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REPORT TO CONGRESS: 

 ACHIEVEMENT OF CERTAIN POLICY GOALS WITH RESPECT 

TO TRANSPARENCY AND ACCOUNTABILITY IN THE 

MULTILATERAL DEVELOPMENT INSTITUTIONS 

MARCH 14, 2005 

This report is presented in compliance with section 581 of Division D of the 

Consolidated Appropriations Act, 2004 (Pub. L. No. 108-199), which directs the 

Secretary of the Treasury to instruct the United States Executive Director at each 

multilateral development institution (MDI) to inform his or her respective 

institution of certain policy goals pertaining to transparency and accountability 

and to use the voice and vote of the United States to achieve such goals by June 

30, 2005. The Treasury Department provided an initial report on September 1, 

2004 to the appropriate congressional committees describing the actions taken 

by each MDI to implement the policy goals as well as further actions needed. 

This report provides additional information on progress within the institutions with 

respect to the policy goals as well as further actions expected or required to 

occur to fulfill the goals. 

The MDIs covered by this requirement are: The International Bank for 

Reconstruction and Development (IBRD), the International Development 

Association (IDA), the International Finance Corporation (IFC), the Multilateral 

Investment Guarantee Association (MIGA), the African Development Bank 

(AfDB), the African Development Fund (ADF), the Asian Development Bank 

(AsDB), the European Bank for Reconstruction and Development (EBRD), the 

Inter-American Development Bank (IADB), and the Inter-American Investment 

Corporation (IIC). For the purpose of this report, the IBRD and IDA will be 

treated as one institution (the World Bank) and the African Development Fund 

will be subsumed under the African Development Bank. The IBRD, IDA, IFC and 

MIGA together are referred to as the “World Bank Group”. The policy goals 

covered by section 581 are listed in Annex A. 

As was stated in the September report, the transparency and accountability 

objectives established in section 581 are an integral part of the Treasury 

Department’s efforts to fight corruption in the use of funds by the MDIs and to 

provide the public with more information on how these institutions operate and 

the results they achieve. Treasury’s efforts are focused on three levels. First, at 

the institutional level, we are focused on improving the functioning of MDI 

investigative mechanisms, whistleblower protections, corporate procurement and 
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internal control processes for internal auditing - and increasing the disclosure and 

accountability of MDI operations. Second, at the project level, we are focused on 

encouraging the MDIs to conduct analyses and design projects that help reduce 

opportunities for corruption, to strengthen fiduciary standards, improve project 

supervision and disclose results. Third, at the country level, we focus on 

enhancing the transparency and accountability of recipient countries' governance 

systems and improving the disclosure of MDI operations and analyses to affected 

communities. With respect to this last category, the Treasury Department 

provides considerable information to Congress in accordance with Section 803 

(b) (1) of Public Law 106-429, Foreign Operations, Export Financing and Related 

Programs Appropriations Act, 2001, which requires an annual report by the 

Treasury Department on actions taken by recipient countries, as a result of the 

assistance allocated to them by the multilateral development banks (MDBs), to 

strengthen governance and reduce the opportunity for bribery and corruption. 

Treasury has been working diligently to achieve the implementation of the 

Section 581 provisions. Shortly after the legislation was enacted into law, Under 

Secretary for International Affairs John Taylor sent a memo to each of the U.S. 

Executive Directors in which he conveyed the section 581 language along with a 

request that they use every appropriate opportunity to press for the goals set 

forth in that section. Since then, our Executive Directors have been working in a 

variety of ways to make progress toward these goals. This has included informal 

conversations with fellow Directors and senior management officials, as well as 

the Directors’ use of their “voice and vote” for proposals formally put before the 

Boards of Directors for discussion. We have also pushed our agenda forward in 

the context of replenishment discussions (see Annex B for pertinent language 

from the African Development Fund and IDA replenishment agreements) as well 

as through direct discussions with our counterparts in other countries, particularly 

the G-7. 

