Report on the World Bank’s Inspection Panel and the International Finance Corporation’s 

Compliance Advisor Ombudsman: Issues and Recommendations 

April 2019 

Introduction 

The Treasury Department presents this report as requested by the conference report, H. Rept. 

116-9, for the Department of State, Foreign Operations, and Related Programs Appropriations 

Act, 2019, Public Law 116-6. This report provides information on the budget, staffing and 

caseloads of the Inspection Panel of the World Bank and the Compliance Advisor Ombudsman 

(CAO) of the International Finance Corporation (IFC), and discusses priorities and 

recommendations of the U.S. Executive Director for these mechanisms, in response to the 

following request from the committee of conference: 

CONTRIBUTION TO THE INTERNATIONAL DEVELOPMENT ASSOCIATION 

The conference agreement provides $1,097,010,000 for Contribution to the International 

Development Association. Not later than 60 days after enactment of the Act, the 

Secretary of the Treasury shall submit a report to the Committees on Appropriations 

detailing the annual budgets of the Inspection Panel and the Compliance Advisor 

Ombudsman for each of the past five fiscal years, the caseload of each such entity for 

each of those years, a description of the priorities of the United States Executive Director 

for such entities, and specific recommendations, including budget and personnel 

increases, to enhance the capacity of each such entity to effectively carry out its mission. 

The report provides some context on independent accountability mechanisms generally, and then 

discusses each mechanism in turn. 

Context 

The U.S. has been a strong advocate of independent accountability mechanisms (IAMs) at the 

multilateral development banks (MDBs) since the early 1990s, when the World Bank first 

considered establishment of such a mechanism. IAMs serve three broad functions important to 

the Board in its oversight over the Bank. First, they help address grievances of people and 

communities who believe they have been, or are likely to be, adversely affected by an MDBfinanced project. Second, they are an important risk management tool of the MDB, aiding in 

identifying and addressing problems that emerge in connection with the MDB’s activities. 

Lastly, as a result of the first two functions, they foster inclusive development and enhance the 

development outcomes of MDB-financed projects. Strong IAMs at the MDBs distinguish the 

MDBs from many bilateral donors that do not put in place measures that hold them accountable 

or provide a voice for affected communities. 

From the diversity of IAM experience, we have drawn a few lessons about factors that contribute 

to IAMs’ effectiveness. Specifically: 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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• Independence from MDB management is essential to IAMs’ credibility with projectaffected people and civil society organizations, and thus, to the IAMs’ effectiveness. 

• Compliance review, dispute resolution, monitoring, and the distillation of learnings from 

experience (advisory services) are inter-related functions that, when combined in an 

integrated way, make the IAMs more effective. 

• The above functions require an on-going institutional commitment to sufficient budget 

and staffing. 

• In compliance reviews in particular, IAMs can play a useful role in monitoring and 

confirming implementation of a management action plan, or in identifying gaps in 

implementation. However, a compliance review does not necessarily lead to satisfaction 

of a complainant’s grievance. 

• Project-affected people need to know that an IAM exists, in order to seek its services. 

Given valid fears about retaliation for making a complaint, IAMs and MDBs need to be 

proactive in preventing retaliation and acting promptly in cases where retaliation occurs. 

• IAMs can contribute to knowledge development and knowledge management. However, 

this is currently largely limited to “advisory” services and there is potential for IAMs to 

do more in this area. 

The Inspection Panel1 

Context. The Inspection Panel was established in 1993 by the World Bank Board of Executive 

Directors, with strong U.S. leadership so that the Board had an independent mechanism to assess 

whether projects funded by the World Bank were consistent with World Bank policies.2 

Budget. As shown in Table 1, the Inspection Panel’s budget spent varies slightly from year to 

year, depending on the cases and specific activities undertaken in a given year. In the last five 

years, the budget spent has varied from a low of $3.2 million in World Bank FY 2015 to a high 

of $4.1 million in FY 2018.3,4 In FY 2018, the Panel’s expenses slightly exceeded the Panel’s 

budget and the net balance for FY 2019 is not yet available. The current budget supports a fulltime Chairperson, two part-time members of the Panel, and nine full-time Secretariat staff. They 

are supplemented by additional consultants, as needed. The budget is included in the World 

Bank budget approved annually by the Board. 

