Report on MDB Reform Commitments 

Consistent with Section 7082 of the Consolidated Appropriations Act, 2012 (Pub.L. 112-74) and 

following its initial report of February 22, 2012, the Department of the Treasury is providing a 

report detailing the extent to which the World Bank, African Development Bank (AfDB) and 

Inter-American Development Bank (IDB) have continued to make progress in eight areas. 

The report highlights significant developments since submission of the initial report. Major 

areas of discussion include: 1) the World Bank’s procurement review; 2) implementation of 

whistleblower policies at the Multilateral Development Banks (MDBs), especially the IDB; and 

3) initial programs under the World Bank’s Program-for-Results (P4R) instrument. 

We report on progress in eight areas. 

(1) Implementing specific reform commitments agreed to by the World Bank and the AfDB as 

described in the Pittsburgh Leaders’ Statement issued at the Pittsburgh G20 Summit in 

September 2009 concerning sound finances, effective management and governance, 

transparency and accountability, focus on core mission, and results. 

The Pittsburgh Leaders’ statement stated that “additional resources must be joined to key 

institutional reforms to ensure effectiveness: greater coordination and a clearer division of labor; 

an increased commitment to transparency, accountability, and good corporate governance; an 

increased capacity to innovate and achieve demonstrable results....” 

Following the G-20 Summit, the shareholders of the World Bank and the AfDB negotiated 

reform commitments consistent with the Leaders’ statement, in conjunction with shareholders’ 

commitments to provide additional resources. As discussed in this report and the preceding 

report, the World Bank, the AfDB, and the IDB have undertaken robust implementation of and 

made substantial progress in these reform commitments since September 2009. 

World Bank:

 Sound Finances: As reported previously, in 2010 the World Bank adopted a new and 

significantly improved financial framework requiring that major financial decisions take 

into account implications for the administrative budget, pricing of loans, and net income 

transfers in a unified, comprehensive analysis. This was an important policy change 

because it compels the Bank and its shareholders to consider trade-offs in the Bank’s 

budgetary process. 

This framework will now be the basis for a discussion of the World Bank’s upcoming 

revision to its capital adequacy framework. The capital adequacy framework is designed 

to protect the Bank’s financial soundness (and, by extension, its AAA rating) through a 

series of guidelines which ensure prudent management of the Bank’s assets and 

liabilities. Currently, projected income on the Bank’s loans to client countries has 

declined, in large part because of recent decreases in long-term market interest rates. 

This phenomenon could create pressures on the Bank’s balance sheet in several years’ 
time. In the upcoming capital adequacy framework review, Bank Management and the 

Board of Directors will use the new framework to consider adjustments to the main 

determinants of long-term capital adequacy (budgets, pricing, and transfers to IDA). We 

expect to have an open dialogue about potential tradeoffs that can be made over time 

which will ensure financial sustainability without either additional capital from 

shareholders or dramatic changes to the current financial framework. 

 Effective Management and Governance: Since the last report, Management has 

completed the second phase of its comprehensive review of World Bank compensation 

and benefits that will run through FY14. Phase 1 of the compensation review, completed 

in February 2011, led to a revised approach for determining the salary increase envelope. 

It increased the alignment between pay and staff performance by eliminating the 

“comparatio,” which is the formula that the World Bank used as the basis for its annual 

pay increases (and which was historically automatically applied). We strongly supported 

the elimination of the comparatio, as we believe the methodology was inherently flawed. 

Phase 2 of the compensation review, which was completed in January 2012, addressed 

Management’s commitment to review two additional elements of the staff compensation 

methodology: a) the comparator sector weighting methodology (i.e., the mix between 

private sector, public sector and academic institutions that the World Bank uses as the 

basis for its wages and salaries); and b) the annual variable pay portion of the total 

compensation market data. 

The new compensation methodology slows down the rate of salary and benefits growth, 

eliminates automatic cost-of-living increases, and more strongly links pay to 

performance. In June 2012, the Board applied the new methodology to FY13 staff 

compensation, resulting in a more modest salary increase than would have resulted under 

the previous methodology. In addition, all salary increases were distributed based on 

performance, with no increase exceeding 5.7 percent. 

 

 Transparency and Accountability: Since the last report, the World Bank launched a 

process designed to improve the transparency, oversight and planning of its partnership 

programs. Partnerships, including trust funds, are an integral component of the Bank’s 

work, and are used to achieve dedicated objectives that neither the Bank nor its partners 

can as effectively achieve by working alone. They are typically multi-country in scope 

and address development challenges that involve cross-border spillovers, such as 

environmental degradation and food security. 

The World Bank has 186 Partnership Programs involving over 370 partner entities, 

including donors, recipient countries, civil society organizations and the private sector. 

The Bank’s role in these programs varies substantially: it can serve as a chair, member, 

adviser, or observer. In many cases, other organizations also serve as implementing 

bodies. 