We have made considerable progress, despite the reluctance on the part of a 

number of other shareholders to join us in this effort. The reluctance is largely 

centered around two issues. One is that these measures will impede the ability 

of the institutions to deliver development assistance in an efficient and effective 

manner. There is a perception that these policy goals will add additional 

administrative burdens on top of the numerous existing requirements that weigh 

down the institutions ability to quickly deliver development assistance. The other 

is that some of these measures will impair the deliberative and frank nature of 

Board discussions. In response, we explain that these measures represent good 

corporate governance that will increase the effectiveness of the MDIs by making 

them more accountable for achieving results. Increased disclosure will also 

increase public support for their work in promoting economic growth and poverty 

reduction. 

Below is a summary of the extent to which the MDIs meet the various goals of 

section 581: 
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• All but two of the institutions (EBRD and MIGA) either disclose minutes of 

their Board meetings, have agreed to disclose minutes, or are moving forward 

with proposals to disclose minutes. 

• All MDIs keep a written transcript or electronic recording of each meeting of 

their boards and preserve the transcripts or recordings for at least 10 years 

after the meeting. 

• All MDIs have taken various measures to increase public involvement in, and 

awareness of, proposed public sector projects, strategies and policies that will 

be the subject of Board decisions. All MDIs also have rigorous procedures, 

including use of resources and conditionality, to ensure that borrowers comply 

with applicable laws. 

• All institutions either post on their website an annual report containing 

statistical summaries and case studies of the fraud and corruption cases 

pursued by their respective investigations units, have agreed to do so, or are 

moving forward with a proposal to do so. 

• All the development institutions provide information on indicators and results 

for health, education and poverty-focused projects, policies and strategies. 

All the institutions that finance such projects provide the information upon 

project completion and all but one (IADB) either provide the information 

during project execution, have agreed to do so, or are moving forward with a 

proposal to do so. 

• All but one of the institutions (AsDB) have agreed to conduct independent 

audits or assessments of internal management controls over operations and 

compliance or have begun to implement a regular process for assessing their 

internal controls systems in a manner consistent with the approach of the 

Committee of Sponsoring Organizations of the Treadway Commission 

(COSO). 

• All of the multilateral development institutions currently have in place, or are 

putting in place, procedures for the receipt, retention and treatment of 

external and internal complaints and concerns regarding fraud, accounting, 

mismanagement, internal accounting controls, or auditing matters. Where 

procedures are already in place, the institutions are constantly reviewing them 

to see if they should be improved. 

The following two sections provide information on the extent to which the MDIs 

meet the Section 581 goals. The first section organizes the information by 

institution and the second section by policy goal. A table indicating the extent to 

which each institution meets each of the seven goals is provided at the end. 
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Section I – Status of Section 581 Policy Goals by Institution

International Bank for Reconstruction and Development (IBRD) and the 

International Development Association (IDA), collectively known as the 

World Bank. 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: The World Bank Board of Directors has recently approved a revised 

disclosure policy under which the Bank will make available to the public Board 

minutes after the Board has approved the minutes. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The World Bank meets this policy goal. 

Policy Goal #3 (First part): All public sector loan, credit and grant documents, 

country assistance strategies, sector strategies, and sector policies prepared by 

the institution and presented for endorsement or approval by its Board of 

Directors, with materials deemed too sensitive for public distribution redacted or 

withheld, shall be made available to the public 15 calendar days before 

consideration by the Board or, if not then available, when the documents are 

distributed to the Board. 

Status: The World Bank does not disclose to the public internal documents 

prepared for the Board of Director’s final endorsement or approval prior to the 

Board’s consideration. Poverty Reduction Strategy Papers (PRSPs) are 

disclosed to the public prior to their consideration but these are documents 

drafted by the governments of the countries themselves, and not by the staff or 

management of the institutions. 

