World Bank Group’s Compliance Audit slams IFC

Washington, Jan.19 (ANI): The CAO has held the IFC, the private lending arm of the World Bank Group responsible for repeated violations and blatant non-compliance with its own Performance Standards in its investment in the GKEL project.

The investigation asserted four Standards were repeatedly breached, despite sufficient and timely evidence to carry out compliance measures. Furthermore, IFC continued regular disbursements even when its own E&S Team downgraded the Environment & Social Risk Rating to the lowest denominator of 4, which is unsatisfactory.

The CAO confirmed systemic flaws and gaps in IFC’s lending through Financial Intermediaries to the High-Risk project leading to significant environmental and social impacts. IFC’s investment in IIF not only failed to deliver the intended client’s compliance with the Performance Standards but also failed in its pre-investment due diligence.

Moreover, the Audit Report categorically stated that IFC lacked a basis to conclude that its investment in IIF could “meet the requirements of the Performance Standards over a reasonable period of time”. That there was no scope for enhancing its own E&S Guidelines to be in line with IFC’s standards is amplified by CAO’s finding, “E&S requirements envisaged, when IFC’s investment in the Fund was approved, were not incorporated into the agreements that governed the investment.”

“The CAO report has reaffirmed our fear that the IFC has almost no ability or will to ensure client’s compliance with its E&S requirements in the case of FI lending.

If the project affected communities had not raised their voices, this instance of irresponsible financing would have totally gone unnoticed and IFC would have considered this project as business as usual. It is our continued perseverance that has led to the CAO’s strong criticism of IFC lending to GMR project.

The report strengthens the long term struggle of the people of Talcher who are determined to continue fighting for an equitable and sustainable development”, stated Amulya Nayak of Odisha Chas Parivesh Sureksha Parishad.

While IFC, in response to the CAO Report, has agreed in principle to develop action plans, these are unconvincing, inadequate and much delayed caricatures. IFC ‘strives’ to influence GKEL to complete implementation of the livelihood restoration plan by December 2018, almost eight years after the complaint was raised and ten years after land was taken from the people. As the CAO itself observes, not only has the project transitioned from construction to operation, but such time frames would only increase the risks of irreversible adverse impacts on the complainants. With no budgetary allocations set aside for the implementation of Action Plans, the questions over seriousness of intentions to carry these out are further reinforced.

“IFC instead of acknowledging their error and making amends have backed a sketchy Action Plan that is bound to fail, while continuing to support corrupt companies like GMR. We demand that the IFC immediately begin dialogue and consultation with the affected local community, working with us to develop a genuine, specific and credible plan and to ensure its implementation. The community has waited too long already”, says Bhakta Bandhu Behera, President, Mangalpur Gram Panchayat. (ANI)

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