Though the World Bank’s mission is to alleviate global poverty and promote equity, in practice, its International Finance Corporation appears structured to favor investment over social or environmental welfare, according to the new audit by an internal watchdog of the bank.
The report, by the Compliance Advisor Ombudsman, described the bank’s IFC as systematically encouraging staff charged with monitoring the environmental and social impact of projects not to “make waves.”
Indeed, the audit found, when officials raised objections to the supervision of a $30 million loan to the Corporación Dinant in Honduras, “this elicited pushback from the IFC portfolio manager, as a result of which the lead environmental specialist working on the case was replaced.”
Moreover, environmental and social staff depended on officials in the investment department for annual performance appraisals, meaning that those who raised objections could suffer lower pay and fewer promotions.
“[I]nvestment staff are minimally accountable for either the [environmental and social] performance of their projects or the quality of their relationships with” environmental and social staff, according to the audit.
One official interviewed by the auditors described curtailing the review of historical conflict in order to avoid uncovering inconvenient facts: “you look a few years back on land issues — but not too far” for fear of opening a “Pandora’s Box” of thorny ethical problems, that could stand in the way of investment, the official was quoted as saying.
Peter Rosenblum, a professor of international law and human rights at Bard College, described the IFC as an institution that is designed to keep the dollars flowing.
“The bank is set up to get the money out the door. It keeps those who do any kind of accountability in a separate space,” he said, adding that by the time problems were discovered, those responsible for a given project had often moved on.
“Three, four and five years later, people look back and say, ‘Oh, Gosh! I failed.’ And unfortunately there’s nothing in the system for integrating lessons.”