1 www.inspectionpanel.org 

2 The Inspection Panel can review projects funded by the International Bank for Reconstruction and Development 

(IBRD) and the International Association for Development (IDA), the two principal arms of the World Bank that 

provide sovereign lending to governments. 3 All references in this report to fiscal year “FY” refer to the World Bank Group fiscal year, which runs from July 1 

to June 30. 

4 The increase in FY 2018 was due to a change in the way the World Bank Group allocates staff benefits in its 

budget documents. Starting in FY 2018, some benefits have been transferred to the budget of each unit. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Table 1: Inspection Panel Budget (FY 2014-FY 2019) 

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 

Salaries 1,426,332 1,218,568 1,221,536 1,276,853 1,404,454 n.a. 

Benefits 711,970 608,932 608,207 663,823 1,068,904 

Communications 

& IT Services 104,998 127,024 120,374 113,701 121,705 

Office Occupancy 176,820 176,157 174,511 174,270 188,166 

Equipment and 

Building Services 217 - 2,054 103 552 

Temporaries 59,829 13,163 7,105 45,502 47,236 

Consultants 697,392 625,269 777,605 526,721 762,977 

Travel 294,794 330,960 93,709 272,784 368,972 

Representation 

and Hospitality 14,956 7,773 11,854 11,915 14,020 

Publications 57,153 55,903 71,994 62,546 62,603 

Contractual 

Services 34,535 69,741 49,909 111,366 47,681 

Other Expenses 3,858 5,320 25,107 12,636 3,645 

Budget spent 3,582,854 3,238,810 3,463,965 3,272,220 4,090,915 

Total Budget 

Received 3,625,879 3,667,198 3,760,000 3,704,000 4,000,000+ 4,070,000+ 

+ Reflects World Bank Group increase in allocation of benefits to each unit. 

Source: Inspection Panel, March 2019. 

Caseload. The Panel’s caseload is driven by the number and types of requests it receives. When 

the Panel receives a request for inspection, it determines if it can register a complaint and if it is 

eligible for an investigation of the Bank’s compliance with its policies, requesting additional 

information from Management when it registers a case. For eligible requests, the Panel assesses 

the request and the Management’s response to the request, and makes a recommendation to the 

World Bank Board on whether to undertake an investigation of the Bank’s compliance with its 

policies. If an investigation is recommended and the Board approves, the Panel proceeds. Many 

cases span more than one year. 

As shown in Table 2, since FY 2014, the number of requests registered in a fiscal year has stayed 

around three or four. The Panel has received 133 requests since the start of FY 2014, of which 

22 were registered. During this time, the Panel issued eight Investigation Reports (three in 

response to requests received in prior years and five for investigations in response to requests 

received during this period). It is currently working on two pending investigations reports 

anticipated this fiscal year or in early FY 2020. The number of projects considered by the 

Inspection Panel is a very small fraction of the projects that the World Bank Group considers 

each year. 
 

 

 

 

 

 

 

 

 

 

 

 

 

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Table 2: Inspection Panel Caseload (FY 2014-FY 2019) 

Not-admissible 

based on initial 

review5 

Not registered6 Registered Report and 

Recommendation 

Investigation 

Report 

FY 2014 9 5 3 2 1 

FY 2015 6 5 4 2 3 

FY 2016 16 3 4 3 3 

FY 2017 18 6 3 5 0 

FY 2018 18 3 4 7 1 

FY 2019 

(expected) 

21 1 4 5 2+ 

+ One report may be in early FY 2020. 

