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EXAMINING RESULTS AND ACCOUNTABILITY 

AT THE WORLD BANK 

HEARING 

BEFORE THE

SUBCOMMITTEE ON MONETARY 

POLICY AND TRADE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

MARCH 22, 2017 

Printed for the use of the Committee on Financial Services 

Serial No. 115–8 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

PATRICK T. MCHENRY, North Carolina 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

STEVE STIVERS, Ohio 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

THOMAS MacARTHUR, New Jersey 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

CHARLIE CRIST, Florida 

RUBEN KIHUEN, Nevada 

KIRSTEN SUTTON MORK, Staff Director 

(III) 

SUBCOMMITTEE ON MONETARY POLICY AND TRADE

ANDY BARR, Kentucky, Chairman 

ROGER WILLIAMS, Texas, Vice Chairman 

FRANK D. LUCAS, Oklahoma 

BILL HUIZENGA, Michigan 

ROBERT PITTENGER, North Carolina 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

ALEXANDER X. MOONEY, West Virginia 

WARREN DAVIDSON, Ohio 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

GWEN MOORE, Wisconsin, Ranking Member 

GREGORY W. MEEKS, New York 

BILL FOSTER, Illinois 

BRAD SHERMAN, California 

AL GREEN, Texas 

DENNY HECK, Washington 

DANIEL T. KILDEE, Michigan 

JUAN VARGAS, California 

CHARLIE CRIST, Florida 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

March 22, 2017 ................................................................................................. 1 

Appendix: 

March 22, 2017 ................................................................................................. 27 

WITNESSES 

WEDNESDAY, MARCH 22, 2017 

Berger, Elana, Social Inclusion and Accountability Program Manager, Bank 

Information Center .............................................................................................. 10 

Chavkin, Sasha, Reporter, International Consortium of Investigative Journalists ......................................................................................................................... 5

Ensminger, Jean, Edie and Lew Wasserman Professor of Social Science, California Institute of Technology ............................................................................. 6 

Morris, Scott A., Senior Fellow, Center for Global Development ........................ 8 

APPENDIX 

Prepared statements: 

Berger, Elana .................................................................................................... 28 

Chavkin, Sasha ................................................................................................. 33 

Ensminger, Jean ............................................................................................... 69 

Morris, Scott A. ................................................................................................. 77 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Moore, Hon. Gwen: 

Letter to Dr. Jim Yong Kim, President, World Bank Group, dated July 

14, 2016 .......................................................................................................... 81 

Written statement of Oxfam America ............................................................. 83 

Memorandum from Admiral James Stavridis to the Secretary of the 

Treasury, dated July 25, 2011 ..................................................................... 84 

Memorandum from CDR USTRANSCOM and CDR USCENTCOM to the 

Secretary of the Treasury, dated May 10, 2010 ......................................... 86 

Ensminger, Jean: 

Written responses to questions for the record submitted by Representative Barr ........................................................................................................ 87 

(1) 

EXAMINING RESULTS AND 

ACCOUNTABILITY AT 

THE WORLD BANK 

Wednesday, March 22, 2017 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON MONETARY

POLICY AND TRADE, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:02 a.m., in room 

2128, Rayburn House Office Building, Hon. Andy Barr [chairman 

of the subcommittee] presiding. 

Members present: Representatives Barr, Williams, Pittenger, 

Love, Hill, Emmer, Tenney, Hollingsworth; Moore, Sherman, Heck, 

and Vargas. 

Ex officio present: Representatives Hensarling and Waters. 

Chairman BARR. The Subcommittee on Monetary Policy and 

Trade will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the subcommittee at any time. 

Today’s hearing is entitled, ‘‘Examining Results and Accountability at the World Bank.’’ 

I now recognize myself for 5 minutes to give an opening statement. 

I welcome members to our hearing today. This year is especially 

important for the World Bank as Congress will be considering the 

18th replenishment of the International Development Association, 

or IDA, the Bank’s lending mechanism for the world’s poorest countries. Since IDA replenishments occur on a 3-year cycle, 2017 is a 

rare opportunity for Congress to discuss appropriate resource levels 

for the Bank as well as any needed reforms. 

As the World Bank’s largest shareholder, the United States has 

a leading role in the Bank’s governance. If we take that role seriously, we must hold the Bank to the highest standards, demanding 

accountability for its projects and ensuring that it remains focused 

on poverty alleviation. 

I am concerned, however, that internal incentives at the Bank 

may prioritize lending over producing real results. Such incentives 

have been criticized for literally decades, yet the Bank’s own evaluation office has indicated little has changed. 

Let us be clear. No one claims that the Bank’s officials will always get things right. But its incentives appear designed to elevate 

lending at the expense of learning from past mistakes. As the 

2 

Bank’s Independent Evaluation Group, or IEG, concluded in a 2014 

report, ‘‘This continuing push to lend increases the opportunity 

costs of dedicating time and effort to learning and knowledge-sharing and distorts the metrics of performance in favor of inputs and 

short-term outputs rather than on results and development solutions.’’ 

The evaluation office added, ‘‘IEG interviewees indicated that 

senior management should give knowledge the same status as 

lending in management attention, monitoring, and promotion.’’ 

Well-designed incentives should focus our attention more on the 

lives of Bank beneficiaries, not on loan amounts approved by the 

board. Such incentives will place more value on the poors’ rights 

and freedoms without which long-term economic growth is unlikely. 

As Nobel Prize-winning economist Angus Deaton has written, 

‘‘World Bank officials have long moved on to other things by the 

time the effects of their handiwork become visible. There is no responsibility of member-country shareholders to the recipients of 

their aid.’’ 

Indeed, the Bank’s projects in IDA countries have, at times, 

harmed their intended beneficiaries or emboldened regimes that 

are more committed to personal enrichment than they are to their 

citizens’ futures. 

Today, we will learn about some of those projects, and how their 

failures, some of which reflect lapses in basic project management, 

can spur improvements at the Bank. Of course, the Bank is not 

new to reform initiatives. Its recent history has seen the introduction of matrices, scorecards, frameworks, task forces, and other 

well-intentioned ideas. In the end, however, this committee expects 

to see genuine reform, not the branding of reform. 

Such reform will, of course, hinge on the Bank’s own leadership. 

I am therefore concerned by reports from within the Bank that senior officials may not appreciate what is at stake. In the Bank’s 

2015 employee engagement survey, a mere 38 percent of respondents indicated that senior management clearly communicates strategic priorities, while only 26 percent responded that management 

‘‘creates a culture of openness and trust.’’ Only 34 percent of respondents had any confidence that the Bank would take action on 

these findings. 

The Executive Committee of the World Bank’s Staff Group Association called these results, ‘‘sobering, humbling, embarrassing, 

humiliating, appalling, and a number of other adjectives that could 

be added to the list.’’ 

If the Bank is to be successful in its goal to eliminate poverty, 

then business as usual is not enough. The World Bank may have 

the best of intentions, but we must call on the Bank to deliver results, not simply look for new ways to push money out the door. 

In addition, the Bank is involved in a number of countries whose 

economic prospects are key for U.S. security interests. If the Bank 

cannot design and execute projects effectively, then not only could 

the world be less well off, it could be less safe. 

I want to thank the witnesses again for testifying today. And I 

look forward to hearing their thoughts on how we can make the 

World Bank more accountable and more results-driven. 

3 

The Chair now recognizes the ranking member of the subcommittee, the gentlelady from Wisconsin, Gwen Moore, for 3 minutes for an opening statement. 

Ms. MOORE. Thank you so much, Mr. Chairman. And good morning, colleagues. 

I want to welcome our very distinguished panel and thank them 

for their time. 

I do see a familiar face, a former staffer of this committee, Mr. 

Morris. You are proof that there is life after Congress and you inspire me. 

Let me jump right into it. The World Bank is the flagship development bank in the world. And it is my intention to keep it that 

way. As a matter of fact, as we were going over material last night, 

we saw testimony from former Representative John Kasich, now 

the Governor of Ohio, who was the ranking member of the Budget 

Committee, and spoke passionately on behalf of the World Bank. 

I consider myself as well to be a staunch advocate of the Bank, 

its mission, and I do believe that the moral authority and the involvement of the United States has led to a safer and more just 

world. And I am also aware of areas where the Bank has fallen 

short. 

I pushed hard to get the best, most comprehensive safeguards in 

place for exactly the reasons that we have seen in Uganda. Doing 

development in economically depressed areas means almost by definition that you will operate in areas with limited judicial capacity, 

questionable rule of law, and a desire to get the job done that could 

lead to a certain kind of myopia of money. It is why a strong social 

and moral grounding is very critically important. 

I sent a letter with then-Subcommittee Chairman Huizenga— 

and without objection, I ask unanimous consent to place it in the 

record—that made quite clear my disgust for what happened surrounding the Bank projects in Uganda. 

I have met with the Bank about it since. And I get the sense that 

lessons learned have been lessons applied. Now, we have stronger 

safeguards, and I am happy about that. And I hope my Republican 

colleagues are pleased about that as well. 

In fact, I would love for our private U.S.-based institutions to 

mimic some of the social and environmental impacts of projects. I 

wish that more financial institutions were as responsive to this 

body as the Bank has been. And even as we fund the World Bank, 

we back our banks as taxpayers found that we did in 2008 and 

2009. 

If there is something that comes out of Uganda at this hearing, 

I hope it is that safeguards are not only important, but meticulously observed, even in the difficult position of when the pressure 

to finish the project is on. 

I yield back my 2 seconds. 

Chairman BARR. Thank you. The gentlelady yields back. 

And we will reserve the opportunity for the ranking member of 

the full Financial Services Committee, Ms. Waters, to give a 2- 

minute opening statement, but for now, I am going to go ahead and 

introduce the witnesses here. 

First, we welcome the testimony of Mr. Sasha Chavkin, who is 

the lead reporter for the International Consortium of Investigative 

4 

Journalists (ICIJ’s) ‘‘Evicted and Abandoned’’ investigation, which 

analyzed Bank projects across the world and their unintended impact on the poor. He has previously written for ProPublica, Columbia Journalism Review, and The New York World. Mr. Chavkin has 

reported from countries including Ethiopia, South Sudan, Honduras, and Sri Lanka, and his work has been recognized by the Society of Professional Journalists, the Society of Environmental 

Journalists, and the Sidney Hillman Foundation. 

Second, Dr. Jean Ensminger is the Edie and Lew Wasserman 

Professor of Social Science at the California Institute of Technology, and is a past president of the Society for Economic Anthropology. Dr. Ensminger has conducted several decades of research 

on Africa, and her current research focuses on corruption in development and decentralized government. 

Third, Mr. Scott Morris is a senior fellow at the Center for Global 

Development, and a director of the U.S. Development Policy Initiative. Mr. Morris also served as Deputy Assistant Secretary for Development Finance and the Debt at the U.S. Treasury Department 

during the first term of the Obama Administration. 

And finally, Ms. Elana Berger is the Child Rights Program manager at the Bank Information Center. She is a human rights lawyer with significant experience working on education and childrens’ 

rights at the international level. 

Each of you will be recognized for 5 minutes to give an oral presentation of your testimony. 

But before we turn to our witnesses, I would like to give the 

ranking member of the Full Financial Services Committee, the gentlewoman from California, Ms. Waters, an opportunity for a 2- 

minute opening statement. The Chair now recognizes Ranking 

Member Waters for 2 minutes. 

Ms. WATERS. Thank you very much. 

I would like to welcome our witnesses here today to discuss one 

of the very important issues within our jurisdiction, which is oversight of U.S. participation in the multilateral development banks, 

including the World Bank. 

There is by now widespread agreement that poverty in the developing world is one of the major challenges facing the world today. 

While the success of some countries over the past 50 years has 

shown that development is possible, the failures elsewhere have 

shown that it is not inevitable. 

I believe that the criticism of the World Bank that you will hear 

today should be understood within a context that also recognizes 

the great deal of progress the Bank has made in many areas over 

the past few decades, in large part due to pressure from civil society, from individual governments, from parliaments, including the 

U.S. Congress, and in particular from this committee itself. 

Over the years, this committee has successfully insisted upon 

much more transparency and disclosure of information from the 

World Bank. Many years ago, we conditioned U.S. support for the 

Bank on the creation of the Inspection Panel, an independent accountability mechanism that would investigate allegations by citizens of the Bank’s failure to follow its own policies and procedures. 

Working in a bipartisan fashion, we successfully pushed for debt 

relief, and then for better and more effective debt relief for impovVerDate Nov 24 2008 17:22 Jan 08, 2018 Jkt 027249 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\27249.TXT TERI
5 

erished countries. We have also pushed for less burdensome conditionality and more attention to the social dimension that must be 

present when decisions about development assistance are made. 

I welcome both the criticism and the recommendations that our 

witnesses will make today, which, in my view, means that you will 

also be making the case for strong U.S. leadership within the 

Bank, and for more vigorous congressional oversight, and for this 

committee, in particular, to take a more active role in helping to 

shape the development policies that have helped make the World 

Bank the preeminent development institution that it has become. 

I would like to thank the Chair, as well as Ms. Moore, for all of 

the work that she has done to help us make sure that we give the 

kind of support to the World Bank that is needed. 

Chairman BARR. Thank you. The gentlelady’s time has expired. 

Each of the witnesses will now be recognized for 5 minutes to 

give an oral presentation of their testimony. And without objection, 

each of your written statements will be made a part of the record. 

Mr. Chavkin, you are now recognized for 5 minutes. 

STATEMENT OF SASHA CHAVKIN, REPORTER, INTERNATIONAL CONSORTIUM OF INVESTIGATIVE JOURNALISTS 

Mr. CHAVKIN. Chairman Barr, Ranking Member Moore, and 

members of the subcommittee, thank you for inviting me to testify 

about the World Bank. 

I am a reporter for the International Consortium of Investigative 

Journalists, or ICIJ, a nonprofit news organization that conducts 

investigative reporting on global issues of public interest. We work 

through large collaborations with media outlets around the world, 

such as our project last year, ‘‘The Panama Papers.’’ 

I was the lead reporter in a global ICIJ investigation entitled, 

‘‘Evicted and Abandoned,’’ which was published in April 2015, and 

examined forced displacement caused by projects financed by the 

World Bank. Our team included more than 50 reporters from outlets in 21 countries. We reported on the ground in 14 countries in 

Africa, Asia, and Latin America. 

And we analyzed more than 6,600 World Bank documents that 

tracked what the Bank calls involuntary resettlement associated 

with projects. We found that over a decade, spanning from 2004 

through 2013, projects financed by the World Bank physically or 

economically displaced an estimated 3.4 million people around the 

world. That means that these people either lost their homes, their 

livelihoods were damaged, or they lost some or all of their land. 

The figure was drawn from the Bank’s own documents tracking 

resettlement and includes projects funded by the IDA and IBRD, 

but not the Bank’s business lending arm, the IFC. 

We also found that the Bank regularly failed to follow its own 

safeguards for protecting displaced communities. These commitments include resettling communities in equal or better conditions 

than they lived in before, restoring lost livelihoods, and avoiding 

violent evictions. 

We found instead that the Bank repeatedly funded governments 

that not only failed to adequately resettle communities, but in 

some cases were accused of human rights abuses such as rape, 

murder, and violent evictions associated with Bank projects. We 

6 

found in several cases that the World Bank continued to bankroll 

these borrowers even after evidence of these abuses came to light. 

One of the most significant cases we examined was the Bank’s 

support for a health and education initiative in Ethiopia called the 

Protection of Basic Services Project. We investigated allegations 

that some of this money was diverted to an Ethiopian government 

program called Villagization which violently evicted a minority 

tribe called the Anuak from their traditional farmlands which were 

then turned over to investors. 

I met with Anuak refugees from Ethiopia in a camp in South 

Sudan. I encountered a devoutly Christian community whose members described being beaten, raped, and seeing family members 

killed by Ethiopian soldiers who were driving them from their land. 

I also spoke to the former Ethiopian governor who was in charge 

at the time of the evictions, now living in exile in the Philippines, 

who described to me how he personally diverted $10 million in 

World Bank funds to the Villagization program. 

Despite the evidence presented by refugees, human rights 

groups, and others, the World Bank refused to acknowledge that 

their funding had supported these evictions. Last year, the Bank 

announced an extension of a similar initiative in Ethiopia under a 

different lending mechanism that now makes it impossible for communities to file complaints to the World Bank ombudsman. 

There are three findings from our reporting that seem most relevant to the work of the committee today. One is that the World 

Bank has serious problems with enforcing its safeguards and holding its borrowers accountable for following its rules. The second 

point is that the Bank can be responsive to pressure in the form 

of negative publicity and the influence of donor countries, particularly the United States. 

Shortly after ICIJ shared its findings with the Bank, the Bank 

announced a resettlement action plan that boosted funding for safeguards enforcement by 15 percent and hired 11 new safeguard specialists. The resettlement documents and ombudsman report that 

allowed ICIJ to conduct our investigation existed because the Bank 

had previously adopted an open-records policy and created an ombudsman, the Inspection Panel, at the insistence of the United 

States and members of this committee. 

Finally, the failures in safeguard enforcement do not negate the 

fact that the same projects may also have positive effects on development. In Ethiopia, for example, the Bank said that its investments helped slash child mortality in half in less than a decade. 

Thank you. 

[The prepared statement of Mr. Chavkin can be found on page 

33 of the appendix.] 

Chairman BARR. Thank you. The gentleman’s time has expired. 

Dr. Jean Ensminger, you are now recognized for 5 minutes. 

STATEMENT OF JEAN ENSMINGER, EDIE AND LEW 

WASSERMAN PROFESSOR OF SOCIAL SCIENCE, CALIFORNIA 

INSTITUTE OF TECHNOLOGY 

Ms. ENSMINGER. Chairman Barr, Ranking Member Moore, and 

distinguished members of the subcommittee, it is an honor to have 

been invited here to testify. 

7 

In 2007, based upon my research experience in Kenya, I asked 

the World Bank to investigate corruption in the Kenya Arid Lands 

Project. INT is the World Bank’s integrity vice presidency and it 

has sole responsibility for investigating corruption in World Bank 

projects. In its investigation of 28,000 financial transactions from 

the Arid Lands Project, INT concluded that 62 percent were suspected fraudulent or questionable. The Arid Lands Project was 

then shut down. 

The Arid Lands case tells us something about the effectiveness 

of routine monitoring systems at the World Bank. For 14 years, 

this project was rated ‘‘satisfactory,’’ despite the monitoring of the 

World Bank’s task team leader, external supervision missions, regular financial management reviews, and audits. In 2007, it was 

even referred to as ‘‘exemplary’’ and served as a model for a new 

project. 

Two of Arid Land’s biggest problems were lack of transparency 

and excessive staff discretion over the selection of project recipients. Control of future funding provided leverage to silence beneficiaries who complained about project corruption. Most troubling 

to me is that I see the same patterns on the ground today in World 

Bank projects. 

Recently, a villager asked the regional head of a current World 

Bank project in his area how much money his region was budgeted 

to receive from the project. The head of the project refused to tell 

him. Two weeks ago, I made the same request of that project’s two 

World Bank task team leaders. I have received no response. 

Fortunately, not all World Bank projects are as poorly designed 

and implemented as Arid Land’s. The original Indonesian Community-Driven Development Project is deservedly often cited as the 

great success story. 

The Indonesian project was specifically designed to bypass the 

major centers of government corruption. Private firms were used to 

hire many project staff rather than seconding them from corrupt 

government ministries. The tone at the top of the project was inspiring and this attracted reform-minded job applicants. 

The Indonesian project used a democratic and competitive selection process controlled by beneficiaries to allocate funds. In striking 

contrast to the secretive nature of Kenyan projects, the Indonesian 

project also aggressively encouraged uncensored media coverage 

and academic research by third parties to shine a spotlight on 

problems like corruption. 

What the Indonesian case teaches us is that development aid can 

work to better the lives of the poor. But when projects don’t work 

well, as was the case with Arid Lands, sanctions are necessary. 

This is where INT comes in. My concern is that INT has moved 

away from intensive forensic audits in favor of a concentration on 

debarment cases. 

Since the Arid Lands forensic audit 51⁄2 years ago, INT has posted 48 investigation reports on its website; 45 of the 48 are investigations of companies. The vast majority of these cases involved 

one company that was found guilty of fabricating documents in 

order to qualify to bid on a contract. 

Company debarment is important work. The problem is that corruption in many World Bank projects is not limited to a few rogue 

8 

contractors. In systemically corrupt countries like Kenya, it is common for World Bank projects to be captured by the government 

ministry cartels from which the project staff is seconded. Failure to 

undertake these investigations leaves a vast segment of the World 

Bank’s portfolio exposed. 

There is an inherent conflict of interest between the mandate of 

INT to fight corruption and operations’ goals to keep the money 

flowing and client states happy. INT is in the political crosshairs. 

In my written testimony, I list some specific recommendations for 

reforming INT and transparency policy. The first is to move INT’s 

direct report out of operations and over to the Audit Committee of 

the Board of Directors. 

Regarding transparency, while the new disclosure policies of 

2010 are laudable, they specifically exclude access to project financial data. These are precisely the data that beneficiaries and third 

parties need to fight corruption. 

Thank you for your time, and I welcome your questions. 

[The prepared statement of Dr. Ensminger can be found on page 

69 of the appendix.] 

Chairman BARR. Thank you. 

Mr. Morris, you are recognized for 5 minutes. 

STATEMENT OF SCOTT A. MORRIS, SENIOR FELLOW, CENTER 

FOR GLOBAL DEVELOPMENT 

Mr. MORRIS. Chairman Barr, Ranking Member Moore, thank you 

for the opportunity to testify this morning on the World Bank’s 

work in low-income countries. 

The World Bank is a leading provider of development assistance 

in the world, working in nearly 150 countries globally. But by 

‘‘leader,’’ I don’t just mean that the Bank is the largest. The World 

Bank consistently appears as the most or one of the most effective 

development institutions globally on key measures of cost efficiency, project outcomes and policy influence. 

These were the findings of aid reviews conducted by governments 

like the U.K., Australia, and the Netherlands; by independent organizations like mine; and by an extensive survey of developing country leaders conducted by Aid Data, a U.S.-based research organization. 

This broader context is important for considering questions of 

World Bank reform and instances of project-level failures. I would 

like to briefly address how to think about cases of failure in the 

Bank, three areas of reform I think deserve consideration, and finally the degree to which the United States can continue to exercise effective oversight in this multilateral institution. I elaborate 

further in each of these areas in my written testimony. 

Risk of failure is inherent in the work that the World Bank does, 

particularly operating in difficult environments, whether in very 

poor countries like Uganda, or countries beset by conflict like Afghanistan. Zero risk would essentially mean zero activity for the 

institution. 

The key questions are, how does the Bank manage risk and promote effectiveness? And how well does it learn from its failures 

when they do occur, as they clearly did in the three cases highlighted by the other witnesses this morning? 

9 

The Bank has multiple areas of monitoring and checks aimed at 

promoting effectiveness and guarding against corruption. The 

Bank’s investigative arm, the INT, typically finds that substantiated cases of fraud and wrongdoing are associated with about 3 

percent of the Bank’s active projects. 

In these cases, the INT office uses measures such as debarment 

of firms, and works with local authorities to pursue prosecutions. 

Separate from the INT, the Bank also has an independent complaints mechanism, the Inspection Panel, as we heard, with origins 

in this committee. 

