.

The term "monitoring" may mistakenly connote an ongoing presence, but that is not how monitoring works in the context of other accountability mechanisms. Those mechanisms check in on implementation periodically and allow space for the harmed community to continue to be heard throughout action plan implementation. Moreover, the Board always retains authority to curtail the Panel's efforts in any project should monitoring become too invasive.

The bigger risk for the Board and the Bank is to under-monitor and learn belatedly that little or no action has been taken in implementing Board-authorized actions deemed necessary to remedy Bank non-compliance. After all, the International Finance Corporation's (IFC's) failure to respond to findings of non-compliance is partly what landed it before the U.S. Supreme Court. Like the people affected by IFC projects in India and Honduras, communities with grievances that have not been effectively addressed may turn to the courts and test the extent of the Bank's now-limited immunity from suit.

This is a particularly ill-advised time to deprive the Bank's flagship accountability institution of the ability to follow up on the Board-approved action plans. Rather, the Board should recognize that monitoring is a function inherent to the Panel's role in safeguarding communities from bearing the disproportionate costs of Bank-financed development and empower the Panel to verify that actions promised are actions taken.

Top photo by Wikimedia Commons user AgnosticPreachersKid, used under Creative Commons license CC BY-SA 3.0.

Tagged as: World Bank
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Also from David Hunter

David Hunter is a Professor of Law and Director of the International Legal Studies Program at American University, Washington College of Law, and Director of the Washington Summer Session on Environmental Law.

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