Priorities and Recommendations. 

Functions and governance. While the Inspection Panel is the oldest and most established of the 

IAMs, it lacks some of the functions of the more-recently established IAMs at other MDBs. 

Accordingly, starting in 2017, the U.S. has supported a review of the Inspection Panel’s toolkit, 

and some modest reforms were adopted in late 2018, including the establishment of a formal 

advisory function. With this function in place, we look for the Panel’s role as a source of 

knowledge development and knowledge management to grow. 

In 2019, the United States is working with other Board members and World Bank Management 

to support a continuation of the Panel reform process. Our goal in this process is to provide the 

Inspection Panel all necessary tools to successfully address complaints, on par with IAMs at 

other MDBs. Specifically, there are three tools that the Inspection Panel does not possess that 

other IAMs do: 

• Robust monitoring of Management Action Plans.7 The Board needs the capacity to 

monitor Management’s Action Plans independently. The Inspection Panel should do this 

on the Board’s behalf, and could be done on a risk-based basis (taking into account the 

nature and severity of the case). 

• Independent dispute resolution. In some cases, the issue at hand is not necessarily a 

problem with non-compliance with Bank policy. Rather, it can be primarily a dispute 

about a project’s impacts on local people’s lives and livelihoods, and a dispute resolution 

process mediated by a neutral party would be the best means to address the problem 

expeditiously. The Inspection Panel, given its independence from Management, could 

serve as that neutral third party and earn the trust of the complainants, which is an 

essential component in successful dispute resolution. 

5 Based on its initial review, the Panel determines that the request does not meet its basic “admissibility” 

requirements. The most common reasons are that the request is related to procurement, the project is closed or 95% 

disbursed, or the requester has not approached World Bank Management to resolve the problem. 6 Based on further review, the Panel determines that the request does not meet the basic “admissibility” requirements 

and issues a notice of non-registration. 7 When the Panel completes an investigation, Management is required to prepare an “Action Plan” detailing how it 

will address the findings of an investigation. 
 

 

 

 

 

 

 

 

 

 

 

 

 

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• Inspection Panel eligibility extended. Currently, a project loses eligibility for 

Inspection Panel review after 95 percent of funds are disbursed. This constraint is the 

narrowest of all the MDBs and precludes eligibility for some projects for which harms 

materialize late in the implementation phase and there is still time to correct any 

problems. Hence, we support extending the eligibility for a period of time beyond the 

project closing date, as at other MDBs. 

Budget and staffing: While the Panel has accomplished important work with its current levels 

of funding and staff, a number of factors will likely increase the demands on the Inspection Panel 

and require additional funding and staff. These include potential new functions from the Panel 

modernization process discussed above, increased outreach, an increased number of more 

complex projects, and the Bank’s plans to increase engagement in fragile and conflict- and 

violence-affected states where project implementation is often more difficult. 

While it is difficult to predict future needs, we recommend that the Board carefully consider 

whether the Panel’s budget is keeping up with the workload, the expectations, and the 

complexity of World Bank projects. 

On balance, for the FY 2020 budget, we recommend an increase in the Panel’s budget with scope 

for commensurate additional staff, for two reasons. First, this well help ensure that the Panel is 

not being constrained by its current budget and staffing, This is clearly a risk, as shown by FY 

2018’s data where the Panel’s expenses exceeded budget. Second, this will accommodate an 

increase in the Panel’s workload associated with new functions and will send an important signal 

that the Bank is committed to the Panel and its new functions. In the longer term, we will 

advocate as needed for appropriate budget increases so that the Panel’s can satisfactorily carry 

out its tasks. 