There is broader evidence that the World Bank does learn from 

its failures, but let me point to two examples that followed directly 

from the Uganda case. The Bank’s Board of Directors just recently approved a $230 million road project in Bolivia in which risks similar to the Uganda 

project, associated with a large influx of labor, were actively identified and mitigated as part of the project design. 

More systematically, the Bank has also launched a Gender-Based 

Violence Task Force which should, in part, help to address a longstanding problem within the institution in the sense that lessons 

learned in one region or sector are overly siloed and are not readily 

taken up in other regions. 

But how can the Bank do better? I offer three ideas aimed at promoting effectiveness and guarding against corruption. First, greater reliance on results-based mechanisms, like the Program for Results. Under the program, the Bank and the country agree at the 

outset on appropriate standards of oversight and a set of desired 

outcomes, such as an increase in literacy rates in an education program. And the Bank only disburses money if the outcomes are 

achieved, rather than simply disbursing money to pay for project 

inputs. 

Second, we would have a stronger overall evidence base for the 

Bank’s performance if INT had the capacity to conduct randomized 

audits of Bank projects each year, so not just responding to signs 

of corruption, but proactively reviewing a random selection of 

projects. 

Third, the Bank could move more aggressively toward adopting 

new technologies to improve project accountability and performance. For example, recognizing the remarkable degree of 

smartphone coverage, even in the poorest countries, the Bank could 

be deploying apps that enable whistleblower-type reporting as well 

as more transparent, community-level rating of Bank projects. 

The last point I would like to make relates to the role that you 

play. As the largest cumulative donor to the World Bank’s IDA 

since its founding, the United States, and particularly the U.S. 

Congress, has effectively leveraged these resources to set policy in 

the institution. U.S. commitments also enable the World Bank to 

engage effectively in situations that are critical to our interests, 

such as supporting Jordan’s hosting of a massive influx of refugees 

from Syria, efforts to contain Ebola in West Africa, and just this 

week a $1.6 billion commitment to address unprecedented famine 

in countries like South Sudan and Yemen. 

With recent financial reforms to IDA, every dollar the United 

States contributes now leverages nearly $25 in assistance to lowVerDate Nov 24 2008 17:22 Jan 08, 2018 Jkt 027249 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\27249.TXT TERI
10 

income countries each year. But steering the Bank’s work requires 

active engagement, which in turn continues to rely on a strong U.S. 

pledge to IDA and a commitment to honoring that pledge. 

Finally, my time is up, but I do want to encourage you as a committee to consider participating in some kind of process that is 

looking broadly at our aid toolkit through a formal review process, 

whether a multilateral aid review or one that encompasses the bilateral programs, too. 

Thank you. 

[The prepared statement of Mr. Morris can be found on page 77 

of the appendix.] 

Chairman BARR. Thank you, Mr. Morris. 

And now, Ms. Berger, you are now recognized for 5 minutes. 

STATEMENT OF ELANA BERGER, SOCIAL INCLUSION AND ACCOUNTABILITY PROGRAM MANAGER, BANK INFORMATION 

CENTER 

Ms. BERGER. Chairman Barr, Ranking Member Moore, thank you 

for inviting me to testify this morning. 

I manage the Social Inclusion and Accountability Program at the 

Bank Information Center, or BIC. BIC is an independent, nongovernmental organization that works to ensure that projects implemented by multilateral development banks work for the communities they are meant to serve. BIC became involved in advocacy 

around the Kamwenge-Kabarole roadway, part of the World Bankfunded Uganda Transport Sector Development Project in the summer of 2014. 

Joy for Children, a Ugandan civil society organization, alerted us 

to the fact that the project was leading to sexual exploitation of 

young girls along the roadway construction. The project had created a boom-town effect, where there was a large influx of construction workers into what had been a somewhat isolated, rural 

community. These workers were sexually harassing, exploiting, and 

raping teenage girls. Higher rates of teenage pregnancy, HIV/AIDS, 

and girls dropping out of school soon followed. 

The residents had wanted this roadway to be built and recognized the significant economic benefits that would result from its 

construction. Even when the project started resulting in harm, the 

residents supported its continuation. They simply wanted the harm 

to their families and communities to be addressed. 

Months of attempts to convince the contractor carrying out the 

project to take measures to prevent the harm was fruitless as the 

contractor made clear that they did not see the community’s problems as their responsibility. Efforts to seek assistance from the 

Ugandan government were similarly unsuccessful. 

When the community first brought their concerns around this 

project to the World Bank, the immediate response was denial. It 

was only when the community filed a request with the Inspection 

Panel, the Bank’s independent accountability mechanism, that the 

Bank took the communities’ concerns seriously, ultimately taking 

the extraordinary step of canceling the project. 

However, the significant delay between the community raising 

concerns and the Bank addressing this harm meant that there was 

11 

a 9-month period during which several additional girls reportedly 

became pregnant, dropped out of school, or contracted HIV. 

In our experience, it is profound failures at the Bank that lead 

to the most significant reforms. And we are seeing that now. 

After the Inspection Panel released its report from the investigation, Bank management took the unusual step of putting together 

a document analyzing lessons learned to look at the broader institutional failures behind the harm suffered by this community. 

In this document, the Bank noted several critical gaps that allowed these failures to occur, including the lack of expertise within 

project teams to properly assess, prevent, and monitor genderbased violence (GBV), and a failure to adequately listen to communities and civil society. To remedy these issues, the Bank established a GBV Task Force. 

The World Bank has also used its considerable influence to seek 

reform within the Ugandan government. The Bank has provided 

ongoing capacity-building support to the Uganda National Roads 

Authority, aimed at strengthening its ability to monitor and supervise contractors’ compliance with environmental and social standards and to reduce corruption within that agency. 

Going forward, to ensure that the Bank comes out of this experience stronger and more able to prevent and respond to serious negative impacts from Bank projects, it is absolutely essential that the 

Bank fully implement all of the reforms discussed in the lessonslearned document, along with all of the recommendations made by 

the GBV Task Force. 

The Bank must also improve its social assessments to identify 

risks to children and other vulnerable groups who are least likely 

to have a voice in the process. 

Additionally, the Bank must prioritize genuine citizen engagement. It must seek out ways to listen more effectively to communities and local civil society organizations. The Bank must be prepared to swiftly address reports of sexual abuse, involving trained 

experts in any investigation. 

In closing, we would like to note that throughout the Bank’s history, the U.S. Government has been a critical leader in reforming 

the institution, which has led to lasting changes across the development finance landscape. In this case specifically, the U.S. Government played a leadership role at the World Bank Board to encourage broad institutional reforms aimed at preventing similar failures in the future. 

Today, continued U.S. leadership is needed to ensure that proposed reforms are implemented. We appreciate the committee’s interest in this case, and we look forward to working together to advance reform at the World Bank. 

[The prepared statement of Ms. Berger can be found on page 28 

of the appendix.] 

Chairman BARR. Thank you to all the witnesses for your testimony and your recommendations on how to reform and improve 

the operations at the World Bank. 

The Chair now recognizes himself for 5 minutes. 

In the past, we have seen U.S. national security officials make 

a case for the multilateral development banks, arguing that economic support for our allies serves key interests. Given the 

12 

downsides to some of the Bank’s assistance that we have heard 

about from our witnesses here today, I wanted to ask our panel, 

particularly Mr. Morris, what effect does support for oppressive regimes have on our national security interests? Are we resigned to 

working with governments that may help us in the short term, but 

whose long-term impact on their citizens creates potential security 

risks further down the road? What are the tradeoffs here? 

Mr. MORRIS. Thank you, Mr. Chairman. I think it is really an 

important question and points to the underlying challenges that an 

institution like the Bank actually faces, and particularly working 

on behalf of the interests of the United States as its largest shareholder. The Bank is engaged in some very difficult environments 

with client-country governments that, in some instances, would not 

meet our standards of democracy and freedom. 

But it is also in those very instances where the United States is 

pushing the Bank to be engaged because it is often situations 

where we have troops on the ground and we need the Bank there 

doing things like road projects that are directly supporting our efforts. 

But you are right, there is a broader challenge of the sustainability of that kind of engagement if we don’t have a credible clientcountry government partner. And this is just an ongoing challenge. 

I think in some instances, the United States has been very good 

at pushing the Bank to pull back in the face of clear problems of 

governance. But frankly, in other situations where we have direct 

strategic interests, we may be pushing in the other direction. 

Chairman BARR. Thank you. 

And for the other three witnesses, I wonder if we could make or 

should make the link between the Bank’s activities and national 

security more explicit. For instance, if the World Bank takes on the 

issue of refugees, what should the Bank be doing to prevent extremism or radicalization within those communities? Alternatively, 

should the Bank refocus some of its lending to regions and countries where extremism, radical Islam is a particular problem? 

Would any of the other witnesses care to chime in on that? 

Mr. CHAVKIN. Thank you, Mr. Chairman. I think that what the 

Bank needs is more of an ability and willingness to walk away 

from the table when serious abuses are occurring. I am not a national security expert, but what I can say is that there have been 

a number of cases in recent years where there have been repeated, 

credible claims and evidence that has emerged of governments and 

companies that have received support from the World Bank group 

engaged in human rights abuses or corruption. And that cases like 

the project in Uganda where the Bank pulls back are vaninshingly 

rare. 

And obviously, lending is an important source of leverage for the 

United States as well. But it seems that often, as you mentioned 

before, the desire to lend tends to outweigh an ability to draw a 

firm line when it comes to governments and companies using Bank 

projects to commit abuses. 

Chairman BARR. And Dr. Ensminger and Ms. Berger, when you 

answer this question, when the World Bank works with a government or an education system within the government, if the goal of 

the World Bank is alleviation of poverty and economic growth, 

13 

what responsibility does the Bank have to work with education systems to undermine ideologies that are incompatible with freedom 

and growth? 

Ms. ENSMINGER. I don’t have a ready answer to that question, 

but I can address your previous question. Would that be all right? 

Chairman BARR. Okay, sure. 

Ms. ENSMINGER. I think you hit the nail on the head regarding 

long-term interests versus short-term interests regarding national 

security issues. And it speaks directly to when and whether we cut 

off a country. It also speaks directly to corruption. 

In the case of Kenya, for example, we cooperate a great deal with 

Kenya on national security issues regarding fighting Al-Shabaab 

across the border in Somalia. So it is in our short-term interests 

to cooperate with Kenya. How much license will we give them in 

terms of corruption and other abuses before we are in a position 

to cut that country off? We have undermined our own bargaining 

power on those issues. 

Chairman BARR. And my time has expired. Thank you for your 

answers. 

The Chair now recognizes the ranking member of the subcommittee, Ms. Moore, for 5 minutes. 

Ms. MOORE. Thank you so much, Mr. Chairman. 

And I have really learned a lot and really appreciated all of your 

testimony here. 

One of the things I really find to be very, very frightening to 

think about is these young women and young girls who have been 

raped and taken advantage of in these countries. When I talked 

with the World Bank, it is so pathetic to think about some of these 

Ugandan girls—one of these workers would give them 15,000 shillings, worth about $3, and a 14-year-old saw that as evidence that 

they loved them and cared for them. 

I guess one of the things that I want to get clear before I ask 

some more questions is, I heard correctly, didn’t I, that there is nobody on this panel who thinks that the World Bank is not important to engage, that they continue to support the United States 

paying their dues and being engaged and involved in the World 

Bank? Am I clear on that, that there is no one who thinks we need 

to just bow out? 

Mr. CHAVKIN. As a reporter, I am not here to make policy recommendations. 

Ms. MOORE. Okay, I understand. 

Mr. CHAVKIN. But certainly, none of our findings suggested that 

United States contributions and engagement were a part of the 

problem. 

Ms. MOORE. Okay, thank you. 

Ms. BERGER. And in our case, we found that U.S. engagement actually was incredibly important to gaining redress for these girls. 

Ms. MOORE. Right. 

Ms. BERGER. In fact, the U.S. executive director would go into 

meetings with Bank staffers bringing representatives of other U.S. 

agencies like USAID and the State Department. And because the 

United States was the only board Chair to do that, the United 

States was able to ask the Bank very specific, nitty-gritty questions 

about how the Bank was redressing the harm to these girls, and 

14 

the United States was able to put pressure on the Bank to remediate this harm in ways that other governments did not do. So I 

think the U.S. contribution and the U.S. leadership was critical 

there. 

Ms. MOORE. Thank you. 

Since we talked about counterterrorism, I guess I want to talk 

a little bit about, not only is it my understanding from all of your 

testimony that not only was it the corruption of these countrys’ 

governments sometimes or the fact that the governments would not 

necessarily address the problems, but it was also a problem of the 

contractors. In the case of Uganda, it was a Chinese contractor who 

did not do their due diligence. 

So I ask this question or maybe just to make a statement: We 

have just this session, through the Congressional Review Act, 

eliminated Section 1504 of the Dodd-Frank Act, which requires 

that there be oversight over extractive industries where American 

companies are going in, taking the oil and minerals and stuff out 

of the country, that they disclose these contracts and relationships. 

And so the potential for corruption will be spawned by this. 

Mr. Morris, do you have an opinion on this? 

Mr. MORRIS. Sure, Ms. Moore, thank you for that. I would say 

that one of the mandates of the Bank is, as an institution, to be 

pressing for transparency in the work that it does and as providing 

sunlight in these situations, that it does guard against corruption. 

If I can make two quick points related to the issues you raised, 

on the Uganda case, it is also, I think, worth stepping back and 

recognizing if you don’t have the World Bank or institutions like 

it making the direct connections between road projects being associated with the terrible failings we saw in this case, it is not clear 

to me that other sources for financing these projects will do that. 

I think it is a mandate for the Bank to make those connections in 

ways that— 

Ms. MOORE. Reclaiming my time, with others, like the Chinese 

Development Bank and some of the other banks around the world, 

there won’t necessarily be that accountability and transparency. 

They will just pick up the slack if we were to disengage. 

I’m sorry, Mr. Morris, you can continue. 

Mr. MORRIS. Yes, that is absolutely correct. And I think that is 

also the broader perspective on the financing landscape is that it 

is no secret that in Sub-Saharan Africa in particular, Chinese financing has become dominant in— 

Ms. MOORE. Reclaiming my time, Mr. Chairman, I would like to 

put three things in the record, without objection: an Ex-Im statement for the record; the letter that I referred to with former Chairman Huizenga; and a third statement from—what did I do with it? 

Chairman BARR. Without objection, it is so ordered. 

Ms. MOORE. Without objection, those three things will be placed 

in the record, as soon as I find the third one. 

Chairman BARR. Very good, without objection, those will be 

placed in the record. 

And the Chair now recognizes the vice chairman of the subcommittee, the gentleman from Texas, Mr. Williams. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

15 

At a hearing last Congress, one of our witnesses, Dr. Martin 

Ravallion from the Center for Global Development, and a former 

long-time staff member at the World Bank, told us that, ‘‘The reality is, bank staffs are assessed by the volume of their lending, 

dollars of money lent. And that is just a poor indicator of impact 

on poverty. You have impact on poverty sometimes when you don’t 

lend at all.’’ 

Dr. Ravallion echoed an argument that has been made at the 

Bank for decades. Moreover, a recent report by the World Bank’s 

Independent Evaluation Group confirmed that even after all these 

years, the pressure to lend that is felt by staff inhibits learning and 

takes the focus off development outcomes. 

So, Mr. Chavkin, I would ask you this question: What has been 

your experience with the World Bank staff’s commitment to project 

results? And is that a high priority for them, do you think? 

Mr. CHAVKIN. I am not in a position to speak to whether projects 

delivered on development goals. 

Mr. WILLIAMS. All right. 

Mr. CHAVKIN. If it is helpful, what I can say is that I believe the 

pressure to lend has been an important factor in failure to follow 

safeguards. For example, for quite a while, there was actually a 

system in which safeguards officers would be reporting to project 

managers whose responsibility was to get loans approved. The 

Bank has now improved that system to some degree in providing 

greater budgetary and organizational independence to its safeguards officers. 

Mr. WILLIAMS. Okay, thank you. 

Ms. Ensminger, is effective management important to staff, do 

you think? And do they already have the tools to preempt some of 

the failures we have heard about today, or are they simply in over 

their heads? 

Ms. ENSMINGER. There is tremendous pressure to push money 

out the door. It has been talked about for decades. It has not been 

adequately resolved. There are many wonderful team task leaders 

(TTLs), in the Bank who would like to do their job better. Because 

of the pressure to move money out the door so quickly, they are 

stinting on design elements, not out of desire, but because of the 

pressures on their time, and cutbacks on their budgets. They are 

not capable of doing adequate supervision. 

For the same reasons, we see a conflict of interest regarding aggressive measures on corruption as well as operations interference 

on INT investigations. 

Mr. WILLIAMS. Thank you. 

Ms. Berger, what more could the Bank do to incentivize its staff, 

in your opinion, to care about these elements of a project? How can 

the United States change the Bank’s culture? 

Ms. BERGER. One of the things that the United States has already done is, in the lessons-learned document that the Bank put 

together after this project, it talks about the staffing issue. And it 

said that there was a need for social and environmental safeguard 

specialists to be involved in the project throughout the project 

cycle. And this is something the United States really pushed for in 

that document. 

16 

Because if you have those social specialists involved, not only 

during the project design, but also during the project’s implementation and the monitoring and supervision phase, you have someone 

with the training to pick up on potential problems like the ones experienced by the girls in this case. And as soon as they see risk 

factors for sexual exploitation, they can put in place measures to 

prevent that. 

Mr. WILLIAMS. Thank you. 

Mr. Morris, why has the critique of Bank incentives endured for 

so many years, in your opinion? Why can’t the Bank get it right 

when even the staff knows incentives are misaligned? 

Mr. MORRIS. I think the pressure to lend is a real issue. And the 

critique over the years is genuine. On the other hand, it is a bank, 

and its core model is to lend, so that is going to be with us absent 

some fundamental restructuring of the institution. 

The chairman mentioned the views of Angus Deaton in his opening remarks, and I think Professor Deaton offers a thoughtful critique, that one of the challenges of being overly reliant on lending 

is it does crowd out other types of activities, doing long-term research and development work. So I think there are ways in which 

structurally, the Bank could be shifted toward a wider range of activities, which would also have the effect of dampening some of the 

negative incentives around lending. 

Mr. WILLIAMS. Okay, quickly, also to you, what would the Bank 

have to do to shift staff incentives toward project results and 

knowledge generation? 

Mr. MORRIS. I think the Bank has frankly made a lot of progress 

in this way. I think we do see much more emphasis on actual 

project outcomes, not just success being defined by closing the deal. 

Certainly, there is always more progress that could be made in 

that area. But I do think we see a more outcomes-oriented institution today than what we saw, say, 20 years ago. 

Mr. WILLIAMS. Okay, thank you for your answers. 

Mr. Chairman, I yield back. 

Chairman BARR. The gentleman yields back. 

And now the Chair recognizes the gentleman from Washington, 

Mr. Heck. 

Mr. HECK. Thank you, Mr. Chairman. 

For anyone on the panel who knows the answer to this question, 

is there a more current rating of the quality of official development 

assessment of the IDA since the one for 2014 in which the IDA was 

found to rank in the top 10 of all 4 of the metrics of effectiveness 

and quality? 

Mr. MORRIS. Congressman, I will answer that, because actually 

that work was done by my colleague at the Center for Global Development, Nancy Birdsall, along with colleagues at the Brookings 

Institution. That is the most current rating that was done through 

the so-called QuODA exercise. And as I said in my statement, it 

is consistent with other kinds of reviews which attempt to compare 

institutions like the World Bank to other development institutions. 

And it is frankly remarkable how consistently the World Bank appears at the top or among the top in those kinds of ratings. 

Mr. HECK. Perhaps for you as well, Mr. Morris, one of the concerns about the IDA that has been expressed is whether or not its 

17 

role is duplicative in the broader scheme. And I am wondering if 

you would characterize any way in which the IDA is unique in 

terms of how it contributes to World Bank mission and that of its 

corollary partners? 

Mr. MORRIS. Certainly from a U.S. perspective, I think— 

Mr. HECK. Aside from—pardon the interruption, sir—obvious 

quality, given the ranking of the assessment, is there any way in 

which it is unique? 

Mr. MORRIS. Sure. And beyond quality, I think for the United 

States it is hugely complementary actually to our own toolkit. If 

you look at our bilateral programs, which are almost exclusively 

grant allocations in areas like humanitarian assistance and global 

health, what IDA does, again, is lending-based, much more focused 

on big infrastructure projects. So in that way, it is, as an extension 

of our own assistance tool kit, a great complement. 

And in the face of actors like China, which through their bilateral programs are doing massive amounts of infrastructure investment, I think it is important from a U.S. perspective to see the 

value in IDA’s work in this broader approach to economic development. 

Mr. HECK. Mr. Morris, is it generally the case, as I have been 

led to believe, that when China engages in bilateral development 

‘‘aid,’’ there are often conditions with respect to continuing economic relationships and concessions given to China with respect to, 

for example, access to mineral resources and the like? 

Mr. MORRIS. Congressman, one of the challenges of evaluating 

China’s investments is that there is not a lot of transparency in the 

relationships. 

Mr. HECK. What is your impression? 

Mr. MORRIS. My impression is that the Chinese themselves 

would not characterize most of these flows as aid. They are doing 

it for their own direct economic interests, commercial interests. 

And so I think that certainly affects the kinds of agreements that 

they strike, both in terms of the sectors they are investing in, and 

the kinds of concessions that they would get. I think that is a reality of it. 

I think it still comes with some benefit for these countries, but 

it certainly raises concerns of the type to which I think you are alluding. 

Mr. HECK. And so, in effect, in the effort to cultivate good relationships, which indirectly if not directly contribute to our security, 

we come to the world stage offering these loans in a transparent 

way and without conditions, but are in very real competition with 

China which seeks to extend its influence as well. Is that an accurate reflection? 

Mr. MORRIS. Congressman, I think that is correct. I would say 

on the question of conditions, I think to the degree that the World 

Bank does attach conditions in its engagements, they are broadly 

aimed at an effective relationship. They are certainly not about creating advantages for any one country. 

Mr. HECK. Quickly, in my limited time left, I could not find it in 

the material, are you familiar with the default rate of the IDA, 

what the default rate of the IDA is and how that compares to its 

peers? 

18 

Mr. MORRIS. As a general matter, countries do not default on the 

World Bank. And there is the issue that the Bank has so-called 

preferred creditor status. It is not in the interests of any country 

to default. There have been countries that have been suspended 

from Bank assistance because they are in arrears. But over the 

long term, countries pay back their money, which is evidenced by 

the AAA rating that the Bank has. 

Mr. HECK. I yield back the time I no longer have available, with 

gratitude for your answer and for the Chair’s indulgence. 

Chairman BARR. Thank you. The gentleman’s time has expired. 

And now, the Chair recognizes the gentleman from Indiana, Mr. 

Hollingsworth. 

Mr. HOLLINGSWORTH. Good morning. I am glad that all of you 

came out today and I really appreciate your testimony this morning. 

My question is really about mission creep and better understanding about what we believe the mission of the World Bank to 

be specifically and to what extent we think they are serving that 

specific mission. 

It is my understanding that the genesis of the World Bank was 

really to help countries who couldn’t access international credit 

markets to develop in a manner that would enable them to do so. 

