A crippled inspection panel

Created in 1993, the Inspection Panel of the World is a mechanism for public accountability for the bank. It came about as a response by the Bank’s Board of Directors to mass advocacy and uprisings in the South (beginning with the Narmada Bachao Andolan) and the North demanding for greater accountability and transparency in Bank projects, coupled with internal concerns for the same issues. The panel is unique in its functioning, theory, and mode of operation and possibly the most advanced accountability mechanism among the Multilateral Development Banks. It provides a platform and process by which local people affected by a Bank funded project can file a complaint and request an autonomous investigation into assessing compliance with the Bank’s own social and environmental policies.

The institution of the Inspection Panel was a progressive reform and has to be encouraged in other multilateral institutions as well. The Panel is a direct link between the people or communities directly affected by Bank-funded projects and the Bank. While it is autonomous and is supposed to work independent of the Bank, it can only make recommendations to the Bank board with respect to the investigation and the project. The final decision ultimately lies with the Bank board and management.

The advocacy and grassroots protests that culminated in the creation of the Inspection Panel provide a fascinating overview on how a transnational set of movements and coalitions moved the largest multilateral development bank in the world to deep introspection. An empirical study of this panel’s reports released so far provides insight into various forms of globalization, the neo-liberal economic practices of privatization and the globalization of social and environmental activism as well. Studying the IP’s evolution and reports also lends a certain amount of clarity in what needs to be done to improve the process of accountability on a whole as well as specifically with the Bank.

The panel has released a number of reports in relation to projects in Asia. There seems to be a fair amount of empirical evidence to show that the Inspection mechanism is not functioning completely in tune with the ideals upon which it was formed. The Bank itself is not fully succeeding in sustaining those ideals around which the panel was instituted, whether it is in failing to take action in violations, or not issuing an investigation even after the Panel has found enough evidence to do so. The study of nine reports covering Asia projects upto May 2004 led to an understanding on the sectoral nature of the projects that come up for review, the nature of the alleged/confirmed violations in the request and investigation, and the nature of the Bank’s response. In its reporting to the Bank, the Panel doesn't develop specific remedial measures. It's focus is on violations and the extent of them. Remedial measures are left to the Bank.

A majority of projects covered in the Asia reports are infrastructure projects like dams, roads, and extractive industries. Upto May 10th 2004, 18 out of 30 projects that came up to the Panel for investigation were large infrastructure projects. Six of these are Nepal Arun III, Bangladesh Jamuna Bridge, India NTPC Power Generation, India CSESMP & CRP, Phillipines Manila Second Sewerage, and India Mumbai Urban Transport. Out of the remaining twelve, 5 are large rural development projects, 3 are supposedly positive environmental and social projects, 3 are related to structural or sectoral adjustment programs, and 1 is the creation of a protected area (India Eco-development).

Most violations reported to the panel were with respect to environmental assessment, involuntary resettlement, indigenous peoples, project monitoring and evaluation, and information disclosure. All the Inspection Panel Reports have at least 2 or more of these violations in the request and reports. Violations on involuntary resettlement and environmental assessment topped the list, confirming the serious social and environmental impacts connected to Bank-funded projects.

In the early years of the Panel, Bank management overwhelmingly denied the alleged violations even before the investigations of its panel began, and in most cases even after a Panel investigation. In fact, the Bank was obdurate in approving investigations even when the Panel found sound evidence to issue one. This trend continued until the China Western Poverty Reductions Project in 1999. Since then the Board has approved investigations for all the projects that the Panel has found eligible for investigation.

Two cases in India are illustrative of the Panel's role in the accountability of the Bank. The NTPC Power Generation Project (Singrauli Region, States of MP and UP) is one. The NTPC's Resettlement Action Plans (RAPs) failed miserably in providing adequate compensation to the Project Affected People (PAP), for a number of reasons. First, the Bank management apparently wanted push for the loan and get an approval from the Board by Fiscal Year 1993, in turn pressuring staff in both countries to process the loan speedily. This resulted in a woeful examination on whether or not NTPC had the wherewithal to conduct the RAPs. Second, there was a lack of consultation with the PAPs. Both these represent violations on Bank policies with respect to Involuntary Resettlement, and Bank Supervision.