The Compliance Advisor Ombudsman8 

Context. The CAO was established in 1999 by the Boards of the International Finance 

Corporation (IFC) 9 and the Multilateral Investment Guarantee Agency (MIGA)10, with strong 

U.S. leadership, to serve three roles: (i) to assess whether IFC/MIGA projects were consistent 

with their policies; (ii) to work with complainants to help resolve grievances about IFC and 

MIGA projects; and (iii) to provide independent advice to the IFC and MIGA President and 

Management on environmental and social issues. 

Budget. As shown in Table 3, the CAO’s expenses vary depending on its case load and specific 

activities in each year. Since FY 2014, budget has risen from $4.9 million to $6.3 million. The 

CAO has three funding sources, also reflected in Table 3. These are: 

1. A base administrative budget; 

8 www.cao-ombudsman.org 9 As part of the World Bank Group, the IFC supports development through its lending to private sector clients in 

developing countries.

10 Also part of the World Bank Group, MIGA offers political risk insurance and credit enhancement guarantees to 

investors seeking to protect their investments against political and non-commercial risks in developing countries. 
 

 

 

 

 

 

 

 

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2. A supplemental budget allocation of $475,000 (available since 2014 without conditions 

and requested if needed during the fiscal year); and 

3. The CAO’s Environmental/Social Mediation and Conflict Resolution Contingency Fund 

of up to $1 million annually, to be used for specific, multi-year requirements under 

dispute resolution, jointly funded by IFC and MIGA. 

This budget supports staff in each of the CAO’s functions -- dispute resolution, compliance 

review and advisory -- as well as its front office, for a total of 22 CAO staff in FY 2019. In 

addition, it supports a roster of mediators and consultants who are called upon as needed. 

Since 1999, the CAO’s budget has been approved by the World Bank Group President and the 

Board has not been involved. As part of the effort to increase the independence of the CAO, 

starting with the FY20 budget cycle, the President, will submit the CAO budget request to the 

Board for review, advice, and direction prior to approval. 

Table 3: CAO Budget (FY 2014-FY 2019) 

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 

(estimate) 

Salaries 1,688,869 1,738,494 1,813,978 2,337,519 2,525,668 n.a. 

Travel 991,206 627,625 639,296 541,592 390,071 

Benefits 844,434 881,610 904,232 1,178,796 1,216,101 

Consultants 788,723 726,959 1,019,865 871,681 698,904 

Contractual 

Services 

399,341 203,261 415,876 253,341 302,186 

Publications 69,431 57,741 97,617 62,338 99,543 

Communications 

& IT 

49,475 34,969 26,875 38,440 53,265 

Equipment and 

building services 

34,192 5,749 21,554 25,389 6,227 

Temporaries 23,291 41,348 53,270 60,752 55,423 

Representation 

and hospitality 

3,925 11,427 26,180 3,391 5,483 

Base and 

supplemental 

expensed 

4,892,887 4,329,182 5,018,743 5,373,239 5,352,870 

Contingency Fund 

expensed 

799,929 732,580 877,496 907,895 859,424 

Non-recurring 

expensed 

126,020+ 

Total expensed 5,692,816 5,061,762 5,896,239 6,278,237 6,338,314 6,974,000 

Base budget 

allocation 

4,519,305 4,492,901 4,827,345 5,092,849 5,178,884 5,818,000++ 

Supplement 

allocation 

398,000 0 475,000 282,869 175,000 310,000 

Contingency Fund 

allocation 

800,000 800,000 1,000,000 907,895 883,382 856,000 

Total available 5,717,305 5,292,901 6,179,841 6,283,613 6,387,266 6,984,000 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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+ FY18 non-recurring funding request: $150,000 for mediator summit, of which $126,000 was expensed. ++ Reflects World Bank Group increase in allocation of benefits to each unit. 