Certainly, that has changed over time, but something that my 

constituents continue to worry about, not only with this institution, 

but with institutions more broadly, is that we are continuing to develop an approach where we try to be all things to all people in all 

places and we end up not doing any of them exceptionally well. 

To what extent do each of you think that perhaps an overly 

broad mission focused on middle-income countries as well as extreme poverty in low-income countries, focused on health as well as 

development and infrastructure, has led to some of these failures, 

and a more specific mission and a clear-cut mission would enable 

them to do better at what we want them to do? 

Left to right. 

Mr. CHAVKIN. Thank you. I am not really in a position to comment, particularly if we are looking at IDA replenishment. The performance of IDA seems separate in some ways from the performance of IBRD, which is the middle-income lending arm of the Bank. 

I am going to leave it at that. 

Ms. ENSMINGER. I will speak again just directly to my experience 

with IDA and particularly in Kenya, which I suspect is very typical 

of other African countries. The problem as I see it is not with mission creep, but the way in which the mission is accomplished. So 

I am not seeing a problem specifically in the IDA funds that have 

targeted Kenya, but this may also be a function of my limited experience with some of the other area’s infrastructure projects, for example. 

But from my own perspective, I would not put that down as the 

number-one problem. 

Mr. MORRIS. Congressman, look, I think you are absolutely right. 

Certainly, defining the origins of the Bank, the evolution, and then 

pointing to this as a potential challenge of the Bank trying to do 

too many things in too many places. But I would point out, in the 

full range of countries, look at a country like India where, number 

19 

one, the remarkable progress globally in poverty reduction and 

then where we want to be going forward, you really have to bet on 

India’s success to achieve what we want to achieve when it comes 

to eliminating extreme poverty. 

The Bank is a hugely important partner to India and what the 

Bank is doing, which I think is entirely appropriate, is not to say 

you no longer are eligible for IDA, therefore we are done with you, 

but to shifting the nature of assistance so that it is better leveraged, it is more cost-efficient for countries like the United States 

that are putting money in. 

So the relationship evolves, but the engagement is still critical, 

I think, from our perspective of what we have in terms of goals 

around the world. 

Ms. BERGER. When we talk about Uganda, I think the thing to 

keep in mind is sort of the ‘‘but for.’’ What if the World Bank 

hadn’t been involved, right? Is the World Bank’s involvement in 

Uganda looking towards reducing poverty constructive? And I think 

in this case, it really was, because the community really saw this 

roadway as their way to reduce poverty by allowing them to access 

markets, and sell their goods. 

And so, that roadway was critical. And the World Bank’s involvement in that roadway was particularly important because it was 

through the World Bank that the community was able to get redress for their harms and was able to get changes made to the 

project so that it was more responsive to the needs of the community. 

And I think absent that, if the road was being built without the 

World Bank, you simply would have had the road, but nobody 

would ever have addressed these sort of negative repercussions, 

which means you wouldn’t have achieved the aim of reducing poverty because while you would have that access to markets, you 

would also have all of these families with—teenage mothers who 

weren’t able to finish school and all of these negative impacts that 

kept people in poverty. 

Mr. HOLLINGSWORTH. All right, thank you. 

I yield back the rest of my time. 

Chairman BARR. Thank you. 

Mr. Chavkin offered to introduce into the record three articles, 

and without objection, those articles will be submitted for the 

record. 

The Chair now recognizes the distinguished ranking member of 

the full Financial Services Committee, Ms. Waters from California. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

And again, I would like to thank our witnesses for being here 

today. 

As you know, when we hear some of the kinds of problems that 

you have identified here today, it is disturbing. And we don’t feel 

good about it. But we really do feel good about the fact that we are 

major players in these bilateral institutions and that this country 

is doing its part in the world to deal with poverty, and that we 

must do everything that we can to support these projects. We must 

do everything that we can to make sure they are operating in the 

way that they are supposed to be operating. 

20 

And I see that the World Bank in many instances has taken 

steps to deal with some of these problems. I want to know about 

the Bank’s report entitled, ‘‘Lessons Learned and Agenda for Action,’’ which examined the issues and massive failures that arose 

from the Uganda project. So did they issue a report of some kind 

entitled, ‘‘Lessons Learned and Agenda for Action?’’ 

Ms. BERGER. Yes, absolutely. And this was a unique thing that 

the Bank did in the Uganda case, recognizing those failures. 

The Bank always issues an action plan after an Inspection Panel 

case. That action plan, though, only addresses the harm to a particular community. What is unique about this lessons-learned document is it looks at failures across the institution and the ways to 

remedy those failures. 

And as I mentioned a moment ago, the U.S. Government, the 

U.S. executive director’s office at the Bank played a really important role in strengthening that document so that the recommendations for reform really hit at the issues that caused problems in 

this project. 

Ms. WATERS. I am very, very pleased to hear that. And I must 

share with my colleagues that I have visited Uganda and it was 

for something different, we were looking at HIV and AIDS, and I 

was so impressed with the will and the desire of people in that 

country, despite the lack of resources and the poverty, to get something done and to deal with that issue, a lot of determination by 

folks who have very little. And so, I certainly want us to continue 

to give support to these poor countries to help eliminate poverty. 

And I would like to also ask, what do you think—I don’t know 

how many participating countries visit these projects. What good 

does that do? And should we take a look at visiting more, showing 

up so people know that we are interested, that we care about what 

is going on? What do you think about that? 

Mr. CHAVKIN. I would like to say that showing up and seeing 

what is happening on the ground is one of the most valuable contributions that I believe that the committee and others overseeing 

the Bank could make. 

In reference to the Uganda report, as well as the resettlement 

plan, I think what they show is that the Bank has the capacity, 

when it wishes, to address some of these systemic problems that 

arise. 

In the case of the Bank’s failures in enforcing its resettlement 

policies, what we found, however, was that the Bank had actually 

been looking into this for years and it had issued internal reports. 

Those reports had essentially sat buried until we began investigating and asking questions about them. 

And so what I think the issue for the Bank is, why does it take 

a Uganda project or an Ethiopia project or a report in the press for 

these reforms to be enacted? And I think that one way to encourage 

the Bank to be more proactive and more forthright about addressing the problems with its oversight would be going to the ground 

and seeing what is happening for yourselves. 

Ms. WATERS. Thank you very much. 

And I would like to say to Mr. Barr and to Ms. Moore, I think 

that is a challenge for us to get on the ground and take a look. 

Do you think that is a good idea, Ms. Berger? 

21 

Ms. BERGER. Definitely. I think going and seeing the context 

where a project is happening really helps you to understand the 

problems faced by the community and the ways to address them. 

Ms. WATERS. Thank you all so very much. 

I yield back the balance of my time. 

Chairman BARR. Thank you. The gentlelady yields back. 

The Chair now recognizes the gentleman from Arkansas, Mr. 

Hill. 

Mr. HILL. I thank the chairman and the ranking member for 

hosting this hearing today. 

I appreciate the witnesses being here to talk about an important 

subject, not only to global development, but also to American taxpayers. 

I have some experience in my past government service of working with USAID on the design of technical assistance in foreign 

countries, so I have some personal understanding of the challenges 

that come in working abroad and designing things that work on the 

ground. And I also just returned from a trip to the Republic of 

Congo where the systematic spreading of concrete by the Chinese 

government across the whole country of Congo was quite evident. 

But the issue of corruption was discussed there as well, so I really appreciate the witnesses today talking about the World Bank 

and its work around the world. 

The first question I have is, when we look at the fact that the 

United States has a little larger percentage, contribution, and ownership in the European Bank and in the Inter-American Bank, are 

we more effective at guiding policy there versus the World Bank? 

I would be interested in views on that. 

Mr. MORRIS. Congressman, I will take a stab at that, and I 

should note in answering that I served in the prior Administration 

representing the United States across these institutions. I guess 

my judgment would be that shareholding is an important measure 

of our influence, but it is not the whole picture. And I think we 

have different degrees of influence within the different institutions. 

And frankly, I think the World Bank, for reasons of long history, 

for reasons of the fact that they reside here in Washington, as 

many people noted, that the Bank has always had an American 

president, I think it is pretty well understood that the United 

States has a high degree of influence within that institution, even 

though its membership is much broader and our actual 

shareholding, as you said, is significantly smaller than at the InterAmerican Development Bank. 

Mr. HILL. In that regard, I would like your views, Mr. Morris 

and Dr. Ensminger, on—in your testimony, Dr. Ensminger, you 

say, ‘‘Neither Congress nor the USED’s office have the power to 

micromanage the World Bank’s policies. Changes of the sort I am 

suggesting would require significant commitment and a great deal 

of sustained U.S. leadership to win support of a majority of sympathetic board members.’’ 

So how are we, as Members of Congress, who allocate the resources to contribute to these multilateral institutions, supposed to 

enhance the sustained U.S. leadership to get those sorts of 

changes? 

22 

Dr. Ensminger, this is your testimony, so I will let you start on 

that. 

Ms. ENSMINGER. As I understand it, you do have leverage over 

the Treasury and the Treasury has leverage over the USED’s office. 

You also have an American president, an American-appointed 

president, who has recently demoted the reporting status of the 

vice president for INT. I don’t understand the reasoning behind 

that. I think it sends a very bad message. And as I have suggested 

in my testimony, I think there is undo influence on the part of operations over INT’s investigations. 

I experienced this firsthand in the Arid Lands investigation. And 

I might also add, although it is not directly relevant on this point, 

I have not been impressed with the follow-through and the lessons 

learned from the Arid Lands case, in contrast to what is obviously 

a very different picture here in other arenas. 

Corruption continues to be a huge problem. And I think the role 

of INT is also continuing to be perhaps moving in the wrong direction. So I would hope that you can exercise extreme leverage on 

that issue because I think it is extremely important. 

Mr. HILL. Mr. Morris? 

Mr. MORRIS. Congressman, I would just encourage you both to be 

directly engaged with senior management of the Bank and through 

senior U.S. Treasury officials. I think both are really important 

channels of influence that you have. 

And I want to correct slightly, because I think it is often 

mischaracterized that the United States is not in a position to appoint the president of the Bank. The United States nominates a 

candidate to be president of the World Bank. Through an election 

process, the outcome has consistently been the American candidate. 

Mr. HILL. I think we need to use that leverage to the best of our 

ability. And it is really hard for Members of Congress on both sides 

of the aisle to justify continued U.S. financial commitment to institutions that have such a poor track record in many ways, even 

though they do good around the world. There is no doubt, I am not 

excusing the good that they do. Because in facing a $20 trillion 

debt, we have a lot of pressure on us to make sure that taxpayer 

resources are spent wisely and that we get the best bang for our 

buck. 

I yield back. Thank you, Mr. Chairman. 

Chairman BARR. Thank you. The gentleman yields back. 

And the Chair now recognizes the gentleman from North Carolina, Mr. Pittenger. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

And I thank each of you for your dedication and work in this important area. 

And in the spirit of Congressman Hill’s comments and questions, 

I would like to ask further, as we are all aware, the multilateral 

development banks are sitting on enormous equity from loan repayments to the tune of hundreds of billions of dollars. And these 

loans were made initially from appropriations by the Congress. 

Do these MDB shareholders have a claim to that equity? And if 

so, if the loans are repaid back to the banks, should the proceeds 

go back to the Treasury, especially where the United States does 

have this $20 trillion debt? 

23 

Mr. MORRIS. Congressman, the United States as a shareholder 

does hold equity in the institution. Frankly, one of the things that 

has enabled the World Bank to be effective over many years and 

has lessened the burden on U.S. contributions over the years is 

that the Bank can retain that equity, that the proceeds on loans 

have actually allowed it to grow without coming back and asking 

for more capital on a routine basis. 

Mr. PITTENGER. Yes, sir, I respect that. Then if that is true, why 

should Congress keep appropriating additional dollars? 

Mr. MORRIS. That is a fair question. So it is important to recognize there are different channels of financing within the institution. 

The so-called IDA is the arm of the Bank that is serving the very 

poorest countries. Because it is serving the poorest countries, the 

lending that it does is highly subsidized. That subsidy is something 

that over the years donors to the Bank, with the United States 

really in the lead, I would say, they agree every 3 years to provide 

that. 

I think it is important. And we are talking about $1.3 billion a 

year from the United States. I would never say that is an insignificant amount of money. 

Mr. PITTENGER. No, sir, it is not. 

Mr. MORRIS. It is real money. On the other hand, let us put it 

in context. In terms of even the overall foreign assistance budget 

we have of roughly $30 billion a year, I think that $1.3 actually 

gets us quite a lot in actual IDA programming. 

Mr. PITTENGER. I understand that, sir. And if anyone else wants 

to chime in, they can. But in context then, let us view the Pan African Union. Many of these countries are members of the Pan African Union. I have many ambassadors who come into my office and 

tell me of the pressure that they have to vote against the interests 

of the United States in the U.N. and our interests. 

How do you bring that into clear focus in terms of our American 

interests? I appreciate the work that we can do for the needs 

throughout the world. And I am very sensitive to that. I have traveled extensively back for 40 years when I served with a Christian 

organization and spent a lot of time in Africa. So I am not unaware 

of the concerns. 

But I do in this job have a responsibility to the American people 

and the American taxpayer. And in that regard, how do you balance that when time and again, year after year, decade after decade, the Pan African Union as a whole votes against us on a pretty 

consistent basis in the United Nations? 

Anyone who would like to respond to that. I don’t blame you. I 

wouldn’t— 

Mr. MORRIS. Congressman, if you don’t mind, I will come in 

again. But I would say that it is important to look at each of these 

countries, and for the United States, its relationship directly with 

each of the countries. 

You are absolutely right. There will be cases where the World 

Bank is engaging in countries where we have real concerns. I 

would say even in those situations, I think there is some value in 

the work that the World Bank is doing without us being directly 

associated with it, that over the longer term, it is the channel for 

24 

U.S. influence, particularly if they find ways to do effective 

projects. 

Mr. PITTENGER. Reclaiming my time, I do think, though, we have 

a responsibility to this sovereign country to preserve our interests 

and to make sure that assets that we participate with work in our 

behalf. And the U.N. certainly has not been a friend of our country 

for a long time. And the Pan African Union has certainly been part 

of that. 

I would like to ask Mr. Chavkin, if I could, do you see any oversight process that we could have to prevent and deter some of the 

human rights issues that you convey today? What more could be 

done and how should that fit into our worldview of the World 

Bank? 

Mr. CHAVKIN. I would point to two areas. One is to ensure closer 

scrutiny of individual projects as voted on by the United States executive director. Often, when the United States executive director 

has concerns, they will abstain from a vote. 

Chairman BARR. The gentleman’s time has expired. 

I will let you just finish your thought really quickly. 

Mr. CHAVKIN. Okay, thank you. And the second is to ensure independent oversight structures within the World Bank, both safeguards specialists, and the Inspection Panel remaining independent and having direct lines to Bank management without 

being forced to go through operations or task team leaders and 

projects. 

Chairman BARR. Thank you. 

Mr. PITTENGER. Thank you, sir. My time has expired. 

Chairman BARR. Thank you. The gentleman’s time has expired. 

The Chair recognizes the gentleman from California, Mr. Sherman. 

Mr. SHERMAN. One of the most important things America does 

with our tax money is our foreign aid program, and particularly in 

the new Administration we have to make sure that those dollars, 

which will become even more scarce, are spent in the most effective 

way. Those claiming that the World Bank is the most effective way 

always argue for the multiplier effect, ‘‘Hey, we put in a dollar and 

three other dollars, four other dollars from other countries come 

in.’’ 

Of course, other foreign aid programs also have a multiplier effect. If we announce that we will spend another billion dollars on 

malaria relief and eradication, I believe we could cajole other 

wealthy countries to put in similar amounts, perhaps just as great 

a multiplier effect. 

So putting aside the multiplier effect or understanding that all 

of our foreign aid can be used to generate a multiplier effect, I wonder if the witnesses can identify any better use of our foreign aid 

dollars than a contribution to the World Bank. 

I will go through the—yes, go ahead? 

Ms. ENSMINGER. Not exactly an answer to your question, but I 

want to raise the issue— 

Mr. SHERMAN. I have a limited amount of time. If somebody 

doesn’t have an answer to my question, I will move on to another 

question. 

25 

Ms. ENSMINGER. It is related to your question, but it has to do 

with the research department at the Bank, which I believe is one 

of the finest research departments in development economics. 

Mr. SHERMAN. But how do we weight contributing to the Bank 

as opposed to health programs dealing with malaria? We could put 

more in the Bank. Does anybody have a comparison? 

Ms. ENSMINGER. It is directly relevant to that. 

Mr. SHERMAN. Mr. Morris? But I have to go on to another question. 

Mr. MORRIS. Yes, Congressman, I think you are—there is a question of tradeoffs and it is a concern right now in the foreign assistance budget broadly is under attack in what we saw coming from 

the Administration. I think it is important to recognize we have a 

diverse toolkit. All of the parts of our foreign assistance— 

Mr. SHERMAN. I know we have a diverse toolkit. 

Mr. MORRIS. The other thing I would say is— 

Mr. SHERMAN. I am going to reclaim my time because I want to 

go on to— 

Mr. MORRIS. The World Bank is hugely important— 

Mr. SHERMAN. Mr. Morris, I am going to reclaim my time. Because, as the gentleman from North Carolina pointed out, one of 

the disadvantages of dealing with the Bank is that we don’t get to 

pick which countries get the money. Now, he is concerned with 

countries that vote against us in the U.N. I am concerned with 

countries that are developing nuclear weapons for the purpose of 

destroying millions of Americans’ lives. 

I have been working on these issues for 20 years. And in 2002, 

we were told here in Congress that loans would not be made to 

Iran, and then they were. And then we were told it wouldn’t be 

happening again, and then it happened again. And we were told 

that the United States had the veto power to prevent such loans, 

and then we didn’t. 

And the question here is, can we condition our future contributions to the World Bank on having a U.S. veto power on further 

loans to Iran? Does anyone have an answer? 

Mr. Morris? 

Mr. MORRIS. Frankly, I don’t think you can legislate that. I think 

that— 

Mr. SHERMAN. Sure we can. We can say no money shall be disbursed to the World Bank until the World Bank changes its rules 

so that the United States has an absolute veto power on further 

advances to Iran. 

Mr. MORRIS. With the threat of— 

Mr. SHERMAN. The question is, should we put that in— 

Mr. MORRIS. But you cannot—the rules of the institution do not 

support the United States. 

Mr. SHERMAN. Okay. The question before us here is, should we 

put that as a condition on the disbursement of American funds? 

Mr. MORRIS. I think you are right, it is perfectly legitimate in 

cases like Iran where the United States has very clear interests, 

to express those interests very clearly with the Bank and expect— 

Mr. SHERMAN. What would be the—does another witness have a 

comment? What would be the reaction of the Bank if our next 

tranche of funds was conditioned on a change of Bank rules that 

26 

would give the United States a veto power on or prevent further 

loans to Iran? Does any panelist have—what would be the response 

of the Bank? Would we get the change or would they say keep your 

money? 

Nobody has an answer. Because I know the World Bank is adhering to U.N. sanctions on Iran, but none of those currently prevent further loans to Iran. The World Bank has promised Congress 

again and again, or the supporters of the World Bank have promised Congress again and again it wouldn’t happen and then it happened. 

Mr. MORRIS. Congressman, can I— 

Mr. SHERMAN. Yes. 

Mr. MORRIS. And you can correct me if I am wrong. But I do believe that the last actual lending was— 

Mr. SHERMAN. It was several years ago. 

Mr. MORRIS. —during the Bush Administration. 

Mr. SHERMAN. And you can be sure that such loans will resume 

in the future unless Congress takes strong action. I am not saying 

that necessarily happens this year or next year. But if we don’t act 

now, the culture at the World Bank is oblivious to Iran’s nuclear 

weapons program. 

I yield back. 

Chairman BARR. Thank you. The gentleman’s time has expired. 

And I thank the gentleman for his good line of questioning there. 

I would also like to thank our witnesses for their testimony 

today. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

This hearing is now adjourned. 

[Whereupon, at 11:26 a.m., the hearing was adjourned.] 

(27) 

A P P E N D I X 

March 22, 2017 

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House Financial Services Subcommittee on Monetary Policy and Trade Hearing: 

Examining Results and Accountability at the World Bank 

Testimony of Elana Berger 

Introduction 

Good morning. My name is Elana Berger and I manage the Social Inclusion and Accountability 

program at the Bank Information Center (BIC). BIC is an independent, non-governmental organization 

whose mission is to advance social, ecological and economic justice by amplifying community voices 

and democratizing international development finance. 

BIC serves partners around the world by equipping them with information about the intended benefits 

and identified risks of multilateral investments so that they can exercise more agency in the 

development decisions that affect their lives. When problems arise, we help communities access 

decision makers at the Multilateral Development Banks (MDBs) who can take corrective action. 

Timeline of Uganda Transport Sector Development Project (TSDP) Case and Inspection Panel 

Investigation 

In the summer of2014, Joy for Children, a Ugandan civil society organization that works to end child 

marriage, alerted BIC to a World Bank funded road project in Western Uganda that was associated with 

an increase in the sexual exploitation of young girls in a local community. The project had created a 

"boomtown effect" where there was a large influx of construction workers into what had been a 

somewhat isolated, rural community. Teenage girls were being sexually harassed on their way to school 

and many were sexually exploited or raped by project workers. lligher rates of teenage pregnancy, 

HlV I AIDS and girls dropping out of schools soon followed. Additionally, while the "boomtown" 

created economic opportunities for women and girls in the area, such as selling food and other goods to 

the workers. these activities also created opportunities for girls to be sexually exploited through 

increased exposure to project workers in night markets and other risky situations. 

Months of attempts to convince the contractor carrying out the project to take measures to prevent this 

harm had been fruitless. Efforts to seek assistance from the Ugandan government to force the 

contractor to address this harm was similarly unsuccessful. The local police were unable and unwilling 

to investigate cases of sexual abuse and the Ugandan National Roads Authority (UNRA), the 

implementing agency for the project, was riddled with corruption. The capacity of UNRA to prevent 

and mitigate social and environmental harms resulting from its projects was virtually nil! and the 

agency was completely incapable of complying with the World Bank's social and environmental 

safeguards, the standards that apply to all of the Bank's investment lending projects to prevent 

unintended negative consequences from Bank projects. 
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In December 2014, with support from BIC, Joy for Children alerted the World Bank's country office in 

Kampala, along with the World Bank Inspection Panel, the Bank's independent accountability 

mechanism, to the community's concerns around the project. The immediate response by the Bank was 

denial, with representatives of Bank management arguing that there was no sexual exploitation 

occurring around the project. Initially, the Bank's DC headquarters responded by sending a 

communications specialist to Uganda to assist in managing public relations around the case, rather than 

sending experts in gender issues or sexual violence who could look into the harm being experienced by 

the children around the construction site. 

The Bank continued its denial through the Spring of2015, at which point it agreed to a joint mission to 

the community with Joy for Children to look into the allegations made by community members. During 

this mission, at the end of May 2015, Joy for Children insisted that the Bank speak one on one with 

affected girls and their families. At this point the Bank staff participating in the mission began to 

recognize that sexual exploitation was taking place at high rates, and also substantiated other concerns 

expressed by community members around road safety, insufficient compensation for land, and 

violations oflabor rights of project workers. However, even once the Bank did recognize the legitimacy 

of these concerns, the response was anemic and slow. Initial remediation measures consisted of things 

like the placement of road signs and posters about HIV prevention that failed to protect the girls of the 

community from sexual exploitation. 