While the documents themselves are not released to the public prior to Board 

consideration, considerable information is made available to the public about 

proposed projects, policies and strategies. For proposed public sector projects, 

the World Bank discloses a Project Information Document which describes, in 

summary form, a project and its intended objectives. It also makes publicly 

available environmental assessments for projects that could have a significant 

impact on the environment. With respect to country assistance strategies, sector 

strategies, and sector policies, the World Bank normally makes draft policy 

documents and draft Sector Strategy Papers publicly available to facilitate a 

public consultation process. It may also do the same with draft Country 

Assistance Strategies or portions of such strategies. The feedback received 

during these consultations is regularly summarized and posted on the Bank’s 

external website, along with explanations by Bank staff on how it has been or will 

be used. A 2003 retrospective on World Bank Country Assistance Strategies 
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(CASs) showed that almost 90 percent of the strategies involved civil society in 

the “upstream” formulation process. 

The Bank has approved a pilot program to disclose operational policy reviews 

simultaneously with their distribution to the Board of Directors. The pilot is limited 

to operational policy reviews that are subject to an external consultation process. 

Management will state its intention to the Board to include an operational policy 

review in the pilot. As is current practice, external consultations will normally 

take place on the basis of the Issues Note endorsed by the Executive Directors. 

After the external consultation process, Management will prepare the draft 

operational policy review and transmit it to the Board for an informal discussion. 

This paper will also be made available to the public when it is distributed to the 

Board. After the Board discusses the policy and approves the proposed policy or 

policy revision, the finalized paper will be made available to the public. 

After the Board discussions of the first two policy reviews simultaneously 

disclosed under the pilot, Management will report back to the Board with an 

assessment of the experience. The assessment will focus on the implications for 

the Board’s deliberative process and implications for the administrative capacity 

of the Executive Director’s offices. The remainder of the pilot would proceed 

after Management reports to the Board the costs and benefits experienced from 

the first two policy reviews and after reaching agreement with the Board on the 

scope and timing of the remainder of the pilot. 

Policy Goal #3 (Second part): Such documents shall include the resources and 

conditionality necessary to ensure that the borrower complies with applicable 

laws in carrying out the terms and conditions of such documents, strategies, or 

policies, including laws pertaining to the integrity and transparency of the process 

such as public consultation, and to public health and safety and environmental 

protection. 

Status: Funds to be contributed by the recipient of Bank resources in order to 

carry out the agreed activities (or implement agreed actions) under a Banksupported project are known by Bank and its borrowers as “counterpart funds” for 

the project. The projected or estimated amount of the counterpart funds 

needed, as well as the conditions that would have to be in place to enable the 

recipient to supply such funds in a timely manner during project implementation, 

are addressed by the borrower during project preparation and carefully evaluated 

by Bank staff as part of project appraisal. Specifically, the borrower prepares a 

cost estimate and financing plan for each project. The results of the financial 

appraisal, including the financing plan for the project, are set forth in the Project 

Appraisal Document (PAD) that forms the basis for project approval by the 

Executive Directors of the Bank. The key financial covenants are also included 

in the legal agreements for the project, which are negotiated with the borrower 

and the implementing entities. 

The legal agreements between the Bank and its borrowers include a general 

covenant which states that “The Borrower declares its commitment to the 

objectives of the Project ... and, to this end, shall carry out the project with due 
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diligence and efficiency and in conformity with appropriate .... practices [including 

financial practices] and shall provide, promptly as needed, the funds, facilities, 

services and other resources required for the Project.” In addition, where based 

on the results of the appraisal, Bank staff recommend inclusion of specific 

covenants to address particular risks to the reliability of the borrower’s 

contribution to the project (e.g., specific financial covenants and the making of 

periodic budgetary transfers), these specific covenants are also included in the 

legal agreements for the project. 