Source: CAO Annual Reports and CAO, March 2019 

Caseload. The CAO’s caseload is driven by the complaints it receives. For each complaint, the 

CAO assesses its eligibility11 . An eligible case then proceeds to an assessment phase which 

determines whether a dispute resolution or compliance process is initiated. In a dispute 

resolution process, the CAO works with the complainant(s) and the IFC/MIGA project sponsor 

as a neutral third party to help find joint solutions to problems. In compliance review, the CAO 

first conducts an appraisal to determine whether an investigation is merited. If so, the CAO 

conducts an investigation and delivers its findings, together with IFC/MIGA’s Management 

response and any action plan, to the President of the World Bank Group. The President clears 

the report and response/action plan for public disclosure. Starting in fall 2018, Management and 

the Board agreed that in this process, the President would submit the report to the IFC/MIGA 

Boards for review, advice, and direction. (As of this writing, only one CAO report has gone to 

the Board under the new process.) The President or Board may request IFC/MIGA Management 

develop an enhanced action plan to address the CAO’s findings. Once a dispute resolution or 

compliance process is completed, the CAO monitors implementation of the resulting agreement 

or action plan. Depending on the timing and complexity of a case, including whether it 

undergoes both a dispute resolution and compliance process, the CAO’s work on it can exceed a 

year. 

As shown in Table 4, since FY 2014, the number of new eligible cases each year has ranged 

from 9-16 per year. However, in each year, a substantial number of cases are carried over from 

the previous year. The result over the last five years has been a total annual caseload ranging 

from 46-57, with the majority of cases carried over from a previous year in monitoring. The 

volume of carried cases reflects a growth in complex cases received by CAO, most of which 

have been multi-year engagements. Complex cases involve large numbers of stakeholders and 

issues; large-scale projects or multiple dispersed projects; complex financing structures; and/or 

fragmented community groups, often in remote and conflict-affected locations. These cases are 

resource intensive, particularly while in assessment and dispute resolution, and require 

significant staff and consultant inputs. Managing this complex caseload effectively has been a 

strategic priority for CAO. 

11 The CAO has three eligibility criteria for new complaints to be accepted. The complaint: (i) relates to an existing 

IFC and/or MIGA project or one being actively considered by IFC and/or MIGA; ii) raises environmental and/or 

social concerns; and iii) is filed by an affected community member(s) or those mandated to represent them). 
 

 

 

 

 

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Table 4: CAO Caseload (FY 2014-FY 2019)12 

Fiscal 

Year 

Total 

Cases 

Handled 

Cases 

Carried 

Over 

New Eligible 

Complaints 

New 

Ineligible 

Complaints 

Cases 

Closed 

FY 2014 46 35 11 16 7 

FY 2015 51 35 16 9 12 

FY 2016 47 38 9 17 4 

FY 2017 51 39 12 17 5 

FY 2018 55 41 14 14 7 

FY 2019 

(to 

date) 

57 48 9 5 7 

Source: CAO, March 2019 

As shown in Table 5, the increase in caseload starting around FY2012 has not been matched by a 

commensurate increase in funding. 

Table 5: CAO Caseload and Budget Trends, FY 2000-FY 2018 

80 $15,000,000 

63 70 

0 

7 10 12 14 

19 

12 

17 19 18 

23 24 

33 

42 

54 52 51 55 

$0 

$3,000,000 

$6,000,000 

$9,000,000 

$12,000,000 

0 

10 

20 

30 

40 

50 

60

# of open cases 

FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16FY17FY18 

New Eligible Cases 

Expensed Contingency Fund 

Carry Over Cases 

Administrative Budget 

$1M Benchmark 

Source: CAO, March 2019. 

Priorities and Recommendations. 

Functions and governance. The CAO was established with the full suite of functions – 

compliance review (including monitoring the implementation of Management Action Plans), 

dispute resolution (including monitoring the implementation of a dispute resolution agreement), 

12 The caseload data reflect the status of cases at the end of the fiscal year, and takes into account the merging of 

related complaints into a single complaint for purposes of a compliance process. As a result, the case numbers are 

lower than if each case were counted individually and do not necessarily add up arithmetically. Every year during 

the period under review, the number of cases in compliance review has exceeded the number in dispute resolution. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

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and an advisory function. The CAO is seen as a leader among IAMs for the quality of its work. 