By September of2015 the community was fed up with the delays in addressing the most serious issues 

with the project and the continued failure by the government and the Bank to demonstrate that they 

cared about the issues facing the community. A formal request was filed with the Bank's Inspection 

Panel for a full investigation into the harm caused by the Bank's failures to comply with its safeguard 

policies. Following the filing of this request, the Bank became much more serious about addressing the 

harms resulting from this project, sending a letter to the Ugandan National Roads Authority (UNRA) 

expressing grave concern about the sexual exploitation of young girls by project workers, and hiring 

child protection consultants to advise the Bank in investigating and providing remedial services to the 

community. On October 22,2015 the World Bank suspended the disbursement of funds for the project, 

pending remediation efforts by the government and contractor. Three months later the Bank took the 

extraordinary step of cancelling the Project, with Bank President Jim Kim stating in a press release that 

"an early review of the World Bank-financed project found inadequacies in Bank supervision and lack 

of follow-through after serious issues were identified." 

After the Inspection Panel released its full report from the investigation, the Bank also developed an 

action plan, with input from affected community members, to fully redress the harm suffered as a result 

of the project. This is standard in Inspection Panel cases which reach this stage. However, the Bank 

also took the unusual, and welcome, step of putting together a document on "lessons learned and 

agenda for action" which demonstrated it was committed to learning from its failures and moving 

forward with institutional reform. This document looked at institutional failures more broadly than the 

management response discussed above and noted two critical gaps for the Bank. One was the lack of an 

appropriate skill set on its project teams to address gender based violence (GBV), and a failure to 

adequately listen to communities and civil society organizations. The Bank committed to remedy these 

issues in several ways, most prominent among these was the establishment of a GBV task force with 

several recognized experts on the topic advising the Bank on how to prevent future instances of GBV 

in its projects. 

Aftermath and Ongoing Reform Efforts 
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Several days before the Bank announced the cancellation of the project, management submitted its 

official response to the Inspection Panel on the case. It is important to note that, in this document and 

going forward, the Bank was particularly open about, and accepting of, its responsibility for failures 

around this project. The primary failures that the Bank acknowledged allowed the harm to young girls 

to occur included improper risk categorization, poor quality social assessment, the lack of robust 

prevention and mitigation measures to prevent harm to communities, a blindness to the weak 

institutional capacity of UNRA, and a complete failure to adequately supervise and monitor the project. 

In addition to the considerable influence of the Inspection Panel investigation, the World Bank Board 

of Directors, led by the U.S. government, played a central role in encouraging institutional reforms in 

the aftermath of this specific case. In the words of Bank management, the US was the most active 

Board chair on this case and frequently brought in experts from across the US government to meetings 

with those in the Bank handling the case. This interagency representation allowed the US to ask 

detailed questions, backed up with subject area knowledge, to ensure that the Bank was taking 

appropriate remediation measures. 

Representatives of the US Executive Director's office and the Treasury Department also encouraged the 

Bank to think comprehensively in its examination of the lessons learned from the project and the 

reforms needed. Specifically, the US insisted that the Bank address the issue of adequate staffing of 

projects, requiring that environmental and social safeguards specialists have responsibility for project 

oversight throughout the life cycle of a project. This is critical because the most significant failures to 

prevent the harm to communities along the Bank funded roadway resulted from a complete lack of 

appropriate supervision and monitoring of project implementation by Bank staff. There were a number 

of reasons why supervision was lacking but, chief among those, was the lack of any staff trained in 

identifying and addressing sexual exploitation and GBV. 

This was a project that the residents were excited about; they wanted this roadway to be built and 

recognized the significant economic benefits that would result from its construction, including 

increased access to markets. Even once the project started resulting in harm the residents supported the 

continuation of the project; they simply wanted "someone to care" about the harm that was resulting to 

their families and communities. Unfortunately, when community members raised their concerns about 

the harm being caused by the project with the contractor, the Ugandan government, and World Bank 

personnel who visited the community, these concerns were summarily dismissed. 

Our work at BIC centers around the need for local communities and civil society to be considered and 

engaged in the design and implementation of development projects, and this case demonstrates how the 

failure to do so can have devastating results. Several key opportunities to do so that were missed 

included the failure to properly categorize the project as a category A-meaning it posed significant 

social risks to the local community and required enhanced due diligence and risk mitigation efforts. 

Instead, despite the well-documented history of boomtown effects occurring alongside road and other 

infrastructure projects, it was labeled a category B project, meaning it carried far fewer requirements 

for the engagement of local communities and consideration of social risks. Once these risks became a 

reality, the Bank failed to respond quickly and appropriately to ensure further girls were not victimized. 

Its slow response allowed the harm to continue. 

In our experience, it is often the profound failures at the Bank that lead to the most significant reforms, 

and we are seeing that now. The openness the Bank exhibited in accepting responsibility for its failures 

in the management response to the Inspection Panel was a positive step that allowed the Bank to begin 
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a process of introspection and reform that has the potential to create an institution that is stronger and 

better able to prevent these types of harms resulting from its projects. Even before the Inspection Panel 

completed its investigation the Bank took steps to redress the harms to community members and 

institute systematic reform. For example, in May of2016 the Bank contracted the CSO BRAC-Uganda 

to provide six months oflife skills and livelihoods training to girls in the affected communities. 

The impacts of reforms stemming from this case are starting to reach beyond the World Bank itself. In 

the wake of the project cancellation the World Bank developed a guidance note on addressing risks 

around an influx of project workers. This guidance note has been shared with other multilateral 

development banks in the hope that it will be widely adopted as a common approach across institutions. 

At the national level, this case has also led to important changes within the country's own institutions 

so it can better prevent and mitigate such harms. Beginning with the September 2015 suspension of the 

project, Bank management used its considerable influence over the government of Uganda to create 

significant change within UNRA. In part as a result of World Bank engagement and the failures around 

this project, combined with the fact that corruption was rampant within the agency, a new head of 

UNRA was appointed and all UNRA staff were fired and required to reapply for their jobs. 

Additionally, UNRA developed a child protection policy to prevent sexual abuse and other types of 

violence against children in all future projects implemented by the agency, whether financed by the 

World Bank or by other multilateral, bilateral, or private sources. Finally, the World Bank has provided 

ongoing capacity building support to UNRA, and other Ugandan Government agencies aimed at 

strengthening their financial controls, addressing corruption, and ability to monitor and supervise 

contractors' compliance with environmental and social standards. 

We appreciate the Committee's interest in this case and look forward to working together to push for 

key reforms at the World Bank. Throughout the Bank's history, the US government has been a critical 

leader in refonning the institution, which has led to lasting changes across the development finance 

landscape. Most relevant for this case is the role of the US Congress in the creation of the Inspection 

Panel, the first Independent Accountability Mechanism, which has now been replicated at almost all of 

the other MDBs. The Inspection Panel was established in 1993 in the wake of previous failed projects 

where communities lacked a mechanism for redress. As in this case, it provides redress for harm 

suffered by communities as a result of Bank projects, and it plays an important role in deterring harms 

from occurring. But for the US government's leadership, there is no guarantee that some of the most 

important reforms at the Bank, such as the creation of the Panel, would have ever happened. 

Specific Reforms Still Needed 

Going forward, to ensure that the Bank does come out of this experience stronger and more able to 

prevent, and more promptly and effectively respond to, sexual abuse and other serious negative impacts 

from Bank projects, it is absolutely essential that all of the recommendations made in the Bank's 

lessons learned document, along with the recommendations made by the GBV Task Force, be fully 

implemented. 

It is also critical that the Bank improve its social assessments to ensure that these assessments identify 

risks to disadvantaged and vulnerable groups, those most marginalized by society who are least likely 

to have a voice in the process. As part of the review and update of the World Bank safeguards, 

management is now required to assess the potential impacts on specific disadvanted and vulnerable 

groups. This requirement must be accompanied by detailed guidance that will inform Bank staff how 

best to approach such issues. Once these risks are identified, robust prevention and mitigation 
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measures must be put in place to address the risks to these groups. 

Additionally, the Bank must prioritize genuine citizen engagement. It must seek out ways to listen more 

effectively to affected communities and local civil society organizations in borrowing countries. 

Consultations must include more than just community leaders who cannot necessarily represent the 

needs and concerns of marginalized populations, and those most vulnerable to negative impacts from 

development projects. Improving the consultation process requires including the voices of 

disadvantaged and vulnerable groups as well as providing regular openings to listen to community 

voices throughout the project cycle. Gaining meaningful feedback from civil society and affected 

communities about local context, necessary for maximizing project benefits and minimizing project 

related harm, also requires the proactive disclosure of expected risks and benefits from a project. 

Allegations of sexual abuse must also be addressed swiftly and appropriately, with the involvement of 

experts and social service providers. The significant delay between the community raising concerns 

about harm to young girls around the project and the Bank becoming serious about addressing this 

harm meant that there was a nine month period in which work on the project continued absent 

appropriate security measures. During this period several additional girls reportedly became pregnant, 

dropped out of school, or contracted HIV. It is clear that the steps taken by the Bank beginning in late 

September 2015 were effective at influencing the government and the contractor to implement 

appropriate measures to prevent the sexual exploitation of children. This makes it all the more 

devastating that the Bank's initial response was one of denial and delay, but raises the hope that, in 

future projects when the Bank is better prepared to respond quickly, it can provide the needed 

interventions to ensure that child sexual abuse and gender based violence are swiftly and 

comprehensively addressed. 
33 


27249.006

United State House of Representatives 

Committee on Financial Services 

Subcommittee on Monetary Policy and Trade 

Examining Results and Accountability at the World Bank 

Wednesday, March 22, 2017 

Written Testimony ofSasha Chavkin 

Reporter, International Consortium oflnvestigative Journalists (ICIJ) 

Chairman Barr, ranking member Moore, and members of the committee, thank you 

for inviting me to testify about the World Bank. 

I am a reporter for the International Consortium of Investigative Journalists, or JCIJ, 

a nonprofit news organization that conducts investigative reporting on global issues 

of public interest. We work through large collaborations with media outlets around 

the world, such as our project last year The Panama Papers. 

I was the lead reporter in a global ICIJ investigation entitled Evicted and Abandoned, 

published in April 2015; which examined forced displacement caused by projects 

financed by the World Bank. I began researching this subject when I noticed a series 

of complaints by communities around the world, recorded in NGO, media and World 

Bank ombudsman reports, saying that they had been forcibly and sometimes 

violently evicted, or lost their lands and livelihoods, because of projects funded by 

the bank. 

ICIJ launched an investigation to identify the scale of this problem and the systemic 

reasons that the same kinds of stories were emerging over and over. Ultimately, we 

built a team of more than 50 reporters from outlets in 21 countries, we reported on 

the ground in affected communities in 14 countries in Africa, Asia, Latin America 

and Eastern Europe, and we analyzed more than 6600 World Bank documents that 

tracked what the bank calls "involuntary resettlement" associated with projects. 

We found that over a decade spanning from 2004 to 2013, projects financed by the 

World Bank physically or economically displaced an estimated 3.4 million people 

around the world. This means that these people either lost their homes, their 

livelihoods were damaged, or they lost some or all of their land. This figure was 

drawn from the bank's own documents tracking resettlement, and includes projects 

funded by the IDA and IBRD but not the bank's business-lending arm, the IFC. 

We also found that the bank regularly failed to follow its own safeguards for 

protecting displaced communities. These commitments include resettling 

communities in equal or better conditions than they lived in before, restoring lost 

livelihoods and avoiding violent evictions. They are broadly summarized by the 
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principle of"do no harm" toward poor communities living in the path of bank 

projects. 

We found instead that the bank repeatedly funded governments that not only failed 

to adequately resettle communities, but in some cases were accused of human rights 

abuses such as rape, murder and violent evictions associated with bank projects. We 

found in several cases that the World Bank continued to bankroll these borrowers 

even after evidence of these abuses came to light. 

One of the most significant cases we examined was the bank's support for the 

Protection of Basic Services program in Ethiopia, an initiative known as PBS that 

supported the provision of education and healthcare across Ethiopia. We 

investigated allegations that some of this money was diverted to an Ethiopian 

government program called villagization that violently evicted a minority tribe 

called the Anuak from their traditional farmlands, which were then turned over to 

investors. 

I met with Anuak refugees from Ethiopia in a camp in South Sudan, where they had 

fled despite the ongoing civil conflict because it was safer for them there than 

remaining in their traditional homeland in Gam bella State in Ethiopia. I encountered 

a devoutly Christian community whose members described being beaten, raped and 

seeing family members killed by Ethiopian soldiers who were driving them from 

their lands. I also spoke to the former Governor of Gambella who was in charge at 

the time of the evictions, now living in exile in the Philippines, who described to me 

how he personally diverted $10 million in World Bank funds to the villagization 

program. 

Despite the evidence presented by refugees, human rights groups and others, the 

World Bank refused to acknowledge that its funding had supported these evictions. I 

spoke to the Ethiopia program director at the bank who had met with Anuak 

refugees face to face, but because their stories did not match the bank's internal 

assessments, said he had to "agree to disagree" with the refugees' accounts of the 

abuses they had suffered. The World Bank not only continued to fund the Ethiopian 

government, but last year announced an extension of a similar initiative under a 

different lending mechanism that will now make it impossible for communities to 

file complaints to the World Bank ombudsman. 

The Ethiopia case was one of a number of IDA projects that our team investigated -

which included the stories of indigenous people in the forests of Kenya whose 

homes in were burned in a bank-funded conservation project, and slum dwellers in 

a World Bank redevelopment zone in Lagos, Nigeria who awoke one morning to find 

bulldozers bearing down on their homes. 

There are three findings from our reporting that seem most relevant to the work of 

the committee today. 
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One is that the World Bank has serious problems with enforcing its safeguards and 

holding its borrowers accountable for following its rules. The bank has repeatedly 

been unwilling to admit errors, responded to negative consequences of its projects 

with public relations and spin rather than taking responsibility for them, and failed 

to listen seriously to the voices of the poorest people in the world, whose wellbeing 

is at the heart of its mission. These shortcomings have real consequences, as large 

sums of aid flow to regimes and to projects that violate the bank's rules and 

principles. 

I would like to clarify, however, that these failures of safeguard enforcement do not 

negate the fact that the same projects may also contribute positively to 

development For example, in the case of the PBS program in Ethiopia, the bank said 

its investments had helped slash child mortality in half and increase primary school 

enrollment by 13 percent in less than a decade. 

The second point is that the bank can be responsive to pressure, in the form of 

negative publicity and the influence of donor countries, particularly the United 

States. Shortly after ICIJ shared its findings with the bank, the bank announced a 

resettlement action plan that boosted funding for safeguards enforcement by 15 

percent, hired 11 new safeguard specialists and created new oversight procedures 

for resettlement. The resettlement documents and ombudsman reports that allowed 

ICIJ to conduct our investigation existed because the bank had previously created an 

ombudsman called the Inspection Panel and adopted an open records policy at the 

insistence of the United States. 

Finally, despite its shortcomings, the World Bank still has the highest standard of 

accountability among multinational development banks. It offers greater 

transparency and oversight than regional development banks in Latin America, 

Africa and Asia and the new China-backed Asian Infrastructure Investment Bank, 

which do not keep sufficient records to allow similar investigations of displacement. 

Similarly, for all of the bank's problems with their enforcement, the World Bank's 

safeguards remain a benchmark for development banks around the world and the 

governments and the companies that they finance to do the hard work of 

development in impoverished countries. 
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Evicted & Abandoned 

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Prologue Evicted & Abandoned Ethiopia Peru India Honduras Kosovo 

Prologue 

Evicted & Abandoned 

Ethiopia 

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Peru 

India Honduras Kosovo 

Hr:m The WOfld Bank Broke Its Promise to Protect the P()(X 

I! ow The World Bank Broke Its Promise To Protect The Poor 

By Sasha Chavkin, Ben Hallman, Michael Hudson, Cecile Schilis-Gallego and Shane Shiftlett 

With reporting from Musikilu Mojeed, Bcsar Likmeta, Ciro Barros, Giulia Afiune, Mar Cabra, Anthony Langat, 

Jacob Kushner, Jeanne Baron, Barry Yeoman, Blaz Zgaga and Friedrich Lindenberg, 

Wednesday, Aprill5, 2015,8:01 pm EDT 

Beneath a gloomy white sky, more than I 00 armed police poured into the slum of Badia East in the teeming 

megacity of Lagos, Nigeria. 

As they advanced, they cracked their batons on the unpaved streets and against the ramshackle walls of the 

shanties. 

"If you love your life, move out!" the officers shouted. 

Thousands of people grabbed what belongings they could carry and fled. 

Then a line of hulking excavators moved in, using their hydraulic claws to smash homes into pieces. Within 

hours, the neighborhood was a ruin. 

Bimbo Omowole Osobe, a former resident of the Badia East slum who was evicted in 2013 when her 

neighborhood was demolished, sits in the clinic where she now sleeps at night in the reception area. Osobe 

joined with volunteers from Justice and Empowerment Initiatives, an NGO where she works with other slum 

dwellers to fight demolitions. A child in the slums of Orisunbare ljora Badia in Lagos, Nigeria. George Osodi I 

International Consortium of Investigative Journalists 

Bimbo Omowole Osobe briefly lost track of her children in the chaos. When she returned to the community 

hours later, her concrete-block home and two small shops were gone. 

"It's like when a woman goes in for labor, and the baby comes out dead," she said. "That's how it felt to me." 

The Lagos state government flattened Badia East in February 2013 to clear land in an urban renewal zone 

Jinanced by the World Bank, the global lender committed to fighting poverty. The neighborhood's poor residents 

were cast out without warning or compensation and left to fend for themselves in a crowded, dangerous ciry. 

Evictions like the one in Badia East aren't supposed to happen in the middle of projects backed by the World 

Bank. 

For more than three decades, the lender has maintained a set of"safeguard" policies that it claims have brought 

about a more humane and democratic system of economic development. Governments that borrow money from 

the bank can't force people from their homes without warning. Families evicted to make way for dams, power 

plants or other big projects must be resettled and their livelihoods restored. 

Key Findings 

• Over the last decade, projects funded by the World Bank have physically or economically displaced an 

estimated 3.4 million people, forcing them from their homes, taking their land or damaging their 

livelihoods. 

• The World Bank has regularly failed to live up to its own policies for protecting people harmed by 

projects it finances. 

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312012017 How The World Bank Broke Its Promise to Protect the Poor 

• The World Bank and its private-sector lending arm, the International Finance Corp., have financed 

governments and companies accused of human rights violations such as rape, murder and torture. In some 

cases the lenders have continued to bankroll these borrowers after evidence of abuses emerged. 

• Ethiopian authorities diverted millions of dollars from a World Bank-supported project to fund a violent 

campaign of mass evictions, according to fanner officials who carried out the forced resettlement 

program. 

• From 2009 to 2013, World Bank Group lenders pumped $50 billion into projects graded the highest risk 

for ·~irreversible or unprecedented'' social or environmental impacts·- more than tv.lice as much as the 

previous five~year span. 

The bank's commitment, it says, is to "do no hann" to people or the environment. 

The World Bank has broken its promise. 

Over the past decade, the bank has regularly failed to enforce its rules, with devastating consequences for some 

of the poorest and most vulnerable people on the planet, an investigation by the International Consortium of 

Investigative Journalists, The Buffington Post and other media partners has found. 

The World Bank often neglects to properly review projects ahead of time to make sure communities are 

protected, and frequently has no idea what happens to people after they are removed. In many cases, it has 

continued to do business with governments that have abused their citizens, sending a signal tl1at borrowers have 

little to fear if they violate the bank's rules, according to current and former bank employees. 

"There was often no intent on the part of tl1e governments to comply- and there was often no intent on the part 

of the bank's management to enforce," said Navin Rai, a former World Bank official who oversaw the bank's 

protections for indigenous peoples from 2000 to 2012. "That was how the game was played." 

In March, after ICIJ and Huf!Post informed World Bank officials that the news outlets had found "systemic 

gaps" in the institution's protections for displaced families, the bank acknowledged that its oversight has been 

poor, and promised reforms. 

"We took a hard look at ourselves on resettlement and what we found caused me deep concern," Jim Yong Kim, 

the World Bank's president, said in a statement. 

The scope of"involuntary resettlement," as the bank calls it, is vast. From 2004 to 20!3, the bank's projects 

physically or economically displaced an estimated 3.4 million people, forcing them from their homes, taking 

their land or damaging their livelihoods, ICIJ's analysis of World Bank records reveals. 

The true figure is likely higher, because the bank often fails to count or undercounts the number of people 

affected by its projects. 

A team of more than 50 journalists from 21 countries spent nearly a year documenting the bank's failure to 

protect people moved aside in the name of progress. The reporting partners analyzed thousands of World Bank 

records, interviewed hundreds of people and reported on the ground in Albania, Brazil, Ethiopia, Honduras, 

Ghana, Guatemala, India, Kenya, Kosovo, Nigeria, Peru, Serbia, South Sudan and Uganda. 

Tn these countries and others, the investigation found, the bank's lapses have hurt urban slum dwellers, 

hardscrabble farmers, impoverished fishcrfolk, forest dwellers and indigenous groups- leaving them to fight 

for their homes, their land and their ways of life, sometimes in the face of intimidation and violence. 

Between 2004 and 20 I 3, the World Bank and its private-sector lending arm, the International Finance Corp., 

committed to lend $455 billion to bankroll nearly 7,200 projects in developing countries. 

Over the same span, people affected by World Bank and IFC investments lodged dozens of complaints with the 

lenders' internal review panels, alleging the lenders and their borrowers failed to live up to World Bank and IFC 

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312012017 How The World Bank Broke Its Promise to Protect the Poor 

safeguard rules. 

In Lagos, the World Bank's ombudsman, the Inspection Pane!, said bank management "fell short of protecting 

the poor and vulnerable communities against forceful evictions." Bank officials should have paid better attention 

to what was going on in Badia East, the panel said, given Lagos authorities' long history of bulldozing slums 

and forcing people from their homes. 

One year after the evictions, the bank loaned Lagos authorities $200 million to support the state government's 

budget. 

The World Bank said it was "not a party to the demolition" and that it advised the Lagos government to 

negotiate with displaced people, leading to compensation for most of those who said they'd been harmed. 

Cases involving evictions have drawn the most attention, but the most common hardships suffered by people 

living in the path of World Bank projects involve lost or diminished income. 

A fisherman near Mundra, India, prepares the net for an overnight fishing trip. Locals say a World Bank Groupbacked project in the area has depleted fish stocks. Sami Siva I International Consortium oflnvestigative 

Journalists 

On India's northwest coast, members of a historically oppressed Muslim community claim that heated water 

spewing from a coal-fueled power plant has depleted fish and lobster stocks in the once-fertile gulf where they 

make their living. The IFC loaned Tata Power, one oflndia's largest companies, $450 million to help build the 

plant. 

The U.S. and other global powers launched the World Bank at the end of World War II to promote development 

in countries torn by war and poverty. Member countries finance the bank and vote on whether to approve 

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roughly $65 billion in annual loans, grants and other investments. 