There are 70 trust-funded global and regional partnerships programs (GRPPs) in which 

the Bank is involved. These partnership programs aim to further global and regional 
public goods. Management does not consider trust funds managed under GRPPs as a 

separate trust fund category with separate accountabilities. A 2011 IEG report of all 

Bank trust funds recommended that the Bank adopt a three-pillar structure for trust funds, 

consisting of: country-specific trust funds, GRPPs, and umbrella facilities. Umbrella 

facilities would consist of multi-donor funds to be deployed in multiple recipient 

countries. The IEG report also called for stronger oversight and risk management of 

GRPPs. Executive Directors have expressed support for IEG’s findings and have 

encouraged Management to draw on the idea of umbrella facilities. 

 Focus on Core Mission: Ahead of the April 2012 World Bank-International Monetary 

Fund Spring Meetings, the Bank released its updated Modernization Strategy: “Results, 

Openness and Accountability.” Under this strategy, Management articulated its key 

priorities, which are to: 1) enhance simplification, quality assurance, and accountability, 

including developing options to reduce overlaps and duplication in the structural 

organization; 2) develop quality and impact indicators for knowledge, and improve 

governance and management of the knowledge portfolio; 3) continue to improve the 

measurement of results, in particular by building in client and beneficiary feedback; 4) 

adopt a package of measures to scale up work in Fragile and Conflict-Affected States; 5) 

make attention to gender part of the Bank’s DNA – including from project 

conceptualization through monitoring and evaluation (M&E)—including incorporation of 

gender indicators in M&E frameworks; and 6) enact human resource reforms, in 

particular with the introduction of a new approach to performance and talent 

management, benefits and compensation, and global mobility, and begin to deepen 

synergies and collaboration across the Bank. Treasury has been broadly supportive of 

this agenda, while cautioning that the “simplification” agenda not be code for a 

diminished application of the Bank’s safeguards and controls. 

 Results: As previously reported, the World Bank’s key tool for reporting on results at the 

corporate level is an integrated results and performance framework known as the 

“Corporate Scorecard,” which was introduced Bank-wide in fall 2011. The Corporate 

Scorecard uses indicators in four areas (or tiers) to track development results and 

elements of Bank performance. Its key objective is to assess whether the Bank is 

functioning efficiently and managing its operations and services effectively. 

Specifically: 

o Tier I indicators show progress in long-term development outcomes of the Bank 

client countries as a group, which enables the Bank to assess progress at a very 

high level (e.g., global/regional trends in health, education and poverty levels). 

Because of the myriad factors that influence these outcomes, they are not the basis 

for assessing Bank programs, but do provide a useful snapshot of changes in 

global welfare. 

o Tier II indicators show country-specific results, using data on human 

development, infrastructure, and access to services for the poor and the 

vulnerable. 
o Tier III indicators show the effectiveness of the Bank’s products and services in 

its client countries. To ensure objectivity, the Bank includes ex-post evaluation 

ratings of program effectiveness provided by the IEG. 

o Tier IV indicators are designed to capture the main dimensions of the Bank’s 

organizational efficiency and modernization agenda to determine if it is becoming 

more responsive and accountable. 

In September 2012, the fourth Corporate Scorecard was published and disclosed online in 

October. Key findings included: 

 The percentage of people living on less than $1.25 a day and the number of poor 

declined from 43 percent in 1990 to 22.7 percent in 2008. This would mean that 

the first Millennium Development Goal of halving extreme poverty from its 1990 

level has been achieved before the 2015 deadline. 

 During fiscal year 2010-2012, the World Bank supported procurement system 

reforms in 11 countries, strengthened civil service and public administration 

systems in 28 countries, improved public financial management systems in 57 

countries, and strengthened tax policy and administrative systems in 27 countries. 

 In terms of operational effectiveness, 91 percent of approved projects had clearly 

formulated development objectives. This increase represents an 8 percentage 

point improvement over 2009. 

 Gender mainstreaming has continued to progress, with the share of country 

assistance strategies and programs drawing on and discussing the findings of a 

gender assessment increasing to 100 percent in both FY11 and FY12. In addition, 

55 percent of recent operations now have gender informed design. We want to 

press the Bank to ensure that it is setting a high bar for assessing whether or not 

operations are gender informed. 

 Portfolio performance in FY12 remained similar to FY11, with 85.5 percent of 

active operations in satisfactory status. Despite this favorable figure, we wish to 

ensure the highest quality portfolio review process and will continue to press 

management for transparency and accuracy in the ratings process. 

 As previously reported, the Bank has made continuous improvements that allow it 

to allocate and use its resources more efficiently while operating within a flat 

budget environment since FY06. At the same time, the Bank significantly scaled 

up its response to the recent global financial crisis by doubling lending, improving 

the speed of project preparation, and shifting resources to the provision of 

implementation support. 
African Development Bank (AfDB):

 Sound Finances: As reported previously, the Bank is moving towards an income 

management model that balances net income projections, administrative costs, loan 

charges and the notional lending program. The Bank's prudent financial management has 

resulted in the reaffirmation of its AAA rating from the major credit rating agencies. 