During project implementation, Bank staff supervise borrower implementation of 

the project. As provided for in para 2 of OP 13.05, Project Supervision, “[p]roject 

supervision covers monitoring, evaluative review, reporting, and technical 

assistance activities” needed to, among other things, “ascertain whether the 

borrower is carrying out the project with due diligence to achieve its 

development objectives in conformity with the legal agreements.” If during 

project supervision, Bank staff ascertain that the borrower or implementing entity 

is unable or unwilling to provide the resources (or counterpart funds) needed for 

the project, this would constitute a breach of the obligations included in the 

general covenant (and, where relevant, any specific financial covenants) in the 

legal agreement. Such breach would entitle the Bank to exercise its remedies 

(including suspension and cancellation) under the legal agreements for the 

project.

To ensure that Bank support for such borrower projects achieves the maximum 

development impact and helps advance the borrower’s development agenda, it is 

important to design projects that could, to the maximum extent possible, rely and 

fit within the existing legal and regulatory framework of the borrower and avoid, 

whenever possible, covenants which cannot be performed by the borrower 

without a change in the domestic laws or regulations of the borrower. 

Therefore, during project preparation and appraisal, Bank staff assess whether 

the proposed project design relies on specific laws or regulations of the borrower. 

If so, Bank staff then assess whether there are any inconsistencies between 

such laws or regulations and the proposed project design and the development 

objectives of the project. If no inconsistencies are identified and if Bank staff 

determine that the success of the project would depend on the continuation of 

the law in question and on proper enforcement of the said law by the relevant 

borrower institutions, they may recommend that the legal agreements include 

remedies relating to such law and such entity. The Bank could then exercise 

such remedies (including suspension and cancellation) in the event the borrower 

(i) repeals the law in question or introduces changes in such law that are likely to 

undermine the project’s objectives, and/or (ii) dissolves or substantially changes 

the nature of the implementing entity in ways that undermine its ability to carry 

out the project. Where Bank staff determine that enforcement of a law that is 

central to the success of the project has been weak, they may also recommend 

that the project include institution building measures, including, where 

appropriate, technical assistance to improve the implementation and 

enforcement capacity of the relevant borrower entities. 
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In situations where Bank staff identify any inconsistencies between project 

development objectives or design and the existing laws of the Borrower, Bank 

staff, in consultation with the borrower, determine whether it makes sense to alter 

the project design to ensure a better fit with the borrower’s existing legislative 

framework or, where a reform or change of a given law makes sense from a 

development point of view, whether it is reasonable and realistic in a given timeframe to pursue such change either before the project is finalized (i.e., as a 

condition of negotiations) or, where this is not possible, during project 

implementation. In this regard, it is important to keep in mind that since 

legislative changes usually require action by the legislative branch of the 

borrower government, legal agreements between the Bank and the borrower 

cannot require the government (i.e., the executive branch) to amend existing 

legislation or enact new laws. Instead, where such change is determined 

necessary from a development point of view, and if such changes cannot be put 

in place before the project is negotiated, adoption or amendment of particular 

legislation may be made a condition of loan effectiveness or a condition of 

disbursement only. 

Bank remedies in the event of borrower non-compliance with covenants included 

in the legal documents for the loans provided by the Bank (and credits and grants 

provided by IDA) are set out in Articles VI and VII of the General Conditions that 

apply to the legal agreements concluded by the Bank. These remedies include: 

suspension, cancellation and acceleration of loan maturity. 

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: The World Bank has recently issued on its website a report containing 

statistical summaries and case studies of the fraud and corruption cases pursued 

by its investigations unit and intends to do the same on an annual basis. 

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: Among all the multilateral development institutions, the World Bank has 

taken the most aggressive approach to implementing a transparent and rigorous 

results measurement system. With respect to individual projects, the World 

Bank, upon completion of each lending operation financed by the Bank, reviews 

the results and prepares an assessment of the operation, known as an 

Implementation Completion Report (ICR). These reports are publicly available 

after they have been distributed to the Executive Directors for information. It has 

also begun to publish its annual “Status of Projects in Execution” report which 

provides information on each active project, bridging the gap on information 

available to the public between project appraisal and completion. With respect to 

policies and strategies, the Bank is increasingly setting explicit objectives in 
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these documents that can serve as a basis for monitoring and evaluating results. 