The Panel found prima facie evidence of harm and believed it was possible that serious violations by the Bank of its policies and procedures may have occurred to a degree beyond those identified by Bank management itself. Therefore, the Panel recommended that the Bank authorize, as a matter of urgency, an investigation into the involuntary resettlement and associated aspects of the project. Bank Management, again after much postponement, finally came to a decision to issue and investigation but restricting the Panel investigation to a desk study in Washington, D.C.

The rationale was as stated - “Preventing the Panel from undertaking a field investigation reflected the views of some Executive Directors who pointed out that it was unavoidable that the public would see it as an investigation--with all that word’s connotations of wrongdoing--of Borrower actions. The Panel, however, is not intended to investigate Borrower actions. Its role is to investigate allegations that the World Bank itself has failed to observe its own policies and procedures and whether this has resulted in the damage claimed by Requesters.”

The desk study found gross violations on both the parts of the Bank as well as NTPC on the policies of Environmental Assessment and Involuntary Resettlement. However the investigation was greatly hampered by the fact that it was not a full-fledged field investigation, and hence couldn’t state either compliance or non-compliance for some violations with certainty.

The second case is the Coal Sector Environmental and Social Mitigation Project and Coal Sector Rehabilitation Project (States of MP, UP, Orissa, Chhattisgarh, Maharashtra, and Jharkhand). The original RAP for Parej East did not reflect the actual situation in Parej East (Jharkhand) and was not location-specific as required by the Bank when it approved Coal India Ltd.’s R&R (Resettlement & Rehabilitation) policy. In the Panel’s view, the Bank failure during appraisal to ensure that the original RAP reflected reality on the ground resulted in many problems that were at the root of the Requesters complaints. In Parej East, many of the displaced PAPs had not been compensated at full replacement cost, with the result that many of them suffered and continue to suffer harm. Both these are violations of Bank policy.

One of the conditions of the Bank is that the Bank and Borrower have to disclose EIAs (Environmental Impact Assessments), RAPs, and IPDPs (Indigenous Peoples Dev Plans) to the PAPs. The Panel found that, while these and other relevant documents were made available at the Public Information Centers in DC and New Delhi, they were not made available at a public place accessible by the PAPs, affected groups and local NGOs. This was violation of the Disclosure of Information Bank Policy.

In response to the Panel's findings on the coal mines case, the Bank responded by stating that the NGOs hired for the preparation of the RAP conducted an extensive door-to-door survey with a detailed questionnaire to determine current socio-economic status. It held that since many land transactions in rural India are often not conducted in transparent open-market systems, real land prices are difficult to ascertain. The Bank's position was that is had taken measures to improve the disclosure of EIAs, RAPs, and IPDPs in project affected areas and there was no other action to be taken.

Despite the claim that the Panel is an autonomous arm of the Bank, it really is hindered by the fact that it can only recommend and not carry out remedial measures, as well as be on quite a tight leash from the Bank Board. There is also a weakness in the manner in which claimants harm is assessed. Currently, this is done comparing the situation at the time of filing the claim to what would have been if there had been no project at all. While, on the face of it, this might seem more progressive, it makes it more difficult for claimants to demonstrate harm. Instead, the situation should be compared that when which corresponds to full compliance with the Bank's rules and procedures.

The Bank has not implemented remedial measures that rise to the level of the Panel’s findings. Instead it has consistently displayed a willful ignorance of their own institution’s findings, and has been almost always accompanied by a denial of the violations or limited measures at best. In some cases where the project has really gone into a tailspin and the situation has been grave, the Bank has cancelled the project. (e.g. Arun III Hydroelectric Project and the Restructuring of the Arun III Access Road Project in Nepal, The Jute Sector Adjustment Credit Project in Bangladesh, etc.)

Not surprisingly then, there have been little positive results on the ground both in terms of the Bank's accountability and due relief to the projected affected people. In fact the Panel has fallen woefully short. One has to honestly question the credo with which an undertaking as progressive as the Inspection Panel has been instituted and handled.