 Effective Management and Governance: Since the last report, the AfDB has advanced its 

risk management and anti-corruption agendas. 

o Risk Management. The AfDB took an important step to strengthen risk 

governance by formalizing the establishment of a Credit Risk Committee. The 

objective of the Committee is to monitor the Bank’s portfolio, provide credit 

assessments, and advise Management on risk mitigation measures. In addition, 

the Bank has agreed to create a Head of Risk position, in line with MDB best 

practices, by the end of 2012. 

o Anti-corruption. In June 2012, the AfDB followed the World Bank and other 

MDBs in approving a new sanctions policy that enables it to implement the cross 

debarment agreement among international financial institutions. As Chair of the 

Audit Committee during the development of the policy’s implementing 

regulations, the U.S. played a critical role in achieving important objectives. 

These included: 1) clarifying the definition of “sanctionable practice” to ensure 

that there is no ambiguity; and 2) calling for the establishment of an independent 

Sanctions Commissioner responsible for determining sanctions, along with a 

separate appeals body. 

The U.S. also pressed the AfDB to delegate cases of staff misconduct that do not 

constitute fraud or corruption to Human Resources personnel, enabling the 

Integrity and Anti Corruption Department (IACD) to dedicate its time to 

corruption cases. In addition, the Bank has taken steps to strengthen IACD by 

creating two separate divisions (i.e., a preventative division and an investigation 

division). Finally, IACD is developing key performance indicators so its 

effectiveness can be measured. 

 Transparency and Accountability: Since the first report, the AfDB has adopted a new 

policy on disclosure and access to information, with the aim of strengthening the 

transparency and accountability of the Bank. In line with best practices across the 

MDBs, the new policy includes a shift from a “positive list” approach, in which 

disclosure is considered exceptional, to a presumption of disclosure, or “negative list” 

approach, in which disclosure is considered the default. The policy sets deadlines for 

responding to requests for information and establishes an appeals process for requests 

that are denied. 
 Focus on Core Mission: In late 2011, AfDB Management tapped a group of experts to 

develop a Long Term Strategy (LTS), a process that we expect will be finalized at the 

end of 2012. The LTS builds on the Bank’s Medium-Term Strategy, which provides a 

clear framework for greater operational selectivity. The LTS will consolidate the Bank’s 

success in infrastructure, regional integration, governance, and private sector 

development while striving to respond to the changing needs of a diverse continent that 

includes fragile states, newly emerging frontier markets, and North African nations in 

transition. With an overarching focus on inclusive and green growth, the Bank will also 

move away from a strategy anchored primarily in outputs to one that is more outcomesoriented. Finally, the Bank will strive to consolidate and expand its ability to measure 

and communicate results as the key driver of institutional performance. 

 Results: In May 2012, the AfDB published its second Annual Development 

Effectiveness Review (ADER), which assesses the Bank’s developmental impact by 

providing an overview of Africa’s development trends and describing the Bank’s 

contributions to those results.1

 Key findings included: 

o Africa is going through its most dynamic growth period in recent times. The 

continent has achieved growth rates above six percent for most of the past decade, 

driven largely by private sector growth. The African private sector generates 70 

percent of Africa’s output, two-thirds of its investment and 90 percent of 

employment. However, while economic growth has lifted many households out 

of poverty and the number of middle-income households is increasing, inequality 

in Africa is still high and growing. Africa’s Gini index—a measure of income 

inequality—has widened over the past six years, as it has in other developing 

regions, and is hardly better than it was in 1980. 

o Africa continues to perform poorly on standard governance indicators, scoring 30 

percent lower than the Asian average and 60 percent lower than industrialized 

countries, and conflict and political stability remain serious constraints on 

Africa’s growth. Environmental degradation is also a serious and growing 

problem. 

o Major areas where progress is needed to accelerate and sustain growth are: 1) 

regional integration; 2) infrastructure development; 3) agricultural productivity; 

4) investment in health and education; and 5) access to finance. The AfDB 

provides valuable support in all of these areas. The Bank plays an especially 

critical role in regional projects, due its role as Africa’s leading financier. More 

than 40 percent of Bank lending goes towards infrastructure development to 

improve connectivity for marginalized areas and address rural-urban imbalances. 

 

1

 Similar to the World Bank’s Corporate Scorecard, the ADER uses four tiers: 1) level one measures Africa’s 

overall development progress in nine areas, including growth, human development, and public service delivery; 2) 

level two presents the aggregate outputs of Bank operations in the same nine areas, showing how the Bank has 

contributed to Africa’s development; 3) level three assesses how well the Bank manages its portfolio of operations; 

and 4) level four describes how well the Bank manages its institutional effectiveness, measured against progress in 

areas like decentralization and human resource management. 
o At the end of 2011, the AfDB’s portfolio consisted of 769 operations with a 

combined value of $34 billion. The ADER concluded that the Bank has improved 

the level of supervision of its operations, with the level of problem projects 

declining to below five percent in 2012. In addition, the overall proportion of 

operations rated satisfactory reached 93 percent, a major improvement over 2010 

and just short of the Bank’s target of 95 percent. However, both the 

disbursement ratio—representing the overall pace of disbursement— and the 

average lapse of time between approval and first disbursement remain a cause of 

concern. The Bank is conducting a study on first disbursement to better 

understand why the lapse of time is so long, and to formulate appropriate 

measures to address this. 

o Human resource management remains one of the AfDB’s biggest challenges. 