In 2014, the bank financed initiatives as varied as training for chicken farmers in Senegal and sewage system 

upgrades in the West Bank and Gaza Strip. 

World Bank President Kim said in March that the demand in struggling regions for infrastructure spending- to 

provide clean water, electricity, medical care and other vital needs- will mean the bank will finance an 

increasing number of big projects likely to remove people from their land or disrupt their livelihoods. 

The World Bank also put out a 5 Y,-page "action plan" that it said would improve its oversight of resettlement. 

"We must and will do better," said David Theis, a World Bank spokesman, in response to the reporting team's 

questions. 

Yet even as it promised reforms to its procedures, the bank has proposed sweeping changes to the policies that 

underlie them. The bank is now in the middle of a rewrite of its safeguards policy that will set its course for 

decades to come. 

Some current and fanner World Bank officials warn that the proposed revisions will further undermine the 

bank's commitment to protecting the people it was created to serve. The latest draft of the new policy, released 

in July 2014, would give governments more room to sidestep the bank's standards and make decisions about 

whether local populations need protecting, they say. 

"!am saddened to see now that pioneering policy achievements of the bank are being dismantled and 

downgraded," said Michael Cernea, a former high-ranking bank official who oversaw the bank resettlement 

protections for nearly two decades. "The poorest and most powerless will pay the price." 

The bank says it has listened to the feedback and will release a revised draft with "the strongest, most state-ofthe-art environmental and social safeguards." 

Unsettled History 

A man-made disaster in eastern Brazil in the late 1970s helped prompt the World Bank to adopt its first 

systematic protections for people living in the footprint of big projects. 

Rising waters upstream from the Sobradinho Dam, built with World Bank financing, !(,reed more than 60,000 

people from their homes. Their relocation was poorly planned and chaotic. Some families fled their villages as 

water began pouring into their homes and fields, leaving behind herds of animals to drown. 

The fiasco gave Cernea, the World Bank's first in-house sociologist, leverage to convince the bank to approve its 

first comprehensive policy for protecting people whose lives are upended by the bank's projects. Cernea based 

the new rules, approved by the bank in 1980, on a simple premise: People who lose their land, their homes or 

their jobs should get enough help to restore, or exceed, their old standard of living. 

Under the World Bank's rules, governments seeking money from the bank must put together detailed 

resettlement plans for people who are physically or economically displaced. 

Current and former bank employees say the work of enforcing these standards has often been undercut by 

internal pressures to win approval for big, splashy projects. Many bank managers, insiders say, define success by 

the number of deals they fund. They often push back against requirements that add complications and costs. 

Daniel Gross, an anthropologist who worked for the bank for two decades as a consultant and staff member, said 

in-house safeguards watchdogs have "a place at the table" in debates over how much the bank is required to do 

to protect people. But amid the push to get projects done, they're irequently ignored and pressed to "play ball 

and get along," he said. 

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In an internal survey conducted last year by bank auditors, 77 percent of employees responsible for enforcing 

the institution's safeguards said they think that management "does not value" their work. The bank released the 

survey in March, at the same time that it admitted to poor oversight of its resettlement policy. 

"Safeguards are irrelevant for managers," said one staffer who was surveyed for the report. 

Albanian authorities used a World Bank-backed project to clear the way for a planned seaside resort, partly or 

completely tearing down I 5 homes in the impoverished village of Jale. Andon Koka's home was flattened, and 

half of his brother's home (in background) was demolished. Besar Likmeta I Balkanlnsight.com 

No Consolation 

In 2007, residents of Jale, a tiny Albanian beach hamlet on the Ionian Sea, found themselves in the path of a 

coastal cleanup effort backed by a $17.5 million loan from the World Bank. More than a dozen poor families 

lived in Jale, many in homes with add-ons and extra floors they rented to vacationers. 

Albanian authorities had other plans for the seaside. 

They saw Jale as an ideal spot for a high-end resort to lure tourists to the country. They decided to use the 

coastal restomtion project- which was managed by the son-in-law of Sali Berisha, Albania's prime minister at 

the time- as a vehicle for turning the plan into a reality. 

Before dawn one April morning, dozens of police officers streamed into the beach community, heading for 

structures previously identified in photos taken during aerial surveys paid for by the World Bank. The police 

rousted residents from their beds and forced them from their homes. Demolition crews leveled entire houses or 

tore down additions that the government said had been put up without proper permits. 

Sanie 1-Ialilaj cried as work crews pulled down half of the house she had shared with her husband for more than 

half a century. 

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"When you lose a loved one, someone consoles you," the 74-year-old said in a recent interview. "But when you 

lose your home, there is no consolation." 

Bank officials initially denied the evictions were connected to the bank-financed coastal initiative. But a year 

later, the bank's Inspection Panel found "direct links'' between the project and the demolitions. The panel 

slammed the bank for embarking on a "systematic effort" to obstruct its investigation, providing answers "at 

times in total conflict with factual information which had been long known to management." 

After the panel's report was released in 2008, then-World Bank Group President Robert Zoellick called the 

bank's actions "appalling." Zoellick vowed that the institution would swiftly "strengthen oversight, improve 

procedures and help the families who had their buildings demolished." 

"The bank cannot let this happen again," he said. 

Seven years later, little has changed. In Jale, most residents still haven't received payment from the government 

for what they lost, even though the World Bank has covered their legal costs. At the bank, oversight remains 

weak. 

A 2014 internal World Bank review found that in 60 percent of sampled cases, bank staffers failed to document 

what happened to people after they were forced from their land or homes. 

Seventy percent of the cases sampled in the 2014 report lacked required information about whether anyone had 

complained and whether complaints were resolved, indicating the bank's mechanisms for dealing with 

grievances were ""box-checking" exercises that ''existed on paper but not in practice," the in-house reviewers 

wrote. 

These ''sizeable gaps in information" indicate '"significant potential failures in the bank's system for dealing with 

resettlement," the report said. ''The inability to confirm that resettlement has been satisfactorily completed poses 

a reputational risk for the World Bank." 

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Victor Mendoza, the president of a farming co-op near the sprawling Yanacocha gold mine in northern Peru, 

with his I 0-year-old son. The mine, built two decades ago with the financial backing of the International 

Finance Corp., the private-lending arm of the World Bank, is deeply unpopular in this region. Farmers like 

Mendoza claim it is polluting their water supply and threatening the health of their families and livestock. Read 

the story here. Ben Hallman I The Huffington Post 

'They Abandoned Us' 

Most World Bank investments do not require evictions or damage people's ability to earn a living or feed their 

families. But the percentage of those that do has increased sharply in recent years. 

A 2012 internal audit found that projects in the bank's pipeline triggered the bank's resettlement policy 40 

percent of the time- twice as often as projects the bank had already completed. 

The World Bank and IFC have also been boosting support for mega-projects, such as oil pipelines and dams, that 

the lenders acknowledge are most likely to cause ''irreversible" social or environmental harm, an analysis by 

HuftPost and ICIJ found. 

A big project can upend the lives of tens of thousands of people. 

Since 2004, World Bank estimates indicate that at least a dozen bank-supported projects physically or 

economically displaced more than 50,000 people each. 

Studies show that forced relocations can rip apart kinship networks and increase risks of illness and disease. 

Resettled populations are more likely to suffer unemployment and hunger, and mortality rates are higher. 

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The World Bank acknowledges that resettlement is difficult, but says it's often impossible to build roads, power 

plants and other much-needed projects without moving people from their homes. 

"We stand by the need to continue financing infrastructure projects, including those that entail land acquisition 

and involuntary resettlement," said Theis, the World Bank spokesman. 

The bank says it strives to make sure its borrowers provide real help to people pushed aside by big projects. In 

Laos, the bank says, authorities built more than 1,300 new homes with electricity and toilets, 32 schools and two 

health centers for thousands of people forced to move to make way for a World Bank-financed dam. 

"Through careful project design and proper implementation, land acquisition and involuntary resettlement have 

resulted in people's lives improving significantly," Theis said in a statement. 

In a drought-haunted region of Brazil, farm families pushed aside by another World Bank-backed dam say that 

their lives haven't been improved. 

Thirty-five families live in a tiny, government-built relocation village called Gameleira, named after the dam and 

reservoir that forced them to leave their homes along the Mundau River. 

In tl1eir old homes, they could take water from wells and the river itself, but the relocation village has no fresh 

water source. A World Bank report acknowledged a delay in getting water access for the new village, but said 

the village's water issues had been solved by late 2012. 

The villagers say that's not true. They are still waiting, four years after tl1ey were forced to relocate, for local 

authorities to keep their promise to build a small pipeline to draw water from the new reservoir to the relocation 

village. Meanwhile, water from the reservoir is being piped to urban areas. 

A well in the village produces salty water and, even with desalination equipment, each tinnily is limited to 36 

liters of water a day. Families supplement their supply by buying from commercial vendors, sometimes spending 

as much as a third of their modest incomes. 

These purchases provide them enough water to irrigate small gardens ofyuca, beans and com. If they want to 

plant cash crops -such as cashews- they have to wait for rain, which hardly ever comes. 

"We feel that we are suffering so that people from the city can have water," 39-year-old Francisco Venilson dos 

Santos, a farmer and father of four boys and two girls, said. "They abandoned us here." 

In a written statement the World Bank said it is satisfied the village was provided an adequate supply of water 

"both in terms of quantity and quality." The bank said it is helping Brazilian authorities deal with northeast 

Brazil's prolonged drought by helping '"to increase the resilience of small rural communities,'' giving them 

advice on drilling emergency groundwater wells and creating "drought preparedness plans." 

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World Bank Group President Jim Yong Kim at a Berlin press conference. Tobia Schwarz I Getty Images 

Shortcuts 

In July 2012, an unconventional leader took over as the World Bank's new president. Jim Yong Kim, a KoreanAmerican physician known for his work fighting AIDS in Africa, became the first World Bank president whose 

background wasn't in finance or politics. 

Two decades before, Kim had joined protests in Washington, D.C., calling for the World Bank to be shut down 

altogether for valuing indicators like economic growth over assistance to poor people. 

Human rights advocates and bank staffers working on safeguards hoped that Kim's appointment would signal a 

shift toward greater protections for people affected by World Bank projects. 

In March, Kim said he was concerned about "major problems" in the bank's oversight of its resettlement 

policies. He announced an action plan calling for greater independence for the bank ·s safeguards watchdogs and 

a 15 percent funding boost for safeguards enforcement. 

But while Kim and other bank officials have acknowledged general shortcomings, they have consistently denied 

that the bank shares blame for violent or wrongful evictions carried out by its borrowers. 

In Ethiopia, the World Bank's Inspection Panel found the bank had violated its own rules by failing to 

acknowledge an "operational link" between a bank-funded health and education initiative and a mass relocation 

campaign carried out by the Ethiopian government. In 2011, soldiers carrying out the evictions targeted some 

villagers for beatings and rapes, killing at least seven, according to a report by Human Rights Watch and ICIJ's 

interviews with people who were evicted. 

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Daily life in a refugee camp in South Sudan. Some ofthe camp's residents fled Ethiopia to avoid brutal evictions 

carried out by government forces. New evidence suggests the government's actions were funded by the World 

Bank. Read the story here.Andreea Campeanu /International Consortium of Investigative Journalists 

Kim said that while "we could have done more" to help the evicted communities, the bank was ultimately not at 

fault. 

In India, the IFC's internal ombudsman found that the lender had breached its policies by not doing enough to 

protect the large fishing community living in the shadow of the coal power plant it financed on the Gulf of 

Kutch. With Kim's approval, IFC's management rejected many of the ombudsman's findings and defended the 

actions of its corporate client. 

In both Ethiopia and India, the World Bank Group declined to direct its clients to fully compensate the affected 

communities. 

In response to complaints about the Badia East evictions in Nigeria, the World Bank embraced a shortcut that 

fell short of its promise that people affected by projects will be fully compensated for their losses. 

Typically, a community that claims it has been harmed by a bank project can file a complaint that will trigger an 

investigation by the bank's Inspection Panel. 

But when three Badia East residents submitted a complaint, panel staffers held off launching an investigation. 

Instead, they guided the residents into a new pilot program for handling disputes. The program put the 

community into direct negotiations with the Lagos state government. 

Megan Chapman, then a lawyer for the Social and Economic Rights Action Center and now a co-founder of 

Justice & Empowerment Initiatives, represented the evicted residents. The Inspection Panel promised Chapman 

that the Badia East community could demand an investigation at any time if it wasn't satisfied with the outcome, 

according to emails reviewed by ICI.l. 

Negotiations didn't go well for the evicted residents. The Lagos government insisted they had been illegal 

squatters, even though some of them had lived there for decades. It gave the group an ultimatum: Accept a small 

payment and sign away any legal rights. or get nothing. 

Chapman believed that the government's offer violated the bank's resettlement policy because it didn't provide 

new homes for the displaced or compensation equal to what they'd lost. The payments that Lagos authorities 

offered for larger demolished structures, for example, were 31 percent lower than what the World Bank's own 

consultants said they were worth. 

"It was like David and Goliath. There were these little people fighting against this giant," Chapman said. The 

bank "really Jell vulnerable people on their own." 

The government's ultimatum divided the community. The leader of Chapman's organization said it was the best 

offer the evicted people were going to get. He said he was satisfied with the deal. Many residents and their 

advocates including Chapman -objected. 

But they had nowhere to turn for help. 

Internal emails obtained by ICIJ indicate that by early 2014, the Inspection Panel's chair, Eimi Watanabe, was 

already pushing to make sure that the panel would not investigate the World Bank's role in the case. 

After hearing that the leader of Chapman's group was satisfied with the outcome of the negotiations, Watanabe 

urged her staff to issue a formal notice shutting down the possibility of any investigation before the fragile 

agreement fell apart, according to internal emails obtained by ICIJ. 

"PI[ ease) issue notice soonest before it unravels," Watanabe wrote on Feb. 6, 2014. 

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Watanabe's directive didn't immediately kill the investigation, but over the following months the panel made it 

clear that it didn't want to dig deeper into the World Bank's actions, 

In July 2014, two of the three residents who had filed the complaint told the panel they were unhappy with the 

deal and that they wanted to go forward with an investigation, The panel rejected their request and shut the case 

down with an official notice that said, as an aside, that the bank had fallen short of its own resettlement 

standards, 

Chapman and other advocates say the bank misled them about how the pilot program would work and 

abandoned the people of Badia East 

Watanabe did not respond to !CIJ's questions about the Lagos case, 

Gonzalo Castro de la Mata, the Inspection Panel's current chair, said the panel "deliberated carefully at every 

stage of the case" and did not seek to arbitrarily shut down the investigation before it could start, 

He said that although the Lagos government had agreed to follow World Bank rules for resettlement in Badia 

East and other neighborhoods, the evictions weren't done under the official umbrella of the bank's urban 

renewal initiative, Because of this and other factors, he said, the panel determined that "a lengthy process of 

investigation would not at the end of day necessarily yield better outcomes" for residents who lost their homes, 

Joseph Kilimo Chebet, a father of five, standing next to the burned remains of his homestead in Kenya, 

destroyed only hours prior by Kenya Forest Service officers, Read the story here, Tony Karumba I GroundTruth 

An Uncertain Future 

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3/2{}12017 Hcr.v The World Bank Broke Its Promise to Protect the Poor 

As it enters its eighth decade, the World Bank faces an identity crisis. 

It is no longer the only lender willing to venture into struggling nations and finance huge projects. It is being 

challenged by new competition from other development banks that don't have the same social standards- and 

are rapidly drawing support from the World Bank's traditional backers. 

China has launched a new development bank and persuaded Britain, Germany and other American allies to join, 

despite open U.S. opposition. 

These geopolitical shifts have fueled doubts about whether the World Bank still has the clout- or the desireto impose strong protections for people living in the way of development. 

United Nations human rights officials have written World Bank President Kim to say they're concerned that the 

growing ability of borrowers to access other financing has spurred the bank to join a "race to the bottom" and 

push its standards for protecting people even lower. 

The bank's proposed changes to its safeguard rules would grant many borrowers greater authority to police 

themselves. In the current draft, governments would be allowed to hold off on preparing resettlement plans until 

after the bank greenlights projects. They would also be permitted to use their own environmental and social 

policies instead of the bank's safeguards, as long as the bank determines these policies are consistent with its 

own. 

Some current and former bank officials say these changes would spell disaster for the people living in the 

growing footprint of the bank's projects- allowing governments to abide by weaker national standards and 

decide whether vulnerable populations need protecting after they have already received financing. 

[n December, the World Bank's biggest patron, the U.S. Congress, approved a measure directing the American 

representative on the World Bank board to vote against any future project that would be subject to weaker 

safeguards than the ones currently in place. 

The bank says that the new rules would strengthen the protections for populations affected by its projects. 

Theis, the bank spokesman, said that under the proposed rules, "a rigorous upfront scoping of the project is 

always required" and borrowers still must prepare plans to address resettlement and other adverse impacts of 

projects "'well in advance of any construction activities." 

World Bank officials are now writing a new version of the safeguards that they say will take into account the 

criticisms of their previous draft. They expect to release the new draft in the late spring or summer. 

ln the meantime, the bank continues to ramp up its investment in large infrastructure projects, like the one that 

claimed Bimbo Osobe's home in Badia East. 

Osobe spent months after her eviction sleeping under only a net for shelter, she said. 

As of mid-March, she was staying in a medical clinic, sleeping in the reception area after the clinic closes at 

night. She's been forced to send three of her children away to stay with relatives, she said. 

"It is not a good thing for a family to be divided.'. Osobe said. 

Sasha Chavkin is a reporter, Cecile Schilis-Gallego is a data journalist, Mar Cabra is a data editor and Michael 

Hudson is a senior editor at the International Consortium of Investigative Journalists. Ben Hallman is a senior 

writer and Shane Shiillett is a data reporter at The Huffington Post. Jacob Kushner and Anthonv Langat are 

Kenya-based reporters for the GroundTruth Project, a nonprofit global news service headquartered in the U.S. 

Ciro Barros and Giulia Afiune are reporters at ~cia Publica in Brazil. Musikilu Majeed is managing editor at 

the Premium Times in Nigeria. Besar Likmeta is Albanian editor at Balkanlnsight.com. Jeanne Baron is a U.S.-

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3/20/2017 How The World Bank Broke Its Pranise lo Protect the Poor 

based radio journalist. Barry Yeoman is a reporting fellow with the Investigative Fund. Friedrich Lindenberg is a 

data journalist with the African Network of Centers for Investigative Reporting. Bla:Z Zgaga is an investigative 

journalist based in Slovenia. 

Produced by Hilary Fung, Alissa Scheller and Shane Shifflett. 

Video editing and production by Hilke Schellmann. 

© 2015 TheHu!lingtonPost.com, Inc. I Privacy I Send Feedback I HuffPost Data I Part ofHPMG News 

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Ethiopia 

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Peru 

India Honduras Kosovo 

By Sasha Chavkin 

Nevw Evidence Ties World Bank to Human Rights Abuses in Ethiopia 

Wednesday, April IS, 2015, 8:01pm EDT 

The soldiers pointed their guns at Odoge Otiri and led the 22-year-old student into the forest outside his village 

in western Ethiopia. Then, he says, they began pounding him with their nightsticks, leaving him bloody and 

unmoving. 

"I was unconscious," he recalls. "The reason they left me is they thought l was going to die." 

That night, soldiers arrested his wife, Aduma Omot. 

"The soldiers took me to their camp," she says. "Then they mistreated me, they raped me." 

They held her for two days, she says, before they let her go. 

The soldiers attacked them, Otiri says, because he opposed Ethiopian authorities' efforts to force him and his 

neighbors from their homes as part of the country's so-called "villagization" effort- a massive social 

engineering project that sought to move almost 2 million poor people to newly built sites selected by the 

government. 

Otiri and Omot are among thousands of Anuak, a mostly Christian indigenous group fi·om the rural Ethiopian 

state of Gam bella, who have fled from Ethiopia's mass relocation campaign. 

The Ethiopian government financed the evictions in part by tapping into a pool of aid money from the world's 

most influential development lender, the World Bank, two former Ethiopian officials who helped carry out the 

relocation program told the International Consortium of Investigative Journalists. The money, the former 

officials said, was diverted from the $2 billion in funding that the World Bank had put into a health and 

education initiative. 

The World Bank strongly disputes that its money supported the mass evictions in western Ethiopia. Even as 

Anuak refugees and human rights groups have publicly charged that World Bank money has been used to 

bankroll brutal evictions, the bank has continued to send hundreds of millions of dollars into the same health and 

education program. 

"We are confident that the money was used for the purposes intended," Greg Toulmin, the World Bank's country 

program coordinator for Ethiopia, told ICIJ in March. '·We remain confident that there was no link." 

New evidence gathered by ICIJ undermines the bank's continuing denials that its money bankrolled the 

evictions. 

One of the two former officials interviewed by ICIJ was well-positioned to know exactly how World Bank funds 

were being used: Omot Obang Olom, the former governor of Gam bella, oversaw the resettlement program in his 

state. 

Olom told IC!J that he personally oversaw the diversion of some $10 million from the World Bank's health and 

education initiative, redirecting the money to finance mass relocations through tl1e villagization program. He 

said senior officials in Ethiopia's federal government instructed him to divert the funds, and this money was 

essential to conducting the resettlement program. 

"If we were not ordered by the federal government to reallocate the World Bank budget for the program, the 

program would not be possible," Olom said. 

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Olom, who left the country last year and is now seeking political asylum in the Philippines, has never before 

spoken to the news media about the eviction program. He now acknowledges that the mass evictions were 

carried out through threats and violence. 

"The farmers came to me and they say, ·omot, we are not free because members of the defense force come and 

intimidate us,' " he said. "'There are incidents of abusing fanners, even raping the women." 

Farmers who spoke out against the evictions, he said, "were beaten, were tortured, by the national defense 

forces." 

The evictions in Ethiopia fit a larger pattern. 

Communities displaced amid World Bank Group projects in Nigeria, Honduras, Kenya, Indonesia, India, 

Guatemala and Uganda have accused the organization's borrowers of committing human rights violations. 

Governments and companies backed by the World Bank or its private-sector lending arm, the International 

Finance Corp., have bulldozed and burned homes and deployed soldiers or private security operatives who have 

arrested, beaten or even killed people, residents of affected communities have said in official complaints and in 

interviews with ICIJ. 

Human rights experts say the bank is undercutting its mission of helping the world's poorest people by failing to 

embrace international policies upholding human rights. 

Philip Alston, the United Nations' special rapporteur on extreme poverty and human rights, has accused the 

bank of hiding behind a "sleight of hand" argument that it can't fully engage in human rights issues because its 

charter forbids it from getting involved in politics. In December Alston and 27 other U.N. human rights officials 

wrote World Bank Group President Jim Yong Kim to complain that the bank's proposed revisions to its "social 

safeguards" policies for protecting people in the path of development "avoid any meaningful references to 

human rights." 

A spokesman for the World Bank said the bank takes communities' reports of human rights abuses "very 

seriously,'~ and that '1hese cases show we must continually improve our approach to supervision." He said the 

bank has been a leader for decades in setting strong safeguards for people living in the footprint of its projects, 

and that its proposed new rules go "as far as or further than any otl1er multilateral development bank" to protect 

vulnerable populations. 