However, it continues to face important challenges, and the recent Jam v. IFC Supreme Court 

case has focused attention on the CAO and the broader accountability system at the IFC and 

MIGA. 

In this context, the CAO, IFC and MIGA Management, and the IFC and MIGA Board of 

Executive Directors are considering an external review of IFC and MIGA’s accountability 

system. The process is advancing and at the time of this writing we are optimistic that a review 

will take place this year that will look at the IFC’s accountability system as a whole, including 

Management’s role in addition to the CAO, and that this review will consider input from a broad 

range of stakeholders. 

Below are some key issues that IFC and MIGA and its accountability system need to consider 

and our preliminary views: 

• CAO reporting lines. The review should consider the question of whether the CAO (in 

its entirety) should report to the Board. The CAO now reports to the President of the 

World Bank Group. While this reporting line gives the CAO independence from the IFC 

and MIGA CEOs, if the CAO reported to the Board, the Board could take a stronger role 

in overseeing Management’s responses and supporting the CAO budget. While there are 

benefits to the current reporting lines, on balance, we believe that the CAO should report 

to the Board. However, to maintain the functional integrity of the CAO, we believe it 

important that the CAO’s reporting lines should not be split between the Board and the 

President. 

• Redress. The review should consider whether the IFC should do more to promote 

redress for harms done, and potentially look at whether a funding mechanism should be 

established for this purpose. The IFC could consider options for the establishment of 

contingency resources, whether on a project, client or portfolio basis. 

• Strengthening project-affected people’s engagement. The review should consider 

measures to strengthen project-affected people’s engagement in the CAO process. For 

example, IFC should consult with complainants in developing its Management Action 

Plan, and conduct better outreach to project-affected communities to be sure they are 

aware of the CAO and its services. In addition, the IFC should take a stronger position 

against retaliation for questioning or speaking out against a project; this is a broader issue 

than submission of complaints to the CAO. 

• Management responses to CAO findings. The Management should agree to respond 

systematically and thoroughly to all CAO findings so that the Management Action Plan 

reflects Management’s best effort to improve all areas of the project where CAO found 

weaknesses. 
 

 

 

 

 

 

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Budget and staffing. As noted above, the increase in the CAO’s caseload starting around FY 

2012 has not been matched by a commensurate increase in funding. The CAO has a complex 

funding structure, and a new budget process will be in place for the FY 2020 budget cycle, now 

getting underway as of the writing of this report. 

Accordingly, our immediate priorities are to use this budget cycle to evaluate the new Board role 

in the budget process, to simplify the CAO’s budget framework and to support a meaningful 

increase in CAO funding for FY 2020 over FY 2019. 

In the longer term, we plan to encourage consideration of budget and staffing issues in the 

upcoming review, with a view to ensuring that the CAO is adequately funded and staffed to 

perform its important work. 

Conclusion. 

In order to support projects that are well developed and well executed, the MDBs need to have 

strong risk assessment processes and excellent due diligence in project preparation. The United 

States is committed to advocating for such strong policies, including environmental and social 

safeguards and transparency requirements. However, in those few instances when a project does 

not follow Bank procedure or when implementation has problems, the MDBs need strong 

mechanisms to address the problems and to ensure accountability. 

The Inspection Panel and CAO play critical roles at the World Bank Group and the United States 

is committed to ensuring that they add value, that they help improve the quality of World Bank 

projects, and that they help provide some redress for individuals and communities who may be 

harmed by World Bank Group projects. The United States will pursue the priorities discussed 

above, in conjunction with other Board members. We look forward to working with interested 

members of Congress to ensure that all MDBs have world class accountability mechanisms that 

help address complainant grievances, contribute to overall risk management, foster inclusive 

development, and enhance development outcomes.