Both its premature attrition rate—staff leaving before completion of their first 

contract, as a share of total departures—and the vacancy ratio, which stands at 15 

percent, have made it difficult for the Bank to make progress in this area. 

(2) Implementing specific reform commitments agreed to by the IDB in Resolution AG–7/10 

‘‘Report on the Ninth General Capital Increase in the resources of the Inter-American 

Development Bank as approved by the Governors on July 12, 2010, including transfers of at 

least $200,000,000 annually to a grant facility for Haiti.” 

As reported previously, the IDB is implementing its commitments under the Ninth General 

Capital Increase (GCI-9). (See Annex 1 for a detailed status update.) 

Since the last report, the major development was the approval of the second annual transfer to 

Haiti of $200 million. In addition, the IDB has continued to support tangible improvements in 

Haiti, including: 

 enrolling nearly 35,000 students in preschool and primary school through a tuition waiver 

program; 

 training more than 2,200 15-24 year old youths in areas such as construction, agricultural 

skills, garment manufacturing, and tourism; 

 installing new individual water connections for 1,700 households in Port-au-Prince; and 

 vaccinating nearly 1.5 million animals against swine flu, anthrax, and Newcastle disease. 

Moreover, there are several developments that we assess are contributing to the objectives of the 

reforms embedded in the GCI-9 agenda. 
For example: 

 The IDB has launched a new inter-active tool, “Map Americas,” an online platform that 

uses the latest geo-mapping technology so viewers can easily view and track the results 

of development projects financed by the Bank. 2

 In March 2012, the IDB released its 2011 Development Effectiveness Overview (DEO), 

which gave a positive assessment of the Bank’s increased emphasis on incentives, 

outcomes, and sustainability in project development.3 

Specifically, the DEO: 

o welcomes the use of incentives for improving final health outcomes, including 

conditional cash transfers, as well as benefits for providers who improve the 

quality and quantity of health care services; 

o commends the IDB for focusing more on outcomes, instead of outputs, as in the 

case of a water sanitation project in Bolivia where key indicators go beyond the 

normal output measures (e.g., numbers of additional recipients of clean water) and 

focuses instead on health outcomes amongst children (particularly those related to 

diarrhea, parasites, and respiratory diseases); and 

o highlights the progress on environmental, developmental, and financial 

sustainability of all the IDB’s operations (e.g., as evidenced by a water, sanitation 

and hygiene program in Mexico that was developed to reduce the risk of illness 

caused by unsafe water and bathroom facilities, as well as to cut the rate of 

illness-related absenteeism). 

 Finally, the IDB’s independent Office of Evaluation and Oversight (OVE) is in the final 

stages of reviewing the IDB’s process for measuring project results. OVE reports that it 

has had a productive relationship with Management on the discussion of its findings. We 

anticipate that OVE's review will show considerable progress, while also including 

recommendations (supported by Management) for improving the Bank's project 

completion reports. 

(3) Implementing procurement guidelines that maximize international competitive bidding in 

accordance with sound procurement practices, including transparency, competition, and costeffective results for borrowers. 

World Bank: 

Since the last report, the World Bank launched a comprehensive review of its procurement 

policy and procedures. The rationale for the review is that the Bank’s procurement policies were 

originally designed for infrastructure investments, and therefore are not necessarily well suited to 

its evolving portfolio, new lending instruments, and new ways of doing business (ranging from 

 

2 http://www.iadb.org/en/mapamericas/mapping-results-for-latin-america-and-the-caribbean,5786.html 3 http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36726884 
Public-Private Partnership financing to performance-based and community-based activities), all 

of which now make up a significant share of the Bank’s operations. 

The ultimate objective of the review is to revise the World Bank’s procurement policies, internal 

procedures, and practices to ensure that they remain in tune with the changing world. To make it 

fully comprehensive, the Bank has asked stakeholders to “take a step back” and start from “first 

principles.” This is a major, multidimensional undertaking with significant implications for the 

Bank’s operations. 

The World Bank has committed that the review will be “methodical, inclusive, thorough, and 

evidence-based.” Bank Management affirmed that a key dimension of the review is to gain 

feedback from clients and other stakeholders on what issues they see as important and where 

improvements can be made. 

The review is being carried out in two phases and is expected to take about two years to 

complete. The first phase, to be completed by December 2012, will identify and elaborate on 

areas where changes may be needed. The identification of these issues will be based on the 

results of consultations with stakeholders (already underway), review of literature, advice and 

inputs from a group of international experts, analyses of the World Bank’s procurement track 

record, and benchmarking with other organizations. 

The end product of this first phase will be a set of recommendations that lays out: (i) the 

overarching framework for the future evolution of the Bank’s procurement policies; (ii) the 

principles to guide the formulation of those policies and how they are to be applied; and (iii) the 

specific parameters and dimensions that could be modified, along with their justification. 

This phase will benefit from the results of a parallel effort by the IEG to evaluate the World 

Bank’s procurement policies. 