The World Bank's Ethiopia program director, Toulrnin, said the bank's mission is to support initiatives that fight 

poverty, not to police unrelated activities by its borrowers. 

"We are not in the physical security business," he said. 

Fearing The Worst 

[n Ethiopia, claims of human rights abuses associated with mass evictions in Gambell a prompted neighboring 

South Sudan- a nation ravaged by a civil war- to grant group refugee status to Anuak who have fled 

Ethiopia. 

Otiri and Ornot escaped the violence in Gam bella in the summer of 20 II by trekking across the Ethiopian border 

into South Sudan. 

The young couple did not make the journey together. 

When he awoke alone in the forest after his beating, Otiri faced a choice. If he returned horne, he would likely 

put both himself and his wife in further danger. He decided the safest thing was to head for an Anuak settlement 

in South Sudan. 

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He hoped his wife would realize what had happened and follow him there. 

Shortly after her husband disappeared, a neighbor told Omot that soldiers had taken him into the forest. She 

feared the worst. 

"What came into my mind," she says, ·'was that I was not going to see my husband again." 

Later that night, three soldiers arrived at her parent's compound, looking for Otiri. They demanded, she says, 

that she tell them where her husband was hiding. When she said she didn't know, she says, they arrested her and 

marched her toward their camp, at one point pushing her to ground because she wasn't moving fast enough. 

At the soldiers· open-air encampment in the village of Gog Depache, !hey continued to interrogate her about her 

husband's whereabouts. When she again insisted that she didn't know, she says, the soldiers raped her. 

"After those two days !hey set me free," she says. '·From there I decided to leave the country." 

She headed for South Sudan, not knowing what she would find at the end of her journey. 

'Friend Of The System' 

The World Bank has long made Ethiopia a top priority, funneling loans to its government to help the East 

African nation of some 90 million people move past its legacy of poverty and famine. In 2005, the bank cut off 

funding for Ethiopia after the country's authoritarian leaders massacred scores of people and arrested some 

20,000 political opponents following disputed elections. 

A year later, the bank lifted its ban, launching a new strategy of funding local and state governments rather than 

central authorities. In 2006, the bank approved $2!5 million in loans and grants to support a program. called 

Protection of Basic Services, that's supposed to provide health care, education, fresh water and other support to 

rural Ethiopians. 

In May 2009, the bank approved $540 million to extend the program. 

Soon after, the Ethiopian government began rolling out its ambitious resettlement campaign. The villagization 

program sought to relocate 1.9 million people in four rural states with large indigenous populations, moving 

them into larger settlements where authorities could provide schools and clinics. 

The goal. according to a 2010 plan for the state ofGambella, was the '·socioeconomic and cultural 

transformation of the people." 

The World Bank says Ethiopian authorities didn't consult the bank when they developed the resettlement 

program, and it didn't learn of the plan until October 2010.ln January 2011, the World Bank and other foreign 

donors wrote the Ethiopian government warning that forced relocation "can impact negatively on the wellbeing 

and livelihoods of those who were intended to benefit." 

Othow Nyigwo, then an education administrator in the state ofGambella, says that in February 2011 superiors 

summoned him and other local health and education officials to a meeting with Olorn, Gambella's governor at 

the time. 

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Othow Nyigwo, a former education official in Gambella, sitting in a school classroom in the Gorom Refugee 

Camp. Andreea Campeanu /International Consortium of Investigative Journalists 

At the meeting, Nyigwo says, Olom ordered him to divert some $1,500 in World Bank funds intended for 

primary school classes into the relocation program. Olom gave the same order to divert funding to all the 

otTicials assembled at the meeting, Nyigwo says. 

"This money which was given from the World Bank had to be given to the villagization program,'' says Nyigwo, 

who is now living in a refugee camp in South Sudan. 

As a local supervisor for villagization, Nyigwo heard repeatedly from Anuak villagers who complained they 

were being forced to give up fertile farmland in exchange for small, barren plots at the new government sites. 

When he reported these complaints to his superiors, he says, they told him he should stop causing trouble. 

Olom, the former governor, confirmed Nyigwo's account of the February 20 II meeting. Olom says federal 

officials directed him to divert the funding after it became clear that the government didn't have enough money 

to fully finance the relocation program. 

By the second year of the villagization effort, Olom says, top officials told him he needed to tap other sources of 

funding, including money coming in from the World Bank's health and education initiative. He says he diverted 

90 million Ethiopian birr- roughly $5 million at the time- in each of the next two years. 

He says higher ups assured him that he wouldn't be blamed for diverting money from the World Bank and other 

funders and worked with him to obscure the money trail. 

"They knew that the way we allocated the budget was illegal," Olom said in a telephone interview in March 

from the Philippines. "So they made it very secret." 

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Olom is a controversial figure. An Anuak himself, he is reviled by many Anuak [or his role in carrying out the 

mass relocations. He has also been accused of corruption and of complicity in a 2003 massacre of his fellow 

Anuak when he was Gambella's security chief prior to becoming governor. 

Olom denies these allegations. He claims he fell out of favor with Ethiopia's federal authorities after more than a 

decade as a public official, including as a governor and federal minister, because he raised questions about the 

government's treatment of the Anuak. 

Olom maintains that he initially believed the relocation program would help poor people in Gambella, so he 

went along with federal authorities. 

"! was a good friend of the system," he says. 

Felix Horne, a researcher with Human Rights Watch who focuses on Ethiopia, said that while Olom may be 

seeking to repair his reputation, his allegations are credible. 

"Its very clear that he wants to make himself out as another victim of the regime," Home said. But "his 

statements definitely seem plausible. Everything we've heard from fanner government officials in Gambella 

matches up with what he said." 

The Ethiopian government did not respond to ICIJ's inquiries directed to its embassy in Washington, D.C., its 

Ministry of Foreign Affairs, or its country office at the World Bank. 

Asked about the Nyigwo and Olom's accounts, a World Bank spokesman said the bank was "not aware of these 

specific third-party allegations" and urged IC!J to call the bank's fraud and corruption hotline "and report the 

matter without delay." 

Land To Foreign Investors 

As Olom and Nyigwo were helping to carry out Ethiopia's resettlement push, the World Bank was conducting an 

assessment of the program. 

Concerned after learning about the campaign in late 2010, bank staffers visited western Ethiopia in Febmary and 

March 20 II to see how relocations were being carried out. The team traveled to Benishangui-Gumuz, a state 

north of Gam bella that was selected for the relocation program but didn't have an Anuak population. 

Based on the team ·s reports from the Held, World Bank officials concluded the relocations in that region 

"'appeared to be voluntary and not a direct consequence of bank-supported investment projects.'' 

In late Febmary 2011, even before the review team had finished its work, the bank approved another extension 

of the basic services program, sending another $420 million to Ethiopia. Much of the money went to Gambella 

and other states that were taking part in the resettlement program. 

Toulmin, the bank's Ethiopia coordinator, said the bank also relied on Held visits by other foreign donors who 

went to Gambella and shared their findings. He said that, like the World Bank's review team, these missions did 

not encounter any evidence of violence or forced evictions. 

Even as the field visits soothed the bank's concerns about villagization, the Ethiopian government had turned 

over large tracts of land in Gambell a to private investors in exchange for leasing fees. 

The Anuak, who lack legal title to their ancestral lands, received nothing in return, Anuak refugees say. In 

Ethiopia, the government officially owns all land, but occupants are supposed to retain some customary rights. 

Forty-two percent of land in Gam bella was being leased or marketed to investors, according to a 2011 report by 

the Oakland Institute, a U.S.-based advocacy group that's critical of widespread transfers of land to corporations 

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in developing countries. 

Among the largest leaseholders in Gambella is Saudi Star, a conglomerate owned by Ethiopia's richest man, 

Saudi dual citizen Sheikh Mohammed AI-Amoudi. 

Land previously occupied by Anuak is now being used by Saudi Star for commercial plantations, according to 

two Anuak elders interviewed by ICIJ and reports by the Oakland Institute and Human Rights Watch. The 

government cleared small villages within what became the Saudi Star lease area and relocated the residents as 

part of the villagization program, the Oakland Institute's report said. 

A spokeswoman for the sheikh confirmed that Saudi Star has leased I 0,000 hectares in Gambella, but denied 

any of the land had been occupied by Anuak. "No people or farmers were relocated from the land on which 

Saudi Star is operating," she said. 

She said any suggestions the company improperly benefited from the government's land-use decisions are 

fabrications tueled by "advocacy groups with a political agenda." 

An Anuak refugee tilling the land in the Gorom Refugee Camp in South Sudan. Andreea Campeanu I 

International Consortium of Investigative Journalists 

Tearful Reunion 

As they pushed Anuak villagers out of their homes. local officials conscripted many of them to work on building 

the new, government-selected sites. 

Odoge Otiri, the young husband who says he was assaulted by soldiers, says he drew their anger because he had 

stayed home and refused to work cutting tall grass to thatch the roofs of the new homes that he and his neighbors 

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didn't want. 

The soldiers smashed away at his elbows and knees with their sticks, he says, until he passed out. When he 

regained consciousness~ he saw that he was alone, with no soldiers or any signs of a village in sight. 

He walked nearly two hours to reach another Anuak village. 

"Even though I was walking slowly and I was scared, God guided me on my way," he says. 

Though Otiri was a stranger, a woman there took care of him out of concern for a fellow Anuak. She tended to 

his injuries for three days while he regained strength. 

Then he began the long, slow walk to the border. He had no way at the time to send word to his wife and no idea 

what was happening to her back in their village. 

When he reached the Anuak settlement in Pochalla, South Sudan, he asked two businessmen who were heading 

to Gambella to look for Omot and tell her where he was staying. 

After his wife, Aduma Omot, was released by the soldiers, she faced a painful choice of her own: whether to 

stay in Ethiopia or to flee and hope to find her husband across the border. 

A duma Omot and her daughter, Annacerjwok, at their home in the Gorom Refugee Camp in South Sudan. 

Andreea Campeanu /International Consortium oflnvestigativc Joumalists 

Without word from her husband, she also decided to leave Ethiopia. She began walking toward Pochalla. 

Along the way, in the town of Pignudo, she encountered the two businessmen. They told her that her husband 

was alive and was awaiting her in South Sudan. 

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312012017 New Evidence Ties World Bank to Human RightS Abuses in Ethiopia 

When she reached the Anuak refuge in Pochalla, two small children led her to the compound where her husband 

was staying. 

"I saw her entering into the compound, and we all wept," Otiri recalls. '"The first thing that came into my mind 

was a great pleasure.~· 

'Agree to Disagree' 

In late 20 II, Human Rights Watch confronted the World Bank and the Ethiopian govemment about reports of 

abuses stemming from the resettlement program in Gambell a. These accounts, which it detailed soon after in a 

report called "Waiting Here for Death," described a campaign of evictions enforced by arbitrary arrests, 

beatings, rapes and killings. 

The report said the group had "documented at least seven credible accounts of people dying as a result of the 

beatings inflicted by the military and heard of many more that could not be corroborated." 

One villager quoted in the report described soldiers using guns and sticks to beat a 19-year-old so severely that 

he began vomiting blood and died soon after. 

Human Rights Watch charged that the World Bank and other development funders bankrolling the Protection of 

Basic Services effort were "involved in a program that is doing more to undermine the rights and livelihoods of 

the population than to improve them." 

The bank denied that resettlement was being imposed by force or that World Bank money had been used to 

support forced relocations. The bank said its investments in Ethiopia had helped slash child mortality in half and 

increase primary school enrollment by 13 percent in less than a decade. 

The Ethiopian government has said its resettlement campaign in Gambella relocated 37,883 families before it 

concluded in mid-2013. 

A top Ethiopian official told Human Rights Watch that all families were relocated with their "full consent and 

participation." Any allegations of police and military coercion, the official said, were ··downright fabrications" 

ginned up by "anti-development'' elements in Gambella who were working "in a concerted campaign with the 

support of their foreign handlers." 

With few other options, Anuak refugees turned to the World Bank's internal watchdog unit, known as the 

Inspection Panel. 

Daily life at the Gorom Refugee Camp. Andreea Campeanu /International Consortium of Investigative 

Journalists 

Working with an American nonprofit organization, Inclusive Development International, a group of Anuak 

refugees filed a 21-page complaint in September 2012 charging that the bank's support for the Protection of 

Basic Services program violated the bank's rules against wrongful evictions and dispossessing indigenous 

groups. It said the services financed by the bank were '·precisely" those to be provided by the resettlement 

campaign, meaning that bank funds were "substantially contributing'' to the evictions. 

In a series of meetings with World Bank officials, Anuak refugees described widespread abuses by the 

government. Toulmin, the bank's Ethiopian program director, said that the refugees' accounts weren't enough to 

outweigh the findings of field missions by the bank and other foreign donors that found no evidence of 

widespread forced evictions or human rights abuses. 

"At the end, we simply had to agree to disagree," Toulmin said. 

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A day after the complaint was filed, the bank approved another $600 million dollars in spending for the basic 

services program. 

'The World Bank Was Responsible' 

In February 2014, a team from the Inspection Panel headed to Ethiopia to conduct a field investigation in 

Gam bella, which remains home to tens of thousands of Anuak, 

But when the investigators began travelling to new government-built villages to meet with Anuak who'd been 

resettled, they found that the Ethiopian authorities had gotten there first. 

"All the people had been instructed in advance of us coming," says Eisei Kurimoto, a scholar of Anuak history 

at Japan's Osaka University who'd been asked the join the review team as an adviser. "And they had been 

intimidated in advance to tell us good things." 

So while most of the team conducted public meetings, Kurimoto decided to meet privately with villagers in their 

homes. Even in the formal meetings, Anuak described armed soldiers accompanying government officials who 

told them to evacuate. But some of their testimonies in the private conversations were far more troubling. 

In these private sessions, they described shootings, arbitrary arrests and sexual violence, according to transcripts 

ofKurimoto's discussions with villagers. 

"There was one Anuak man among [military J Special Forces who r~jccted the order to go force farmers to move 

to the new location by force," an Anuak, whose name is not given, told Kurimoto. "And we heard a shot, a 

highland [federal] policeman shot this man ... to death right there." 

When the panel released its report in February 2015, the voices of people who described threats and violence 

were largely absent. 

The report noted that the panel "'came across" some information about abuses linked to the evictions, but the 

report did not describe them in detail- prompting Inclusive Development International, the NGO that helped 

Anuak villagers file the complaint, to claim the panel had "whitewashed damning evidence of widespread 

human rights abuses." 

The Inspection Panel said it didn't have the authority to investigate allegations of human rights violations by the 

bank's borrowers. Its only role, it said, is to determine whether the bank violated its own rules. 

The panel's report criticized the bank for ignoring evidence of an "'operational link" between the bank~financed 

project and Ethiopia's eviction campaign and for failing to do anything to protect affected communities. 

But the panel stopped short of assigning the bank blame for the mass evictions. Because the evictions were not a 

"necessary" part of the health and education program, the panel said, the bank couldn't ultimately be held 

responsible for them. 

Kurimoto, the panel's own expert, thought this conclusion didn't make sense. 

"Personally, I think the World Bank was responsible," he told ICIJ. The bank "turned a blind eye to what was 

happening on the ground." 

In March 2015, the World Bank approved a new $350 million loan to Ethiopia, which included support for local 

government in Gambella. 

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Anuak attending a Sunday morning church service in the Gorom Refugee Camp. Andreea Campeanu I 

International Consortium oflnvestigative Journalists 

'In the Hands of God' 

On a sweltering Sunday morning in South Sudan last summer, hundreds of Anuak refugees packed onto the dirt 

floor of a small, dimly lit church. 

At the front ofthe congregation, a tall young man with a microphone began to sing. At first his forceful baritone 

hung alone in the hot, close air, but he was soon joined by a burst of song from the choir. 

Then the congregation rose to its feet, clapping along. Sweat dripping from his face, the singer paced down the 

narrow aisle, his hoarse and powerful voice exhorting all to worship. Some raised their hands in the air. Piercing 

ululations from women rang out over the voice of the choir. 

In the war-torn nation of South Sudan, Gorom Refugee Camp is a bastion of faith for more than 2,000 Anuak 

who have fled Ethiopia. They are struggling to rebuild their lives amid scarcity and an unknown future. 

Odoge Otiri and Aduma Omot live in a two-room shelter beside a patch of okra and cassava that Otiri is 

cultivating. They have been in Gorom, supported by aid from the United Nations, for more than two years. Otiri 

says that there is nothing to do there. 

"Life in the refugee camp is very difficult," Otiri says. "There is not enough food." 

But they haven't given up. Without much hope that they can return to Ethiopia, they are doing their best to make 

new lives in a new land. Since they arrived, their family has grown to include their first child, a baby daughter. 

The girl fidgeis in Omol's arms, occasionally reaching out to breastfeed. 

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312012017 New Evidence Ties World Bank to Human Rights Abuses in Ethiopia 

Her name is Annacerjwok- Anuak for "'In the Hands of God." 

Sasha Chavkin is a reporter at the International Consortium of Investigative Journalists. He traveled to Ethiopia 

and South Sudan for this story. 

Produced by Hilary Fung and Shane Shifllett. 

Video editing and production by Hilke Schellmann. 

© 2015 TheHuffingtonPost.com, Inc. I Privacy I Send Feedback I HuftPost Data I PartofHPMG News 

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Prologue 

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Prologue Evicted & Abandoned Ethiopia Peru India Honduras Kosovo 

Prolo~ue 

Evicted & Abandoned 

Ethiopia 

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3120/2017 

Peru 

India Honduras Kosovo 

World Bank Projects Leave Trail of Misery Around Globe 

By Jacob Kushner, Anthony Langat, Sasha Chavkin and Michael Hudson 

Wednesday, Aprill5, 2015,8:01 pm EDT 

Gladys Chepkemoi was weeding potatoes in her garden the day the men came to burn down her house. 

After her mother-in-law told her that rangers from the Kenya Forest Service were on their way, Chepkemoi 

strapped her !-year-old son on her back and hurried to her thatched-roofed home. She grabbed two tins of corn, 

blankets, plates and cooking pans, and hid in a thicket. 

She watched, she said, as the green-uniformed rangers set her house ablaze. 

After they were gone, she came out of the thicket to see what was left. 

"What used to be my home was now ashes," she said. 

The young mother is one of thousands of Kenyans who have been forced out of their homes since the launch of 

a World Bank-financed forest conservation program in western Kenya's Cherangani Hills. Human rights 

advocates claim government authorities have used the project as a vehicle for pushing indigenous peoples out of 

their ancestral forests. 

They are not alone. 

In developing countries around the globe, forest dwellers, poor villagers and other vulnerable populations claim 

the World Bank-the planet's oldest and most powerful development lender- has left a trail of misery. 

Dams, power plants, conservation programs and other projects sponsored by the World Bank have pushed 

millions of people out of their homes or off their lands or threatened their livelihoods. In some cases, 

governments supported by World Bank money have arrested, beaten and even killed people who objected to 

being forced from their homes, according to interviews and oflicial complaints. 

They've been put at risk because the bank has repeatedly violated its own rules for protecting people who are in 

the path of development projects, an investigation by the International Consortium oflnvestigative Journalists, 

The Huffington Post, The GroundTruth Project and other ICIJ media partners has found. 

This story is the first in a series about what can happen to people on the ground when the World Bank bankrolls 

big projects. Other stories published today by HuflPost and ICIJ include an overview detailing the reporting 

team's key findings, a look at mass evictions in Ethiopia tied to a World Bank project and an examination of a 

Peruvian gold mine backed by the bank's private-sector investment arm. ICIJ and its partners will publish more 

stories in the corning weeks based on reporting from India, Honduras, Kosovo and other countries. 

"I don't understand why they chase us like this" 

Selly Rotich, mother of five 

The World Bank has admitted "shortcomings" in its protections for people displaced by projects the bank 

supports. It says it is working to improve its policies and how it enforces them. The bank also says protecting 

people in the way of big projects is a "cornerstone" of its efforts to "end extreme poverty and promote shared 

prosperity." 

In Kenya, the World Bank's in-house Inspection Panel found the bank violated its policies by failing to do 

enough to protect the Sengwer, an indigenous minority group in Kenya's western forests that includes 

Chepkemoi and her family. 

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3/20/2017 World Bank Projects Leave Trail of Misery Around Globe 

The report, released last year, concluded the bank wasn't directly to blame for the evictions targeted at the 

Sengwer, but said the bank might have helped prevent abuses against them if it had enforced its own rules 

including the requirement that its borrowers respect the land rights of indigenous peoples. 

Smoke rises from a homestead destroyed by fire in western Kenya's Cherangani Hills. Members of the Sengwer, 

an indigenous group, claim Kenya Forest Service rangers have tried to drive them out of their ancestral forest by 

burning their homes. Tony Karumba I GroundTruth 

The World Bank began financing the Kenya Forest Service's Natural Resources Management Project in 2007. It 

promised to cover $68.5 million of the project's $78 million budget in an effort to help the KFS ''improve the 

livelihoods of communities participating in the co-management of water and forests." 

The Forest Peoples Programme. a U.K.-based advocacy group, says the bank's funding of the conservation 

project put the Sengwer in danger because the project redrew the Chcrangani Hills' protected Forest Reserve in 

a way that included thousands of them inside the reserve's boundaries. This gave KFS officials a pretext for 

evicting them, according to the group. 

Paul Kibet, secretary of the Sengwer Council of Elders, said that cash from the World Bank also provided the 

equipment the KFS needed to launch its mass eviction campaign. "After receiving this money, they bought new 

vehicles. They bought the forest guards a lot of new guns and boots, etcetera," he said. 

''When l woke up the next morning my body was grayish and pale" 

John Chebaraa, a 60-year-old father of seven 

Kenya's government claims the Sengwer are illegally occupying public lands. Authorities have torched at least a 

thousand Sengwer homes since the World Bank began financing the conservation project, according to accounts 

by Sengwer and human rights researchers. They have also jailed dozens of Sengwer for farming without penn its 

and trespassing on lands that their clans have occupied "since time immemorial," a formal complaint filed in 

2013 by a group of Sengwer to the World Bank claimed. 

The KFS says it has not carried out "forceful" evictions of the Sengwer and that "genuine persons deserving 

resettlement" have been "extensively profiled through a consultative and participatory process." 

In the spring of20ll, the World Bank urged Kenya's finance ministry to end the evictions until the bank could 

help the government work out a plan for addressing the Sengwer's concerns. According to bank officials, 

Kenyan authorities agreed to stop the evictions until they found new land where the Sengwer could relocate. 

Sengwer leaders said the land offered by the government was treeless and barren. 

The evictions and burnings continued. 

Paulina Sanyaga said that after the KFS torched her home in March 20 II, she slept in the forest with her 

children. Her youngest was 5 years old at the time. ''My child asked why we were sleeping outside, and I told 

him that the government had burnt not ours alone, but everybody else's house too," she recalled. 

Because her fence was destroyed by KFS men, she said, many of her cattle and sheep were lost or stolen. 

"It felt so painful to lose them," she said. "They were my own sweat." 

John Chebaraa, a 60-year-old father of seven, said he slept in a caved-in tree trunk the night after his home was 

burned in mid-2011. 