The World Bank’s initiative to implement results-based Country Assistance 

Strategies is particularly noteworthy. These documents will link results to country 

goals and require a more explicit link between individual Bank interventions, 

actions to achieve intermediate outcomes, and intermediate outcome indicators. 

The World Bank’s Operations Evaluation Department also regularly provides 

information to the public on the results of the Bank’s work at the project, sectoral, 

country and institutional levels. 

Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status: The Auditor General of the World Bank conducts audits pertaining to 

internal management controls and procedures for meeting operational objectives, 

complying with Bank policies, and preventing fraud. In addition to this internal 

auditing function, the World Bank, as indicated in a response to the 2003 General 

Accounting Office report on internal controls (GAO-03-366), is committed to 

undertaking a comprehensive assessment of the internal control systems over 

operations and over compliance with charters and policies. It has committed to 

doing this once a range of operational policy changes that are currently being 

implemented is substantially in place. President Wolfensohn expects all these 

changes to be completed in the near future. We expect that this assessment will 

be conducted in an independent manner and be reviewed and updated on a 

regular basis, and that the results will be made publicly available. The IDA 

replenishment document states that “Participants noted that Management has 

committed to carry out an independent comprehensive assessment of its control 

framework including internal controls over IDA operations and compliance with its 

charter and policies, and that such assessment would be made available to the 

public after disclosure has been approved by the IDA’s Executive Directors. 

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: The World Bank Group’s Department of Institutional Integrity (INT) has 

been designated to investigate allegations of fraud and corruption in Bank Group 

operations and allegations of staff misconduct. Besides investigations, INT also 

assists in prevention by supporting training for Bank staff to identify ways to 

detect and deter fraud and corruption in Bank Group operations. INT receives 

allegations of fraud and corruption in Bank Group operations and conducts 

preliminary inquiries to determine whether the allegations may have merit. 

Allegations of fraud and corruption may be submitted to the Bank by fax, e-mail, 

or the Bank’s website. Also, a direct telephone hotline has been set up inside the 
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Bank, with multilingual capabilities that operates 24 hours, seven days a week, 

and can be reached by Bank staff and the general public through an international 

toll-free access system. Persons who do not wish to contact the hotline in the 

Bank may contact an externally housed hotline operated by an outside firm of 

trained specialists working under strict standards of confidentiality. Information 

may be provided anonymously and all information to the hotline is turned over to 

INT for appropriate action. Whistleblower protection is also offered. In 2004, on 

the United Nations World Anti-Corruption Day, the World Bank, along with the 

other MDBs, publicly reasserted its commitment to the United Nations 

Convention Against Corruption and specifically pledged to uphold those parts of 

the convention related to the protection of whistleblowers. 

In an effort to ensure that its whistleblower protections reflect evolving best 

practices in the public and private sectors, the Bank is currently undertaking an 

independent external review of its policies to evaluate any areas for 

improvement. The U.S. strongly supports this external review and sees it as an 

opportunity to affirm the credibility of the Bank’s system for protecting 

whistleblower rights, and thus enhance its effectiveness. 
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International Finance Corporation (IFC). 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: The IFC has issued a “Concept Paper on the Review of the IFC’s 1998 

Policy on Disclosure of Information” which contains a recommendation to 

disclose the Board minutes after their approval by the Board if the IBRD Board 

decides to disclose minutes from its meetings. The revisions would be effective 

mid-2005. We intend to voice our strong support for this proposal when it comes 

to the Board for decision. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The IFC meets this policy goal. 