During the second phase, which is scheduled to begin in early 2013, the World Bank will begin 

drafting a revised statement of operational policies and accompanying procedures, including 

recommendations of specific revisions to the procurement and consulting guidelines applicable 

to borrowers. These will ultimately be presented to the Board of Executive Directors for their 

consideration. The revised guidelines are expected to undergo several iterations with the final 

version expected to be approved no earlier than end-2013. 

Treasury fully recognizes the high stakes associated with this review, and is committed to 

ensuring a level playing field for companies bidding on World Bank-financed contracts. To 

maximize our input in the process, we will be meeting separately with stakeholders, World Bank 

Management and other procurement experts, and will remain closely engaged throughout the 

process. We will also seek to ensure that the Bank’s consultative process is adequately robust. 

AfDB: 

In July 2012, the AfDB approved and implemented a new sanctions policy under its procurement 

guidelines, bringing it in line with the other MDBs. Under this policy, sanctioned entities at any 
MDB will be ineligible to bid on AfDB contracts and these entities will be published on the 

AfDB’s external website. 

IDB:

The IDB approved and implemented a new sanctions policy, bringing it in line with the other 

MDBs. Under this policy, debarred firms are ineligible to participate in any IDB-financed 

contract, and ineligibility may extend to any firm or individual that directly or indirectly controls 

the debarred firm or any firm that the debarred firm directly or indirectly controls. Currently, the 

Bank website contains information on more than 50 firms sanctioned due to cross-debarment. 4

(4) Implementing best practices for the protection of whistleblowers from retaliation, 

including best practices for legal burdens of proof, access to independent adjudicative bodies, 

results that eliminate the effects of retaliation, and statutes of limitation for reporting 

retaliation. 

World Bank: 

As reported previously, the World Bank’s most recent whistleblower protection policy, issued in 

2008, expanded the scope of protection for whistleblowers to be consistent with international 

best practices. 

Since the last report, we have sought information on the implementation of this policy from 

World Bank staff and Management. The Bank notes that, over the last three years (2009-2011) 

and through July 2012, the Office of Ethics and Business Conduct (EBC), the Office of 

Institutional Integrity (INT), the Peer Review System (PRS), and the Administrative Tribunal 

have received and dealt with the following whistleblower retaliation cases:5

 

Office of Ethics and Business Conduct: The EBC reports that it received 26 allegations of 

whistleblower retaliation. In 16 of these claims, the allegations did not meet the criteria for 

retaliation (i.e., the alleged retaliatory measure was not taken in connection with a protected 

activity, or it was deemed a feared future action was either insufficiently specific or too far off in 

the future to be considered under the Bank's policy). In seven other claims, the EBC concluded 

that the evidence was insufficient or unfounded to support a claim of retaliation, as it found clear 

and convincing evidence that the employment action would have been taken absent the 

employee’s report of misconduct. Two claims, presented in 2012, are still under review and one 

of these claims alleged retaliation based on alleged misconduct dating from 2008, which predated the EBC’s mandate to investigate staff misconduct. This claim was ultimately brought 

(unsuccessfully) to the World Bank Administrative Tribunal. 

 

4

 Available at http://www.iadb.org/en/topics/transparency/integrity-at-the-idb-group/sanctioned-firms-andindividuals,1293.html 5

 Because the data from these offices has been reported in the aggregate, and employees may present their claims 

through multiple channels of the Bank's Internal Justice System, there may be double-counting of cases that have 

been presented to multiple units for review. For example, staff members who file cases raising claims of 

whistleblower retaliation are encouraged to also report their claims to EBC. 
The Office of Institutional Integrity: The Office of Institutional Integrity reports that 233 staff 

and consultants made protected disclosures to INT of alleged misconduct that fall within the 

framework of the World Bank’s Whistleblower Policy. During the same period, and unrelated to 

the 233 reports of suspected fraud or corruption, INT received seven complaints that could be 

characterized as alleging whistleblower retaliation. Six of these were referred to EBC and are 

among the 26 claims referred to above. The seventh, which was filed for information only, came 

to INT based on a Securities and Exchange Commission (SEC) referral. In the complaint to the 

SEC, the former Bank staff member raised generalized concerns regarding Bank governance, but 

was unable to provide any specific information or allegations when asked. This particular staff 

member’s previous complaints to INT concerning allegations of misconduct in Bank operations 

had been exhaustively investigated and ultimately found to be without merit. 

Peer Review System: PRS reviewed six cases that raised allegations of whistleblower 

retaliation, but did not find that any of them showed a sufficient basis to recommend remedial 

action to address retaliation for whistle blowing. 

Administrative Tribunal: The Administrative Tribunal considered 13 cases of alleged 

whistleblower retaliation. Six of these were decided in favor of the complaining staff members, 

while seven were decided in favor of the World Bank. 

AfDB: 

As reported previously, the AfDB’s most recent whistleblower protection policy, issued in 2007, 

expanded the scope of protection for whistleblowers in order to be consistent with international 

best practices. 