Justin Kipkorir, Brian Bett and Councillor Joel Kiptale inspect Kipkorir's home, which he said was raided and 

destroyed by KFS officers. Shcmilla Chemutai displays a cooking pot bearing puncture marks that she said KFS 

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3120/2017 World Bank Pr~ects Leave Tra1! of Misery Around GlObe 

officers made with a machete. An elderly Sengwer woman and relatives at their homestead at Ket Mokinget. 

Tony Karumba I GroundTruth 

"It was very cold," he said. "When I woke up the next morning my body was grayish and pale." 

After their house was torched in October 2011, Chepkernoi, her husband and her co-wife- the Sengwer are 

polygamous- built a makeshift shelter out of bamboo, cow hide and sheep skin. They slept in it for months 

instead of building a pcm1ancnt house, she said, '·because KFS were always patrolling nearby. If we built 

another house, they would have burned it down as welL So we waited until they stopped patrolling the area." 

The fire set by the KFS consumed their millet, five sacks of com and four beehives, Chepkemoi's husband, 

Brian Belt, said. The family only had potatoes and milk to eat. 

"I did not have enough food tor the family to eat, and we often had to sleep hungry so that my children could 

eat,'' Bett said. "My children have faced a lot of difficulty and they cried a lot, because they are young and do 

not have the ability to explain what is ailing them." 

Kenya's government continued its relocation push after the World Bank's funding for the Natural Resources 

Management Project officially ended in June 2013. 

In early 2014, advocates for the Scngwer rcpmtcd that authorities had begun a new wave of evictions, writing to 

United Nations agencies that things on the ground were "chaotic," with some people moving with their children 

and belongings •·to nowhere in particular." 

The bank, noting that it was no longer funding the forest conservation project, said it was ''not linked to these 

evictions." World Bank officials argue the bank is not to blame for any of the evictions carried out by the KFS 

because the Kenyan government has been evicting the Sengwer for decades and continued doing so after the 

bank's official role ended. 

Tom Lomax, a human rights lawyer with tl1e Forest Peoples Programme, said the World Bank deserves a 

measure of blame even for more recent evictions because it "did not do enough- or didn't do anything loud 

enough- to address the evictions during the course of the project.') That emboldened Kenyan authorities to go 

forward with a removal campaign that grew increasingly aggressive during the World Bank's sponsorship of the 

KFS, he said. 

Tens of thousands ofSengwer still live in the Cherangani Hills. KFS rangers have maintained the campaign of 

evictions through 2014 and into 2015, according to Sengwcr leaders. 

In September, reporters witnessed two gutted, smoldering homes and several fences still burning. Residents said 

forest rangers had set the tires hours before. 

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Selly Rotich stands in what used to be her kitchen. Hours earlier KFS officers destroyed the mud and thatch 

dwelling, Rotich said. Tony Karumba I GroundTruth 

"I don't understand why they chase us like this," Selly Rotich, a mother of five, said as she sat outside her 

scorched home. 

The next day, nine KFS rangers confronted reporters as they entered the forest, demanding to know why they 

were talking to the Scngwcr. 

"These guys are squatters," said one officer, who declined to identify himself. "They are not allowed to be in the 

forest. They are here illegally." 

Reporters asked the rangers if they were the ones who set tire to Scngwer homes the day before. Another ranger 

responded, ""You are being lied to. You are being misled by the people. They claim that we arc burning U1e 

houses- how do you know that they are not burning their own houses?" 

At that. several of the KFS agents grinned. 

Jacob Kushner and Anthony Lan£at are Kenya-based reporters for the GroundTruth Project, a non-profit global 

news service hcadqumtcred in the U.S. Sasha Chavkin is a reporter and Michael Hudson is a senior editor at the 

rntemational Consortium of r nvcsti2ative Journalists. 

Produced by Hilary Fung and Shane Shifliett. 

© 2015 TheHuffingtonPost.com,lnc.l ~I Send Feedback I HuffPost Data 1 Part ofHPMG News 

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WRITTEN TESTIMONY BEFORE THE HOUSE FINANCIAL SERVICES COMMITTEE, 

SUBCOMMITTEE ON INTERNATIONAL MONETARY POLICY AND TRADE 

ON 

"EXAMINING RESULTS AND ACCOUNTABILITY AT THE WORLD BANK" 

Submitted By 

Jean Ensminger 

Edie And Lew Wasserman Professor Of Social Science 

California Institute Of Technology 

March 22, 2017 
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Chairman Barr, Ranking Member Moore, and distinguished members of the 

Subcommittee, it is an honor to have been invited to testify before the Subcommittee on 

International Monetary Policy and Trade on the subject of World Bank reform. 

I have been asked specifically to address issues that flow from my research on 

corruption in World Bank projects in Kenya, and to comment on the perspective of 

beneficiaries and implications for Bank reforms. 

By training, I am an economic anthropologist, and since the 1970s I have 

conducted research in a remote area of Kenya near the Somali border. The people 

living in this area are similar to many other herders in the drought-prone, arid lands of 

eastern Africa. They are the poorest of the poor, exactly the kind of people IDA funding 

is attempting to lift out of poverty. 

In 2004, the World Bank Arid Lands Resource Management Project arrived in the 

village where I have lived and conducted research over many decades. The corrosive 

effects of the corruption that I witnessed in that community project propelled me into a 

broader analysis of the Arid Lands Project that served 28 districts in Kenya and ran from 

1996 to 2010. As I dug more deeply, it became apparent that corruption had been 

entrenched in the project since 2000. That conclusion is based upon hundreds of 

interviews with beneficiaries, Kenyan project staff, members of civil society, World Bank 

staff, donors in Nairobi, and senior Kenyan politicians and civil servants. Unfortunately, 

these patterns continue in current Kenyan World Bank projects. 

The central component of the Arid Lands Project was community-driven 

development (CDD). The idea is to empower villagers. Villagers select their own 

projects and elect leaders to manage the funds, implement the project, and monitor the 

work. In 2012 there were 400 World Bank CDD projects in 94 countries. These are the 

kinds of projects that most directly impact large numbers of poor beneficiaries. 

In 2007, I reported the Arid Lands case to INT, the World Bank's Integrity Vice 

Presidency, which is solely responsible for investigating corruption in World Bank 

projects. As that process played out over many years, I gained insight into how the 

World Bank addresses corruption. Following an extensive I NT forensic audit of the Arid 

Lands Project, the World Bank eventually shut down the project just as the Board was 

about to renew it for a further 5 years. In its investigation of 28,000 transactions from 7 

of the 28 districts, the INT audit concluded that 62 percent of those transactions were 

suspected fraudulent or questionable. Significantly, this is the Q!}]y large-scale forensic 

audit that appears on the INT website out of a total of 66 posted reports going back to 

2008. 

Before turning to the lessons learned about corruption from the Arid Lands 

Project, let's put the case in context. Based upon my experience, this is not an 

exceptional case, nor is Kenya an outlier among similarly systemically corrupt countries. 
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Because of the correlation between poverty and corruption, the world's most corrupt 

countries are where we find many of the world's neediest populations. That said, there 

are other projects in similarly corrupt countries that have realized better results with less 

corruption. 

The Arid Lands Project ran for 14 years before it was shut down for corruption. 

What went wrong? Many of the problems can be attributed to project design. In 

particular, transparency was lacking, and this was compounded by a design that 

empowered project staff with far too much discretion. Beneficiaries were the victims of 

both of these failings. 

To better understand the failure of transparency, let's consider the situation from 

the point of view of the beneficiaries. What would a beneficiary need to know in order to 

better monitor his or her own village project and to ensure that no one is syphoning 

funds from the project offices? Beneficiaries tell me that they want to see the overall 

project budget and transaction level data for all projects, training, and administration in 

their area. They want to know where the money is supposed to be going. 

It is never in the interest of corrupt officials to share budgetary and contracting 

details, which is why they are so often hidden, even when project documents explicitly 

require that they be made available, as was the case for the Arid Lands Project. 

Recently, a villager asked the head of a current World Bank project in his area 

how much money his county was budgeted to receive from the project. The villager 

knows that project money has been stolen, and he wants to better understand the 

magnitude of the problem. This information should be publicly available, but the head of 

the project in the county refused to provide it to him. Two weeks ago I made the same 

request of the two World Bank Task Team Leaders (TTLs) who serve as project 

managers. Despite a second email follow-up request, I have received no response as of 

this writing. Lack of transparency in World Bank project funding is still a problem in 

Kenya today. 

One of the most harmful features in the design of the Arid Lands Project was the 

discretion that district project officers had over which villages received projects. This 

effectively amounted to monopoly control over who got the money, and it vested the 

project office with immense power over beneficiaries. 

By controlling the allocation of future funds to villages, the project staff was able 

to stifle legitimate protests. When project beneficiaries complained that promised funds 

and services were not delivered, they were often told to overlook deficiencies and wait 

for a new project in the next funding round. This strategy almost always worked to 

silence beneficiaries, even though they often did not get funding in the next round. 

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When visits by supervisors and auditors were anticipated, villagers were coached 

to praise the project and say that they had received benefits that they had not They 

were persuaded that if they failed to do so they would jeopardize future World Bank 

funding, and they were promised that there was an even bigger project on the way, 

which was sometimes true. I have seen this scenario play out many times. If these 

strategies did not stop protesters, project staffers bought them off with small bribes or 

cut their community from the project and diverted funds elsewhere. These practices 

continue today in other Kenyan projects. 

The effectiveness of these strategies in preventing most villagers from carrying 

their complaints forward is one reason that the Arid Lands Project stayed under the 

radar so long. 

But consider how these processes pervert the local culture. The honest altruists 

who resist project bribes are penalized, and the local villagers willing to be bought by the 

project are both financially rewarded and elevated to community leadership. Worse, the 

few who persist in fighting project mismanagement are at personal risk and wind up 

jeopardizing their communities' access to future project benefits. 

Is there a way forward? Absolutely, and models already exist. One step is to 

improve project design. 

Indonesia is often cited as the great success story in community-driven 

development, and I would agree. We can learn many lessons from the differences in 

project operations between the Kenyan and the Indonesian projects. 

The original Indonesian COD project (KDP) had many design elements that 

differed from the Arid Lands Project and from current Kenyan COD projects. It was 

specifically designed to bypass the major centers of government corruption. Private 

firms were used to hire many project staff rather than seconding them from corrupt 

government ministries. The tone at the top of the project was inspiring, and this 

attracted reform-minded job applicants. In contrast to the monopolistic discretion of the 

Kenyan project staff, the Indonesian design allocated projects based upon a democratic 

and competitive selection process run by representatives of all the villages in a target 

sub-district 

The Indonesian project was also exceptional in the degree to which it 

commissioned and incorporated research to improve performance; the project opened 

itself to uncensored examination by third parties. This resulted in academic papers that 

are now classics in the study of COD and corruption. 

We know from academic literature that one of the strongest correlates of low 

corruption levels is a vigorous free press. Capitalizing on this, the Indonesian project 

created an ingenious blind-funding mechanism to encourage investigative journalists to 

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write about corruption in the project. All of this speaks to an open, experimental, and 

organically evolving project dedicated to serving the needs of the poor. The Indonesian 

project was not without corruption, but its managers were eager to find solutions. 

The World Bank has the finest and most productive development research group 

in the world. The Indonesian project was wise enough to appreciate the advantages of 

applying this talent to many of their problems, including corruption, and that openness 

was rewarded with superior results. 

We should be encouraged by the Indonesian case, as it means that development 

aid really can make a difference for the poorest of the poor, even in a highly corrupt 

country. I would caution, however, against assuming that Indonesia is the norm and 

Kenya is the outlier. I believe the reverse is true. 

Better design and monitoring are important parts of the corruption solution, but 

sanctions also have a place, especially when faced with extreme capture such as 

occurred in Arid Lands. 

One often hears World Bank senior management say that, "the World Bank has 

zero tolerance for corruption." But what does that mean in terms of policy and 

outcomes? INTis the World Bank's answer to corruption. They are the sole body 

tasked with investigation of fraud and corruption in World Bank projects. 

It is rarely, if ever, in the interest of a donor organization to advertise to their 

funders that money has been misspent. There is an inherent conflict of interest between 

the mandate of INT to fight corruption and operations' goals of keeping projects funded 

and client states happy. INT is in the political cross hairs. 

Since the Arid Lands forensic audit report of July 2011, INT has posted 48 

additional redacted investigation reports on their website. Of these 48, 45 (94 percent) 

were investigations of companies. The vast majority of these cases involved one 

company that was found guilty of fraudulently fabricating documentation in order to 

qualify to bid on a contract. One case, Padma Bridge in Bangladesh, involved huge 

corruption. Of these 45 cases, 36 resulted in company debarment from business with 

the World Bank; one company was given a reprimand, and the remainder resulted in no 

action. 

Of the remaining 3 out of 48 investigation reports in the last 5 Y. years, 2 involved 

fraud by a single project employee. The last case found evidence of large-scale 

corruption in which about 400 contractors each paid 10 percent kickbacks to the 

government. 

Clearly, the overwhelming focus of work forINT's external investigations is cases 

against individual companies that result in debarment. This is important work, but it is 

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unlikely to touch the significant number of projects like Arid Lands that deliver services 

directly to the poor. The contractors involved in COD-style projects are local, they 

number in the thousands, and they are capable of quickly rebranding and opening up for 

business under a new name. Going after them would be equivalent to "whack a mole." 

The problem in many World Bank projects is not limited to a few rogue 

contractors and project staffers. In systemically corrupt countries like Kenya, it is 

common for World Bank projects to be captured by the government ministry cartels from 

which the project staff is seconded. 

Intensive forensic auditing, the strategy that uncovered large-scale corruption 

and shut down the Arid Land's project, is not currently a priority of INT. Debarring 

corrupt companies sometimes makes better newspaper headlines, and debarment 

cases are easier and cheaper to conduct than large forensic audits. But this 

investigative direction leaves a vast segment of the World Bank's portfolio exposed. 

Why else isn't INT more aggressively pursuing project-wide corruption? Part of 

the answer is INT's resource constraints and lack of sufficient, highly qualified staff with 

formal investigative and forensic accounting experience. However, these constraints are 

self-imposed, and reflect senior management preferences, both above INT and inside 

INT. 

Understandably, World Bank operations want to see projects through to 

completion. Corruption investigations can shut down projects and derail careers. They 

are also inconvenient for senior management in the Bank who are balancing delicate 

relationships with their country clients. Predictably, pressure is brought to bear on INT. 

experienced first hand how operations interfered with the INT investigation of the Arid 

Land's project. 

It is notable that the Vice President for I NT, whose direct report line used to be to 

the Bank's President, now reports to the Managing Director and Chief Administrative 

Officer. At the very least, this recent demotion in reporting status gives the appearance 

that the World Bank now cares less about corruption abatement and the important work 

of INT. INT's declining budget also speaks volumes, as does the small size of its budget 

relative to the magnitude of the Bank funds it attempts to protect. 

What does this mean for the odds that a corrupt team that has taken over a 

World Bank project is going to get caught? In the Arid Lands case it is amply evident 

that 14 years of routine project management oversight, supervision missions, monthly 

financial management reports, and audits, did not catch them. Lest one think that these 

systems are functioning better today, I see no evidence of that on the ground in Kenya. 

Given time and resource constraints, many of these tasks have devolved to box 

checking. 

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When the probability of getting caught declines, crooks grow bolder. The same 

principle applies to countries. When countries, or country sectors, show a pattern of 

high levels of corruption in World Bank projects, or fail to cooperate with INT 

investigations, the World Bank should be more willing to demonstrate tough political will 

and cut them off. It has happened, but too rarely to send the right message. 

Helping the poorest of the poor in corruption-ridden countries is difficult work. It 

is also heroic, and that is what has attracted many excellent people to the World Bank. 

We learn from the Indonesian case that much can be accomplished with the right tone at 

the top, careful design, transparency, research and experimentation, and effective 

sanctions. 

Below I summarize a few of my key recommendations to reduce corruption in 

World Bank projects. 

INT 

• Move INT's direct report out of operations and over to the audit committee of the 

Board of Directors consistent with standard practice in many firms, and 

equivalent to the current reporting status of the Inspections Panel. 

• Partition INT to create a separate unit to handle complex corruption cases. To 

be successful, such a unit must be headed by a manager who has professional 

investigative skills and a staff of highly-trained forensic accountants and 

investigators with law enforcement experience who know how to handle evidence, 

witnesses, and the strategic interviewing demanded of such complex cases. 

• Set up a few satellite INT offices in global locations to facilitate timely 

investigations, to develop ties with local law enforcement for enhanced power in 

investigations, and to increase access to leads from civil society, journalists, and 

project staff. 

Transparency 

• The new disclosure policy of 2010 was a laudable step, but it stopped short of 

helping beneficiaries and third parties fight corruption. Access to project financial 

information is specifically excluded from the disclosure policy. This should be 

changed by adding the following: 

o Mandate that projects publish transaction level budget and expenditure data 

quarterly on the web and on publically accessible boards in relevant local 

sites. Note that enforcement of the latter is virtually impossible, which is why 

the web is crucial; web postings can be easily monitored for compliance. 

o Mandate public notice (on the web and in locally appropriate outlets) of 

contracts, job advertisements, tender advertisements, and details of winning 

and losing bids. 

o Mandate that projects include similar expenditure and contract information 

from all donor partners so that World Bank supervisors and interested 

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parties can detect double dipping from multiple donors for the same project 

activities. 

Neither Congress nor the USED's office has the power to micro-manage World 

Bank policies. Changes of the sort that I am suggesting would require significant 

commitment and a great deal of sustained U.S. leadership to win the support of a 

majority of sympathetic Board members. In the past, the U.S. has been effective in 

providing such leadership. 

I thank the Subcommittee once again for this invitation to share my research 

findings and suggestions on how we might make the World Bank more effective in the 

important work of lifting the poorest citizens of the world from poverty. 

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"Examining Results and Accountability at the World Bank" 

Subcommittee on Monetary Policy and Trade 

Committee on Financial Services, US House of Representatives 

Written Statement of 

Scott A. Morris, Center for Global Development 

Mr. Chairman, Ranking Member Moore, 

Thank you for the opportunity to testify this morning on the World Bank's work in 

low-income countries. My name is Scott Morris, and I'm a senior fellow and director 

of the US Development Policy Initiative at the Center for Global Development, a nonpartisan think tank for international development policy issues based here in 

Washington, DC. 

Let me start with the observation that the World Bank is the leading provider of 

development assistance in the world, providing financing and technical expertise in 

nearly 150 countries globally. But by leader, I don't just mean the bank is the largest. 

According to most independent assessments, the World Bank consistently appears 

as the most, or one of the most, effective development institutions globally on key 

measures of cost efficiency, project outcomes, and policy influence. These were the 

findings of multilateral aid reviews conducted by governments in the UK, Australia, 

Sweden, the Netherlands, and Denmark; by independent organizations like mine; 

and by an extensive survey of developing country leaders conducted by AidData, a 

US-based research organization. 

I raise this point at the outset not in order to say "case closed" but to provide a 

broader context for considering important questions of World Bank reform and 

instances of project-level failures, as evidenced by the testimony of the other 

witnesses on this panel. Let me be clear: each of the cases raised here this morning 

represents unambiguous World Bank failings. When we look at the details of the 

Uganda project alone, it's clear that no one should simply wave away a case like this 

as just one project out of the 1600 or so that they bank conducts each year. 

I would like to offer a few observations on how to think about these cases of failure 

in the bank, three areas of reform that I think deserve consideration, and finally, I 

would like to offer some thoughts on the degree to which the United States, as the 

largest shareholder of the World Bank, can continue to exercise effective oversight 

and influence in this multilateral institution. 

I. How to Think About Failure 

Risk of failure is inherent in the work that the World Bank does, particularly 

operating in difficult environments, whether in very poor countries like Uganda, or 

countries beset by conflict like Afghanistan. Zero risk would essentially mean zero 

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activity for the institution. The key questions are: how does the bank manage risk 

and promote effectiveness, and how well does it learn from its failures when they do 

occur? 

Managing risk/promoting effectiveness. The bank has multiple layers of 

monitoring and checks aimed at promoting effectiveness and guarding against 

corruption. Consider two areas. First fraud and corruption: of the approximately 

1600 active projects at the bank in a given year, the bank's investigative arm (I NT) is 

typically investigating 50-60 substantiated cases of fraud and wrongdoing. In these 

cases, the !NT office is aggressive in its response, employing debarment of firms 

from bank procurement and working with local authorities to pursue prosecutions. 

Separate from !NT, the bank also has an independent complaints mechanism, the 

"Inspection Panel", with origins in your committee. By receiving and evaluating 

complaints independently, the panel plays an important role in the bank's system of 

checks and balances. 

Second, if we look more broadly at the effectiveness of World Bank projects (are they 

having the impact that is intended?), one important measure here is the degree to 

which the institution is even trying to answer that question. This may seem obvious, 

but the critical function of program evaluation is often sorely lacking in many public 

agencies and institutions. So, whereas the World Bank, through various independent 

mechanisms, conducts hundreds of project and program evaluations each year (and 

through sampling methods is able to assess overall portfolio performance), a recent 

GAO report determined that the Department of Defense (DoD) had conducted just 

four evaluations within its $8 billion foreign assistance programs in 2015, and none 

of them was determined to be high quality. 

Further, the World Bank has made considerable strides in recent years toward 

making its internal data public so that independent researchers and evaluators can 

conduct their own assessments of bank projects and programs. One of the failings at 

DoD identified by GAO was the lack of transparency in reporting program results. 

Learning from failures. What's the evidence that the World Bank learns from its 

failures? It's notable that the bank's board of directors just recently approved a $230 

million road project in Bolivia, in which risks similar to the Uganda project 

associated with a large influx of labor were identified and actively mitigated as part 

of the project design. More systematically, the bank has also launched a Genderbased Violence Task Force, which should in part help to address a longstanding 

problem within the institution of compartmentalization oflessons learned within 

one region or sector. 

Finally, we should keep in mind that financial risk is largely borne by the country. 

Unlike most US foreign assistance, which is disbursed as grants, World Bank 

support, even in low-income countries, is typically in the form of a loan with varying 

degrees of subsidy. And for various reasons, countries almost never default on 

World Bank loans. The financial strength of this model is reflected in the recent AAA 

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rating for World Bank bonds linked to IDA's lending to low-income countries. So, we 

absolutely should care about corruption to the degree that it jeopardizes the 

underlying development projects in these countries, but we should also recognize 

that it is not a problem that has ever put the bank itself in any kind of financial 

jeopardy. 

II. How Can the World Bank Do Better? 

Nonetheless, a significant number of World Bank projects fail to achieve their 

intended outcomes, and a non-negligible number of projects fall victim to fraud and 

corruption. How can the bank do better? 

• First, greater reliance on results-based mechanisms like the Program for 

Results, which both empowers the client country and shifts more ofthe 

burden of delivering measurable outcomes onto the countries. The bank and 

the country agree at the outset on appropriate standards of oversight and a 

set of desired outcomes (such as an increase in literacy rates through 

education funding, or a reduction in travel times through a road project), and 

the bank only disburses money if those outcomes are achieved. Early 

evidence from P4R suggests that it is achieving good results, and it will be 

important to see how well these results-based projects perform over time in 

comparison to traditional bank project lending. which simply disburses funds 

to pay for project inputs (textbooks in schools, or asphalt for roads). 