Policy Goal #3: All public sector loan, credit and grant documents, country 

assistance strategies, sector strategies, and sector policies prepared by the 

institution and presented for endorsement or approval by its Board of Directors, 

with materials deemed too sensitive for public distribution redacted or withheld, 

shall be made available to the public 15 calendar days before consideration by 

the Board or, if not then available, when the documents are distributed to the 

Board. Such documents shall include the resources and conditionality necessary 

to ensure that the borrower complies with applicable laws in carrying out the 

terms and conditions of such documents, strategies, or policies, including laws 

pertaining to the integrity and transparency of the process such as public 

consultation, and to public health and safety and environmental protection. 

Status: The IFC does not provide loans or credits to the public sector and does 

not have stand-alone country assistance strategies. With respect to policy issues 

deemed to involve the public interest, the IFC practice is to make draft 

documents publicly available to facilitate a public consultation process. A 

current example is the draft Policy on Social and Environmental Sustainability, 

including Performance Standards. 

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: The World Bank’s Department of Institutional Integrity (INT) is 

responsible for activities associated with the IFC. As mentioned previously, the 

World Bank Group, including the IFC, complies with this policy goal. 

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 
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and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: Due to concerns over the release of business confidential material, the 

IFC does not disclose such information on specific projects. However, in the 

context of its new information disclosure policy, the IFC is proposing to report 

publicly on aggregate development results in greater detail and in a more 

systematic manner to promote comparative and consistent analysis. 

Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status: Please refer to the information provided above for the World Bank. 

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: Please refer to the information provided above for the World Bank. 

. 
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Multilateral Investment Guarantee Agency (MIGA) 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: We expect that the MIGA Board of Directors will take up a new 

information disclosure policy upon the completion of the IFC’s information 

disclosure exercise. As with the IFC exercise, we will advocate for release of 

Board minutes. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The MIGA meets this policy goal. 

Policy Goal #3: All public sector loan, credit and grant documents, country 

assistance strategies, sector strategies, and sector policies prepared by the 

institution and presented for endorsement or approval by its Board of Directors, 

with materials deemed too sensitive for public distribution redacted or withheld, 

shall be made available to the public 15 calendar days before consideration by 

the Board or, if not then available, when the documents are distributed to the 

Board. Such documents shall include the resources and conditionality necessary 

to ensure that the borrower complies with applicable laws in carrying out the 

terms and conditions of such documents, strategies, or policies, including laws 

pertaining to the integrity and transparency of the process such as public 

consultation, and to public health and safety and environmental protection. 

Status: This provision is not applicable to the MIGA since all projects are with 

the private sector and it does not prepare any stand-alone country assistance 

strategies, sector strategies, or sector policies. 

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: The World Bank’s Department of Institutional Integrity (INT) is 

responsible for anti-fraud and corruption activities associated with the IFC and 

the MIGA, as well as the World Bank. As mentioned previously, the World Bank 

Group, including the MIGA, meets this policy goal. 

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: Due to concerns about the release of business confidential material, the 

MIGA does not disclose information on results of individual projects. 
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Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status: Please refer to the information provided above for the World Bank. 

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: Please refer to the information provided above for the World Bank. 
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African Development Bank and African Development Fund (AfDB) 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: In November 2004, the Board approved the public disclosure of the 

Summaries of Board Decisions, which are essentially equivalent to “the minutes,” 

as an addendum to the Bank Group Policy on Disclosure of Information. The 

Summaries of Board Decisions will be publicly disclosed through the Public 

Information Center, Field Offices and the Bank’s website, 60 days after the 

relevant Board meetings. Implementation will begin immediately after the 

Committee on Development Effectiveness and Audit and Finance Committee 

decide on an appropriate format for disclosure. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The AfDB meets this policy goal. 

Policy Goal #3 (first part): All public sector loan, credit and grant documents, 

country assistance strategies, sector strategies, and sector policies prepared by 

the institution and presented for endorsement or approval by its Board of 

Directors, with materials deemed too sensitive for public distribution redacted or 

withheld, shall be made available to the public 15 calendar days before 

consideration by the Board or, if not then available, when the documents are 

distributed to the Board. 