Since the last report, we have sought information on the implementation of this policy from 

AfDB staff and Management. The Bank notes that, over the last three years (2009-2011), and 

through July 2012, it has received seven whistleblower retaliation complaints, six of which were 

received between 2009 and 2011. The one case in 2012 is from an anonymous whistle blower, 

alleging retaliation. It was investigated and, as no retaliation was found, the case was closed. 

For each of the six cases, the complainant alleged that someone at the AfDB was about to take a 

retaliatory action against her/him, in response to the complainant’s whistle blowing about 

wrongful acts occurring in AfDB-financed activities. Three of the cases were effectively 

vindicated. In one instance, a pre-emptive action advising the superior against taking the feared 

retaliatory actions was enforced, and the whistleblower was not retaliated against. In another 

instance, the retaliatory case was resolved through a court decision in a member country where it 

was found that the whistleblower, while not facing retaliation, was experiencing related issues 

with the alleged wrongdoer. In a third instance, the Bank led a mediation process between the 

whistleblower (a member government employee working on a Bank project while on a leave of 

absence) and a national authority alleged to have retaliated against the whistleblower. This 

resulted in financial settlements on behalf of the whistleblower with the Bank and the national 

authority, as well as amicable separation between the whistleblower and both of these employers. 

Investigation into one retaliation case received in 2011 is still ongoing. This is because the 

retaliation case is tied to an investigation of the underlying allegation, which is expected to be 
resolved by the end of September 2012. The remaining two cases were reviewed but found not 

to involve retaliation for whistleblowing activities, and were referred to the Bank’s Human 

Resources Department to handle. 

IDB: 

In mid-October 2012, the IDB issued a new whistleblower policy that incorporated the 

recommendations from the consulting firm Global Compliance, a firm the Bank engaged, at the 

urging of the United States, to conduct a comprehensive review of the Bank’s ethics, conduct, 

and grievance systems and to present recommendations for further policy development. Key 

changes under this new policy include: 

 clarifying that the definition of “employees” covered by whistleblower protection in 

Bank policy includes employees who were about to report an allegation and employees 

who were mistakenly believed to have reported an allegation; 

 shifting the burden of proof to Management to provide, by clear and convincing 

evidence, that it would have taken the same adverse action against a whistleblower 

absent the whistleblowing; 

 preventing retaliation in the form of non‐renewal of a temporary contract; 

 reinforcing provisions for interim relief to a whistleblower when necessary; and 

 including a “good faith” standard for reporting and cooperation to invoke whistleblower 

protection. 

In addition, the Board is leading a process to change the IDB’s Statute of its Administrative 

Tribunal, which has jurisdiction over whistleblower cases. Proposals that are being considered 

include: raising (or eliminating) the cap on damages, allowing successful claimants to receive 

costs and attorneys’ fees, providing interim relief in appropriate cases while claims are pending, 

and permitting the Tribunal to waive the statute of limitations for whistleblowers. However, 

there are several key issues that need to be resolved before the revisions can be finalized, 

including the circumstances under which an employee could be obliged to pay the Bank's legal 

costs if a judge finds a complaint to be frivolous (a proposal recommended by Global 

Compliance, consistent with practices of other International Financial Institutions). We 

understand that the Board is working on a modification to address this concern (i.e., by stating 

that payment of the Bank’s legal costs would only be pursued if a claim was found to be 

“malicious or abusive"). However, the Staff Association (SA) would prefer that this provision 

be struck entirely. In addition, the SA is seeking to have the Tribunal—rather than 

Management—determine whether compensation is an appropriate remedy in lieu of 

reinstatement. We support the SA’s approach. 
Specific Cases

The IDB reports that, over the last three years (2009-2011), its Ethics Office received four 

requests from whistleblowers for protection from retaliation. In three of these matters, the Ethics 

Committee determined that there had been no retaliation. In each of these instances, the 

employee appealed to the Administrative Tribunal. One of these appeals was withdrawn by the 

staff member; one of them is still pending; and in the third matter, the Tribunal, while not finding 

retaliation per se, found that the Bank did not make adequate efforts to obtain a new position for 

the whistleblower when her term contract expired. The Tribunal awarded compensation to this 

employee. 

In the fourth matter, an IDB employee reported that she suspected retaliation, allegedly 

committed by the head of a small external group that worked regularly with Bank employees, 

after she accused one or more of the external group’s members of violating IDB policies and the 

IDB Code of Ethics and Professional Conduct. Because the external group is not part of the 

Bank or subject to its policies or the IDB Code, the Bank concluded that the external group 

should not be subject to investigation by the Bank. However, because the employee provided 

credible indicia of retaliation by the external group, the Ethics Office worked actively with the 

Human Resources Department to assist the Bank employee in finding another position at the 

Bank. 

In 2012, the Ethics Office received allegations that are in the initial assessment phase. The 

Office is in the process of obtaining additional information to determine whether these are 

credible allegations of whistleblower retaliation. 

(5) Requiring that each candidate for budget support or development policy loans provide an 

assessment of reforms needed to budgetary and procurement processes to encourage 

transparency, including budget publication and public scrutiny, prior to loan approval. 