• Second, as much as I believe that the !NT office works aggressively to 

respond to allegations and evidence of corruption, I also think we would 

have a stronger overall evidence base for the bank's performance if INT had 

the capacity to conduct randomized audits of bank projects each year. So, not 

just responding to signs of corruption, but proactively reviewing a random 

selection of projects where no such evidence exists. The selections could be 

targeted to projects that fall within key areas of risk (countries, sectors, etc.). 

• Third, the bank is taking some steps toward adopting new technologies to 

improve project accountability and performance. I think they could move 

more aggressively in these areas. For example, recognizing the remarkable 

degree of smartphone coverage even in the poorest countries, the bank could 

be deploying apps that enable both whistleblower-type reporting, as well as 

more transparent community-level ratings of bank projects. Think "Yelp" for 

World Bank projects. 

III. How Can the United States Do Better? 

The last point I would like make relates to the role that you play, and more generally 

the role of the United States government in driving reform efforts in the World 

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Bank. The United States is the largest shareholder in the World Bank, but in practice, 

US influence in the institution in key areas has typically come through its donations 

to the World Bank's International Development Association (IDA). As the largest 

cumulative donor to IDA since its founding in 1962, the United States, and 

particularly the US Congress, has effectively leveraged these resources to shape 

policy in the institution in areas like anti-corruption with the creation of the 

independent inspection panel, bank safeguards and procurement rules, and key 

aspects of program evaluation. 

US IDA commitments have also helped to shape World Bank engagement in key 

countries and situations of US interest, such as supporting Jordan's hosting of a 

massive influx of refugees from Syria, efforts to contain Ebola in West Africa, and 

just this week, a $1.6 billion commitment to address the unprecedented famine in 

Sub-Saharan Africa and Yemen. 

Given the uncertainty of foreign assistance funding this year, it is worth recognizing 

what US IDA contributions deliver for US taxpayers: an institution that is widely 

recognized as either the best, or among the best, sources of development finance 

and expertise in the world; and a mechanism for leveraging very modest US 

contributions (representing two-tenths of one percent of the defense budget) into 

IDA assistance to 77low income countries on the order of $25 billion a year. And as 

the bank continues to pursue innovations in its financial model, that leverage will 

get even better for the United States. 

But steering the bank's work requires active engagement, which in turn continues to 

rely on a strong US pledge to IDA and a commitment to honoring that pledge. 

Finally, it is worth considering the role of these contributions in a broader contextboth the World Bank's role and performance relative to other international 

organizations, and the role of these institutions relative to the capabilities and 

functions of bilateral programs at USAID, the MCC, and OPIC. I would encourage you 

to consider a formal review of the foreign assistance toolkit as a way to inform and 

guide any major changes to the foreign assistance budget over the next year. All told, 

these programs (bilateral and multilateral) represent less than one percent of 

federal budget outlays. It is well worth a rigorous test of their cost effectiveness and 

alignment with US interests in the world before proceeding with deep cuts, program 

eliminations, or consolidation. So I would urge this committee to take part in such a 

review from the standpoint of your jurisdiction over the multilateral institutions. 

Thank you again for the opportunity to share my thoughts and !look forward to 

your questions. 

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JEB HE:NSARUNG, TX, CHAIRMAN 

Dr. Jim Yong Kim 

President 

World Bank Group 

1818 H Street, NW 

Washington, D.C. 20~;)3 

Dear Dr. Kim: 

MAXIN!: WATF.HS, CA., RANKii\IC-i 

,fuly 14, 2016 

We are writing to express our alarm over the World Bank's cancelled Uganda 

Transport Sector Development Project. As you know, the Bank is facing serious allegations 

related to misconduct by a Chinese contractor, including sexual exploitation of minors, 

repeated harassment of female staff, and deficient safety measures that may have resulte(l 

in five fatalities. The Bank has admitted that its supervision of the project was inadequate, 

particularly with respect to protecting Ugandan girls. 

In addition to negligent supervision, the Bank's slow response to local communities' 

accusations is troubling. According to the Bank's own timeline, Ugandans had to wait six 

months from the time they first voiced their complaints until the Bank's Country Director 

wrote to public authorities requesting foUow~up by law enforcement. Ten months elapsed 

before the Bank suspended the project, and delays in the Management Response meant 

that the Bank's Inspection Panel did not visit Uganda until one year following the initial 

allegations. As the Panel continues to investigate this case, we urge you and Bank 

management to cooperate fully while respecting the Panel's independence. We also ask that 

any findings of negligence and wrongdoing lead to appropriate disciplinary action. 

The failure of this project. to protect, let alone benefit, Ugandans should inform 

supervision in an sectors and regions going fOrward. We believe that the Bank must 

strengthen its role in supervising and monitoring its projects to ensure that the poor are 

pl'otected in the Bank's work. Any actions by the Banl~ that wou1d weaken its oversight 

could undermine Rupport for the institution. 

Additionally, the Bank has long faced criticism, including from its own staff, for a 

culture that too often places the volume of lending above concerns for the effectiveness of 

Lhat lending. Last October, the Subcommittee on Monetary Policy and Trade held a hearing 

on the multilateral development banks that explored this very problem, and a report by the 

Bank's Independent Evaluation Group notes how the "pressure to lend" has characterized 

the Bank's culture for decades, often at the expense of development outcomes.' It is clear 

1 Learning and Results in World Bank Operations: Toward a New Learning Strategy, Independent 

Evaluation Group, 2015. 
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Dr. ,Jim Yong Kim 

July 14, 2016 

Page 2 

that such a culture can distract from the proper preparation and administration of projects, 

including monitoring and supervision, thus putting development at risk. 

In the case of Uganda, the Bank clearly should have made supervision a higher 

priority. We hope that future beneficiaries, be they in Africa or elsewhere, will encounter 

more capable and responsive partners at the Bank 

Chairman 

Subcommittee on 

Monetary Policy and Trade 

Sincerely, 

cc: The Honorable Jacob Lew, Secretary of the Treasury 

Ranking Member 

Subcommittee on 

Monetary Policy and Trade 
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0 

OXFAM 

America 

Oxfam Statement for the Record 

"Examining Results and Accountability at the World Bank" 

House Financial Services Committee 

March 22, 2017 

We firmly believe that IDA is a critical place for the United States to be putting its aid dollars and support the 

government's commitment of $3.9bn in December 2016. Some of the key benefits of investing resources in IDA include 

that it is: 

One of the largest sources of concessional finance for Lower Income Countries 

One of the biggest providers of financing for core support for human development services such as health and 

education, key to reducing inequalities in countries. 

Despite there being fewer lower income countries, there is still a huge amount of poverty and inequality within 

those countries. Meeting the Sustainable Development Goals will also require concessional financing. 

There is a benefit of distributing aid through multilateral sources as the World Bank, since it is often less political and 

buffered from the interests of individual donor countries, and rather can focus on development priorities. 

IDA performs well on many aspects of aid effectiveness, especially country ownership over development priorities, 

predictability of financing, and transparency. IDA continues to be ranked highly in global rankings on aid 

transparency. 

The level of political impartiality when the World Bank engages in IDA countries- especially fragile states- allows it 

to be a trusted actor focusing on development priorities. 

Through its strong financial contributions, the United States is very well positioned to ensure the World Bank is 

continuing to deliver on IDA, and producing strong inclusive, development impacts while not harming communities and 

the environment- an essential task on which the Bank still has significant work to do as we have seen with Inspection 

Panel cases and also, for example, through Oxfam and partners' tracking of the International Finance Corporations' 

investments through financial intermediaries (see The Suffering of Others (2015) and Qwning the Outcomes (2016)). 

The Bank has a relatively strong set of social and environmental policies but implementation and accountability is key. 

The US has historically played a crucial role in pushing the institution to be transparent and accountable, through the 

government's insistence on a progressive Access to Information Policy, the creation of an Inspection Panel, and strong 

social & environmental safeguards. The US should continue to use its standing as the majority shareholder of the World 

Bank to ensure it is using its financial resources responsibly and effectively. We recommend the US push the Bank to: 

Ensure strong development impacts that benefit and prioritize poorest communities especially with respect to 

education and health programming 

Ensure strong implementation ofthe new Environmental and Social Framework 

Strengthen the Inspection Panel for enhanced accountability 

Insist on transparency of all World Bank Group Investments especially through the tracking of investments through 

financial intermediaries. 

We would welcome the opportunity to work with Treasury and the US Executive Directors' office at the World Bank to 

push through these important reforms. 
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COMMANDER 

UNITED STATES EUROPEAN COMMAND 

July 25, 2011 

~~f) / JYVl(· 

MEMORANDUM FOR S~ETARY OF THE TREASURY 

FROM: Admiral James Stavridis 

SUBJECT: Support for Work Accomplished by the Inter-American Development Bank 

1. Mr. Secretary, I write to thank you for continued United States support of the InterAmerican Development Bank (I DB). During my time as the Commander of US 

Southern Command, I witnessed first-hand many of the valuable contributions and 

tremendously positive influence the IDB has had on Latin America, the Caribbean, and 

across the region. I would like to outline a few of these accomplishments for your 

consideration. 

2. The IDB has played a catalytic role in mobilizing international support around bold 

agendas that include innovative and proven poverty alleviation programs throughout the 

region. An example is the conditional cash transfer programs {CCT). These programs 

have proven, time and again, to reduce short-term poverty and contribute to important 

reductions in overall inequality. A great example, and one in which the IDB took a 

leadership role is Mexico's groundbreaking conditional cash transfer program, called 

Oportunidades. Oportunidades now serves nearly six poor families nationwide after 

receiving two loans from the IDB for $2.2 billion. In the following years, the !DB 

approved a total of $5 billion for the development of similar programs in countries such 

as Colombia, Guatemala, Honduras and Peru. At the moment, there are 16 CCT 

programs in Latin America and the Caribbean. 

3. In 2009 the Bank developed a new framework for its support to countries in the area 

of citizen security, a major factor affecting social cohesion and economic development 

and an area in which the Bank expects to invest considerably in the years to come. 

This framework is the basis of the Regional Security Strategy that was recently 

discussed by the IDB with the US Department of State, the international community and 

the Central American Integration System (SICA) and that will be presented in June this 

year at the International Conference for Central American Security. 

5. The IDB's Multilateral Investment Fund has played a key role in raising international 

awareness of the importance of remittances. The MIF research, projects, and 

knowledge generation have spurred innovation and competition in the sector, resulting 

in a systemic impact on the Latin American and Caribbean (LAC) remittance market and 

beyond. Over 80 million LAC remittance senders and recipients have benefitted from 

the 75% drop in transfer prices since 2000, making LAC remittance costs among the 
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27249.058

SHGXS 

SUBJECT: Support for Work Accomplished by the Inter-American Development Bank 

lowest·in the world. Based on the $60 billion transferred to LAC in 2009, this amounts 

to savings for these 80 million people of $6 billion. 

6. Clearly, the IDB plays an important role in the region contributing directly to US 

strategic interests. I congratulate you and the !DB on this success and am convinced 

we will see more fantastic progress in the years to come. 
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27249.059

UNITED STATES TRANSPORTATION COMMAND 508 SCOTI DRIVE 

SCOTT AIR FORCE BASE, ILUNOIS 62225-5357 

10 May 2010 

MEMORANDUM FOR SECRETARY OF THE TREASURY 

FROM: CDR USTRANSCOM and CDR USCENTCOM 

SUBJECT: Support for Work Accomplished by the Asian Development Bank 

1. Mr. Secretary, we write to thank you for continued United States support of the Asian 

Development Bank (ADB). Both United States Transportation Command (USTRANSCOM) and 

United States Central Command (USCENTCOM) are eyewitnesses to the valuable contributions 

that the ADB is making in a region of great importance to the United States. Our meetings with the 

ADB's President Kuroda and U.S. Ambassador Chin have left us with a sincere appreciation of the 

great work the ADB team is doing. 

2. The ADB is a leading donor in Afghanistan, financing projects such as tbe Ring Road and the 

Uzbek-Afghan railway project, which contribute directly to reducing poverty and enhancing 

opportunities for the development of cross-border and regional commerce. These projects are vital 

to the success oftbe U.S. strategy in both Afghanistan and the region. We are very pleased with the 

progress of the rail line from Hairaton to Mazar-e-Sharif. On trips to the region, we have visited 

both sides of the Afghanistan!Uzbekistan border and foresee long lasting benefits from this 

initiative. 

3. ADB's $30M rehabilitation of the road between Dushanbe and the Kyrgz border has facilitated 

trade between Tajikistan and its neighbors, thus bolstering the regional economy and cementing 

r<lations between these countries. In Kyrgyzstan, a similar positive outcome is foreseen for the 

ADB's proposed $50M reconstruction of the Bishkek-Torugart higbway. 

4. Another country of great interest to both USTRANSCOM and USCENTCOM is Pakistan-a 

key Operation ENDURING FREEDOM logistics partner. ADB is the lead donor in Pakistan in the 

energy and transportation sectors, contributing to the stability of a country critical to U.S. strategic 

interests. 

5. ADB is an increasingly important player in the Caucasus region and responded rapidly with 

project financing to Georgia in the aftermath of its conflict with Russia. Integration of the region 

through better transportation connections is a key element in its assistance plans and will no doubt 

provide additional opportunities for the flow of commerce throughout the region. 

6. ADB plays an important apolitical role in getting countries to work together for common 

interests. United States engagement at the ADB contributes to our strategic interests in the region. 

We would like to congratulate you and the ADB on its many successful efforts and welcome 

continued strong partnership with ADB as part of our overall United States purpose and goals in 

these areas of critical importance. 

DAVID H. PETRAEUS 

Commander 

United States Central Command 

Sincerely 

~~:·>&U- Commander 

United States Transportation Command 
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"Examining Results and Accountability at the World Bank" 

Subcommittee on Monetary Policy and Trade 

March 22, 2017 

Chairman Andy Barr (R-KY} 

Questions for the Record 

Dr. Jean Ensminger 

1.) You have worked for years in Kenya, with many individuals who have been affected by Bank 

projects. How can we make the Bank's staff more open and responsive to local viewpoints? 

Many World Bank project managers (task team leaders) would like to have the time and 

resources to do a better job. In recent years, their ability to do so has been heavily constrained 

by budget cuts that force them to push through projects without sufficient planning and design. 

Their time constraints also mean that they cannot devote sufficient time to supervision. In my 

view, populations would be better served with fewer, but stronger projects. More money is not 

required, but a reallocation of funds toward better design and mentoring through supervision, 

most definitely is. 

Here is one recent example of flawed project design. On January 13, 2017, the World Bank 

launched the "Kenya Climate-Smart Agriculture Project," which includes funding in its $2SO 

million budget for foreign travel by county government staff in Kenya to visit: India, Indonesia, 

Mexico, and Brazil. Since the beginning of county government in Kenya in 2013, such trips have 

been repeatedly called out in the Kenyan media and by the Kenya National Audit Office as 

grossly wasteful. This is not the best way to serve populations on the verge of starvation. In my 

experience, such trips are most commonly used to bribe government officials to act and vote in 

specific ways that rarely have the interests of their citizens in mind. Officials love these trips 

because they use the opportunity to accumulate per diem "allowances" at high foreign rates. 

It is not easy for Bank staff to understand what is going on on the ground. To do so, they need 

to spend quality time in the field away from their minders, and most especially, away from the 

project staff. Unannounced visits to the site of almost any project are likely to be highly 

revealing. 

2.) One of the more surprising discoveries in your research is that the project you researched had 

received positive ratings up to the time you began investigating it, and was even on the verge of 

being extended by the Bank. Is it safe to say the Bank would have gone forward if you hadn't raised 

concerns? 

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I am absolutely certain that the project would have been renewed for a five-year extension. It had 

an official date set for that renewal on the calendar of the Board of Directors. Even with the INT 

audit underway, there were powerful forces pressing to go forward with the renewal. 

Is it your view that numerous projects are currently running with satisfactory ratings that are, in fact, 

characterized by widespread corruption? 

Yes, I suspect that many projects with satisfactory ratings have widespread corruption. But fixing 

the rating system is not necessarily going to make any difference. For example, the Kenya Climate 

Smart project referenced above, is a follow-on project of the "Kenya: Adaptation to Climate change 

in Arid and Semi-Arid lands (KACCAL)." KACCAL was rated "moderately unsatisfactory" in many 

previous ratings, and "moderately satisfactory" in the most recent rating from March 17, 2017; it 

closes on April28, 2017. Despite these ratings, and what I know to be a deplorable performance, the 

greatly expanded follow-on project is now funded at $250 million. 

When you think of the failures of the Kenyan project you studied, is it reasonable to expect the Bank to 

have understood the corruption risk beforehand? 

Yes, the risk to any project in Kenya should have been anticipated. Anyone who reads the daily 

Kenyan newspapers is aware of the pervasive threat of corruption in Kenya. Over the past 20 years, 

Transparency International has consistently ranked Kenya among the most corrupt 10 to 20 percent 

of countries in the world. 

3.) In their book Why Nations Fail, Prof. James Robinson of the University of Chicago and Prof. Daron 

Acemoglu of MIT discuss the importance of "inclusive institutions." These institutions "enforce property 

rights, create a level playing field, and encourage investments in new technologies and skills." Without 

them, foreign aid is unlikely to succeed. On the other hand, extractive institutions "concentrate power in 

the hands of a few, who will then have incentives to maintain and develop extractive economic 

institutions for their benefit and use the resources they obtain to cement their hold on power." 

Does your research support the argument that extractive institutions undermine foreign aid's 

effectiveness? 

Countries that rank among the most corrupt in the world are often systemically corrupt. By this I 

mean that corruption cartels have effectively infiltrated most, if not all, institutions of government. 

Any aid program that works through government has to take extraordinary steps to avoid capture by 

government cartels, and this may not even be possible. Most World Bank aid projects are run 

through government ministries. In systemically corrupt countries, there is a high probability that 

projects run by government civil servants have been captured by the cartel that runs the ministry. 

This was true in the case of Arid lands. 

What makes matters worse, is that people often dismiss project losses to corruption as the cost of 

doing business in tough neighborhoods. What people fail to take into account is the harm done with 

the ill-gotten gains. In the case of the Arid Lands project, some of the stolen funds went directly into 

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political campaigns in support of the ruling party. This is the norm, not the exception. In other 

words, the stolen funds are not only a consequence of government corruption cartels, but they are 

serving to perpetuate that system by contributing to the re-election of the cartel. 

3.) Your testimony discusses a project in Indonesia that fought corruption by fostering a free press. 

Does Kenya's level of development relative to Indonesia complicate your recommendations? Would 

the Bank be justified in diluting its standards for low-income members in Africa, or should we apply 

high standards to everyone? 

It is indeed true that Kenya is not as well off economically as Indonesia. However, vast stretches of 

rural indonesia share poverty dynamics that resemble much of Kenya. And arguably, we should be 

even more vigilant in poorer countries with regard to controlling corruption in aid. The damage 

that ill-gotten gains can wreak upon the institutions of a poor country are potentially more 

destabilizing than they might be in a richer country. 

5.) Last year, the World Bank forecasted that around 45 percent of its financing would be for 

"development policy lending," also referred to as "budget support." 

What are the implications of your research for how we think about budget support? Should your 

findings make us more skeptical of the World Bank's direct assistance to governments? 

Budget support may be appropriate and efficient in the case of countries with strong institutions 

and low levels of corruption. In the case of systemically corrupt countries, providing budget support 

is equivalent to handing the keys to the bank over to the crooks. In such countries, corruption 

cartels have insinuated themselves in most if not all branches of government and government 

ministries. Turning funds over to them with fewer benchmarks of accountability is not a good idea. 

If the Bank increases its budget support, will the kinds of research and investigations we have heard 

about today be more or less likely? How can the U.S. effectively hold the Bank accountable if its loans 

are not tied to a project? 

It is all but impossible to measure accountability when aid is given as budget support to highly 

corrupt countries. 

6.) In your testimony you write, "I experienced firsthand how operations interfered with the INT 

investigation of the Arid Lands project." How did the Bank's operations staff seek to impede I NT, and 

how susceptible was INT to their interference? 

There were numerous ways in which operations interfered with the !NT investigation of the Arid 

Lands Project. Financial management in operations and the forensic audit team in !NT had agreed 

upon a precise definition of "eligible" and "ineligible" expenditures before the audit work was 

conducted. By World Bank rules, "ineligible" expenditures must be repaid to the World Bank. At 

the end of the audit, when operations saw just how many "ineligible" expenditures (62 percent of all 

transactions) had been captured, they then insisted that the forensic auditors redefine the 

"ineligible" category. This led to the awkward language that appears in the report, which separates 

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"questionable" from "suspected fraudulent" expenditures and reduced the eventual size of the 

repayment made by Kenya. "Questionable" expenditures were not repaid. 

After the forensic audit was finalized in June 2011, the Vice President for !NT travelled with the Vice 

President for Africa to Kenya on June 13, 2011 and met with the Cabinet Minister who oversaw the 

project, the Finance Minister, and the Prime Minister of Kenya. They agreed on two important 

matters in those meetings: 1) to temporarily withhold the report of the forensic audit from the 

public and not publish it immediately on the !NT website, as planned; and 2) to conduct a second 

audit (with the Kenyan National Audit Office) of the same transactions that INT had spent 18 months 

investigating, and use the second audit as the basis for the amount of money to be repaid for 

"ineligible" expenditures. 

There are three striking issues raised by this meeting and it consequences. First, one may 

legitimately question why the !NT Vice President was travelling with the Vice President for Africa in 

the first place and sharing a report with the Kenyans before it had been shared with the Board of 

the World Bank, where it had been promised months prior. If INTis to maintain a truly independent 

posture as a credible watchdog, such a close relationship with the parties that are being investigated 

is suspect Second, the decision to delay the publication of the report was met with extreme 

displeasure from the audit team in Washington, and upon return, the Vice President for !NT 

reversed himself and put it on the web after sharing it with the Board. Third, to allow the Kenyans 

to redo the audit work of INT severely undermined INT's independence. 

7.) In your testimony, you have proposed that projects publish expenditure data and many other details 

in order to hinder corruption. Do you have any reason to believe that IDA projects are unable to make 

these disclosures? Could the World Bank argue that these communities lack the necessary capacity? 

The Arid Lands Project, for all its failings, proposed a remarkably progressive transparency policy in 

its project documents. The problem was that it did not make good on its transparency promise until 

it was forced to do so. However, the project was producing reports in 2003 from the most remote 

territories in Kenya that included exactly the kind of expenditure data that beneficiaries need to be 

able to access in order to know what financial transactions are being recorded for their territories. 

These data are simple excel tables that list: the date, type of project (classroom construction, water 

pan, generator, training exercise, etc.) the village location, number of participants (if training), and 

total expenditure. If they could do it 14 years ago on the remote frontiers at the border of Kenya 

and Somalia, and the border of Kenya and South Sudan, they can do it almost anywhere. These are 

data that all projects have to be collecting on a routine basis in order to submit financial reports to 

the World Bank. Sophisticated computer skills are not required. It stands to reason that if you want 

people to monitor their own projects, which is the philosophy behind participatory development, 

then you have to give them this information so that they can track the money and understand what 

they are supposed to be receiving. Most community driven development projects already mandate 

that such data must be made available on billboards in villages and project offices, but the only way 

to really ensure that the data are being made available publicly is to also insist that they be put on 

the web. The web can be easily monitoring, while billboard postings in remote locations cannot be. 

4 

0