Status: The AfDB provides considerable information to the public about proposed 

projects, strategies and policies. For example, in accordance with its information 

disclosure policy, Prospective Project Briefs for public sector projects are to be 

disclosed at least 6 months prior to presentation to the Board through the Bank’s 

Public Information Center. The AfDB also makes available on its website 

environmental assessments for projects that could have a significant impact on 

the environment. With respect to Country Strategy Papers and policy papers, 

drafts will be released via the AfDB website at least 50 days prior to formal Board 

discussion. The information disclosure policy also explicitly permits staff to 

discuss operational and sectoral policy papers in draft form with institutions and 

individuals outside the Bank with specialized knowledge of specific issues (in 

particular, relevant and competent NGOs and specialized agencies of the United 

Nations). Moreover, AfDB President Kabbaj informed Treasury in January that 

management plans, in accordance with the AfDF replenishment agreement, to 

submit a proposal for Board consideration to make available to the public project 

appraisal documents 15 days before consideration by the Board or when the final 

versions are distributed to the Board. The U.S. Executive Director will actively 

support this proposal. 
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Policy Goal #3 (second part): Such documents shall include the resources and 

conditionality necessary to ensure that the borrower complies with applicable 

laws in carrying out the terms and conditions of such documents, strategies, or 

policies, including laws pertaining to the integrity and transparency of the process 

such as public consultation, and to public health and safety and environmental 

protection. 

Status: All projects require a legal contract between the AfDB and the recipient of 

the Bank’s funds. These contracts include clauses that require the recipients to 

meet all their legal and financial commitments, which include compliance with 

applicable laws and adherence to appropriate public health and environmental 

protection standards. 

When designing and appraising projects, staff review the existing country policy 

and legal framework to assess the environment under which the project will be 

implemented. If some of the policies and laws need updating or reformulating, 

these will be included under the loan conditionalities. Overall, staff identify and 

know which policies or laws are relevant and applicable to each of the projects 

financed by the Bank. Follow-up action is done during supervision and mid-term 

review missions. In general, any terms and conditions associated with 

compliance with respect to the Bank's Environmental and Social Safeguards 

(e.g., implementation of a project’s Environmental and Social Management Plan 

(ESMP) or Resettlement Action Plan) is reflected in the ESMPs that are required 

to be prepared by the Borrowers for all environmental Category 1 & 2 projects. 

The ESMPs incorporate the elements of costs associated with the Borrowers' 

commitments to implement the loan covenants, e.g., cost for resettling displaced 

persons according to the Bank's Policy on Involuntary Resettlement. These 

costs, to the extent they are not covered by the Borrowers’ own budgets, are 

included in the Bank's loans. With respect to the public consultation processes 

for an environmentally sensitive project, costs are incurred during the 

Environmental and Social Impacts Assessment (ESIA) process and are borne by 

the Borrower. Any costs associated with consultations during the project 

implementation or project operations are included in the cost of implementation 

of the ESMP. 

Bank-financed projects have to meet criteria of quality at entry and during 

implementation. These criteria include the existence of national laws and 

legislation that promotes the sustainability of project activities. Such laws could 

be on health and transport safety, environmental protection, resettlement 

regulations and compensation processes, and the rights of individuals and 

communities who will be beneficiaries of Bank supported projects. 

During project supervision and mid-term review missions, Bank staff ascertains 

compliance with the provisions of the laws, including laws safeguarding the 

environment. Failure to comply will lead to suspension of disbursements. 
16

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: Following Board approval in early 2004 of the Guidelines for Preventing 

and Combating Corruption and Fraud in Bank Group Operations, Management 

has presented to the Board a proposal for the establishment of a separate anticorruption and fraud investigation unit. We have asked that it issue annual 

statistical summaries and case studies of the fraud and corruption cases pursued 

by the Anti-Corruption and Fraud Investigation Division (ACFD). If the Board 

approves the proposal as expected in the first half of 2005, the ACFD should 

become fully operational in early 2006 and the U.S. Executive Director will 

request that the first report be produced in 2006 to cover 2005 activities and that 

it be made available on the Bank’s website. 