World Bank: 

As reported previously, the World Bank requires that prior to seeking Board approval for a 

development policy loan (DPL), a borrowing country must submit to a review of its public 

financial management and procurement systems and, if necessary, commit to time-bound actions 

to address deficiencies and help mitigate risks. 

Since the last report, the Bank has concluded a review of DPL performance in borrowing 

countries, which will be released in November 2012. Although the review is not yet public, we 

understand that it will conclude that the Bank has been effectively taking into account the 

fiduciary risks of providing budget support. For example, over a three year period (April 2009-

March 2012), countries with low scores (2 or below), as measured by “quality of budgetary and 

financial management,”6

 received practically no DPLs and nearly 40 percent of DPLs went to 

countries with a score of 4 or above. 

 

6

 This measure is one of the Bank’s “country policy and institutional assessment” scores, which rate countries on a 

range of policies from 1 (low) to 6 (high). 
AfDB: 

In the second quarter of 2012, the AfDB adopted a new, strengthened operational policy 

governing its budget support operations, which includes a new provision requiring budget 

transparency as a condition for budget support. The Bank will continue to require that, before 

receiving budget support, a country must have a satisfactory assessment against a four-pillar 

Fiduciary Risk Management Framework (budget, procurement, audit and reporting, and 

corruption) for a policy based operation (PBO), and against a full range of fiduciary assessments. 

In countries with weaker country systems, the AfDB will consider budget support only if the 

country has committed to an adequate program of reform in its public financial management and 

there is demonstrated evidence of progress. Loan conditions that require significant 

improvement in public financial management are used to help to mitigate the fiduciary risks 

associated with budget support loans in these countries. 

IDB:

As reported previously, the IDB adopted formal guidelines in April 2005 for the preparation and 

implementation of budget support operations (known at the Bank as policy-based loans). These 

guidelines require assessments of a borrowing country’s public financial management systems 

and identification of steps needed to strengthen the borrowing country’s national fiduciary 

systems. 

While these guidelines have not been updated, they are now de facto linked to a recently adopted 

policy requiring the IDB Chief Economist’s office to provide independent assessments of a 

country’s macroeconomic sustainability, including assessments of financial management and 

budget outlook. In the event that the Chief Economist’s office concludes that there is a strong 

likelihood of unsustainable macroeconomic conditions (e.g., poor financial outlook), Bank 

Management is expected to avoid any increase in net aggregate exposure to that country (i.e., 

new lending), outside of what is contractually required for previously approved project 

disbursements. 

 

(6) Making publicly available external and internal performance and financial audits of such 

institution’s projects on the institution’s Web site; 

Since the last report, the AfDB has joined the World Bank and the IDB in requiring borrowers to 

disclose audited annual project financial statements. In addition, as noted previously, the World 

Bank, AfDB, and IDB also post overview assessments of project performance on their respective 

web sites. 

In addition, the IDB is in the final stages of implementing changes needed to fully harmonize its 

access to information guidelines with those of the World Bank. These changes will allow for 

disclosure of the financial statements of IDB projects, provided that the authorities of a country 

in which a project is undertaken do not object to their publication. If there is an objection, the 

country’s authorities are responsible for providing redacted statements that provide financial 

information at a level acceptable to the IDB. These changes are reflected in amendments that 
have been sent to the Bank’s Access to Information Committee for approval. Further, in August 

2012, the Board of Executive Directors approved the Bank President’s appointment of the 

Access to Information external review panel, which will review appeals to information that has 

been withheld pursuant to the guidelines. 

(7) Adopting policies concerning the World Bank’s proposed Program for Results (P4R) to 

limit P4R to no more than 5 percent of annual World Bank lending as a pilot for a period of 

not less than two years; require that projects with potentially significant adverse social or 

environmental impacts and projects that affect indigenous peoples are either excluded from 

P4R or subject to the World Bank’s own policies; require that at the close of the pilot there 

will be a thorough, independent evaluation, with input from civil society and the private sector, 

to provide guidance concerning next steps for the pilot; and fully staff the World Bank 

Group’s Integrity Vice Presidency, with agreement from Borrowers on the World Bank’s 

jurisdiction and authority to investigate allegations of fraud and corruption in any of the 

World Bank’s lending programs including P4R;. 

Since the last report, the World Bank Executive Board, with U.S. support, reviewed and 

approved the first two P4R projects in June 2012, a third in October 2012, and a fourth in 

November 2012. None of these projects, which are detailed below, are a Category A project 

with significant adverse environmental impacts. 

The first P4R project provided a $60 million loan to the Government of Nepal to support bridge 

maintenance and construction. Specifically, it will help finance major maintenance of over 300 

bridges; minor maintenance of 233 bridges; construction of 121 new bridges; and the 

establishment and operation of a bridge management system to ensure sustainability of 

maintenance going forward. During project development, the World Bank specifically excluded 

bridges that were likely to have significant adverse impacts on the environment or indigenous 

peoples. The program builds on a separate Bank road sector reform program and is expected to 

have high rates of return. 

