World Bank Board Destroys Trust in Its Accountability System

How can one trust an institution’s commitment to accountability when it undermines and overrules its own independent accountability mechanism? Over 100 civil society organizations and experts are asking this question of the World Bank Group board of directors after an unprecedented decision last week to reject the Compliance Advisor Ombudsman’s (CAO) findings of harm caused by IFC investments in Cambodia’s microfinance sector. The harms caused by microfinance in Cambodia are well documented - including the loss of land and livelihoods, hunger, increased suicide risks, and threats of retaliation - and a yearslong CAO investigation confirmed IFC’s noncompliance with its own environmental and social requirements in these investments. However, the board explicitly discounted CAO’s findings and recommendations and allowed IFC to skate by with piecemeal actions that ignore most of CAO’s recommendations. As a result, CAO Director General, Janine Ferretti, resigned.

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These actions severely undermine the World Bank Group’s commitment to accountability at a time when the institution is rearranging its decades-long accountability system. Our statement asks the Board for a detailed explanation of what happened with this decision and a course correction that includes requiring IFC to develop a detailed, time-bound management action plan in consultation with the Cambodian complainants.

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Read our statement here.

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Related Coverage:

Wall Street Journal - World Bank Watchdog Finds Cambodian Microfinance Lenders Harmed Borrowers

Devex -  Watchdog head resigns after World Bank board rejects microfinance finding

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