The second P4R project is a $300 million loan to the Government of Morocco to support the 

second phase of the $2.1 billion National Initiative for Human Development (INDH). INDH is 

aimed at fostering social cohesion through thousands of community driven development 

projects: small scale infrastructure, local income generating activities, and social 

cohesion/inclusion programs (e.g., sports, cultural activities, wider participation of women and 

youth in local government). Although the Bank is financing a substantial portion of the project, 

this project will largely be financed by the national and local governments. 

The third P4R project provides $255 million in performance-based assistance to 18 (out of 26) 

Urban Local Government Authorities (ULGA) in Tanzania to improve urban service delivery. 

Key objectives are to improve: (i) institutional structures and local governance to conduct urban 

planning, revenue generation and collection; (ii) fiduciary systems; (iii) service delivery systems; 

and (iv) accountability and oversight mechanisms. It will also construct or repair urban 

municipal infrastructure, and enhance the central government’s fiscal transfer mechanism to 

support and deepen decentralization. 
The fourth P4R project provides $200 million in performance-based assistance to expand access 

to water supply and sanitation services to rural areas in eight Vietnamese provinces. The 

program falls under the third phase of Vietnam’s National Target Program, which has received 

World Bank and other donor assistance in the past. Key objectives are to: (i) increase rural 

access to sustained water supply systems; (ii) increase rural access to commune-wide sanitation; 

and (iii) improve planning and monitoring of rural water supply and sanitation services. The key 

implementing agencies are the Ministry of Agriculture and Rural Development (MARD) and the 

National Center for Rural Water Supply and Sanitation (NCERWASS). 

These four projects represent markedly different uses of P4R, which we view to be appropriate 

for a pilot program. The Nepal project is a case of relatively weak existing country systems 

paired with a narrowly defined program and significant capacity building efforts. The Morocco 

project is a case of relatively strong existing country capacity coupled with a somewhat diffuse 

program. The Tanzania project is an example of relatively weak country systems paired with a 

rather complex project. The Vietnam project is a good example of ambitious yet realistic 

disbursement-linked indicators that pay for progress on important intermediate outcomes that 

have well-established empirical links to ultimate health outcomes. 

In general, Treasury believes that the success of these P4R projects will hinge on the integrity of 

the Disbursement Linked Indicator outcomes. Original proponents of results based lending 

instruments (like P4R) pointed to the importance of having a third party verification mechanism, 

where possible. In the case of the Morocco project, the World Bank will be able to hire an 

external consultant to handle verification. In Nepal, verification will be handled by a 

competitively-selected, private-sector firm contracted by the Government’s National Planning 

Commission, which is independent of the implementing agency for the bridge program. Under 

the Tanzania project, the Prime Minister’s Office for Regional and Local Government will hire – 

through an international competitive bidding process – an independent agency to conduct annual 

performance assessments that the World Bank will have access to and can randomly audit, as 

needed. In Vietnam, the independent State Audit of Vietnam (SAV) agency will contract an 

engineering firm to verify the program’s implementation, and the World Bank will have access 

to all verification reports. 

On the key issue of the Integrity Vice President’s (INT's) access to investigations, INT has noted 

that the P4R Anti-Corruption Guidelines are incorporated in all P4R binding legal agreements. 

INT has also confirmed that the legal agreements provide it clear authority to investigate 

instances of fraud and corruption in these projects. Further, affected persons will also have 

redress under the World Bank’s Inspection Panel. 

We expect that up to three more P4R projects will be reviewed by the World Bank Executive 

Board this calendar year. Bank Management continues to assure the Board that P4R lending will 

not exceed five percent of annual Bank lending. 

(8) Concerning the World Bank, strengthening the public availability of information 

regarding International Finance Corporation (IFC) subprojects when the IFC is funding a 

financial intermediary, including—(A) requiring that higher-risk subprojects comply with the 

relevant Performance Standard requirements; and (B) agreeing to periodically disclose on the 
IFC Web site a listing of the name, location, and sector of high-risk subprojects supported by 

IFC investments through private equity funds. 

As reported previously, the updated IFC Sustainability Framework requires that higher-risk 

subprojects comply with the relevant Performance Standard requirements. In addition, the IFC 

will periodically disclose a listing of name, location and sectors of high-risk sub-projects that 

have been supported by IFC through private equity funds, subject to regulatory constraints and 

market sensitivities. 

Since the last report, we have clarified that the timing of IFC disclosure of sub-project listings 

will depend on: 1) the date on which a commitment by the IFC is made to the private equity fund 

operations subject to the new policy (following Board approval, the mutual agreement between 

the IFC and the private equity fund to move ahead with the project); 2) the timing of reporting by 

the private equity funds to the IFC; and 3) when each private equity fund actually invests in a 

high-risk subproject subject to this disclosure requirement. 

The IFC typically gets written reporting from its private equity fund clients, including private 

equity fund clients, roughly one year after commitment through an “Annual Monitoring 

Report.” Since the updated Sustainability Framework went into effect, the IFC Board has 

approved two private equity funds: CoreCo CA in Central America, and Infuse Capital in India. 

However, since investments in these funds have not yet been committed, the IFC is not yet 

required to provide the first sub-project disclosure listing. Once reporting begins, the IFC 

anticipates that each private equity fund’s listing will be updated annually (in the annual update 

of project information).