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: The African Development Bank is in the process of implementing a new 

results measurement framework system at the project, sector, country and 

institutional levels. Using data from this system, the Bank provides information 

on results of individual projects upon completion and annually provides 

aggregate results of all the projects. With respect to policies and strategies, the 

AfDB, with our urging and support, is increasingly setting explicit objectives in 

these documents that can serve as a basis for monitoring and evaluating their 

results. Beginning in 2005, the new cycle of Country Strategy Papers will be 

results-based. The AfDB’s Evaluation Department also makes available to the 

public its reviews of the results of the Bank’s work at the project, sectoral, country 

and institutional levels. The AfDF replenishment document calls for the Bank to 

publish on its website specific indicators and results of projects and programs, 

both periodically during the execution and at their completion. 

Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status: The Auditor General conducts audits pertaining to internal management 

controls and procedures for meeting operational objectives, complying with Bank 

policies, and preventing fraud. The U.S. Executive Director has urged the 

institution to develop a plan for conducting and making publicly available 

independent comprehensive audits of management controls over operations and 

compliance. In response to U.S. requests, the Director of the independent 

Operations Evaluation Department (OPEV) has committed to undertake the first 

comprehensive review of the Bank’s project and program supervision systems in 
17

2005. This review, which is in the OPEV work program for 2005 and which will 

be made public, is expected to include an assessment of management controls 

over operations and compliance. 

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: The AfDB has established procedures for receiving and investigating 

allegations of fraud and corruption. If a Bank staff member, or any other 

employee under contractual duty to the Bank, its borrower, contractor or supplier, 

uncovers evidence or receives written allegations of corruption and/or fraudulent 

practice in a Bank-financed operation, that person is obligated to report in good 

faith such information, regardless of its source, immediately but no later than 72 

hours after learning of such occurrence. 

According to the U.S. Executive Director’s office, the current system is ad hoc 

and essentially involves passing allegations via e-mail or letter to the Internal 

Audit Department (AUDT) Director or Operations Directors for information and 

possible action. The AUDT Director can recommend to the President of the 

Bank Group that an investigation be conducted but the AUDT Director does not 

have authority to undertake investigations without prior approval from the 

President. The AUDT Director might recommend to the President that an 

investigation be undertaken based on an allegation or the results of normal 

internal and project audits that raise questions that cannot be answered without 

further investigation. 

Over the past two years, the USED’s office has led the Board in pushing for the 

establishment of an anti-corruption and fraud investigative unit, including a 

hotline and whistleblower protections. Proposals to establish these mechanisms 

are now under consideration by the Board (see policy goal #4), and the U.S. has 

made extensive comments and suggested changes, consistent with the best 

practices in the other multilateral development banks, to improve the efficiency of 

the new structures. If the investigation mechanism is adopted with the proposed 

U.S. modifications, it will be effective and will be among the most important 

institutional reforms in the recent history of the Bank. 
18

Asian Development Bank (AsDB) 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: The Asian Development Bank has proposed a change to its current 

disclosure policy that would result in the posting of the minutes of its Board of 

Directors meetings on its website. This proposal is part of a number of proposed 

enhancements set out in its “Draft Public Communications Policy” dated 

December 23, 2004. The U.S. Executive Director has expressed his strong 

support for this change. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The AsDB meets this policy goal. 

Policy Goal #3 (first part): All public sector loan, credit and grant documents, 

country assistance strategies, sector strategies, and sector policies prepared by 

the institution and presented for endorsement or approval by its Board of 

Directors, with materials deemed too sensitive for public distribution redacted or 

withheld, shall be made available to the public 15 calendar days before 

consideration by the Board or, if not then available, when the documents are 

distributed to the Board. 

Status: The AsDB does not disclose to the public, prior to the Board’s 

consideration, the documents prepared for the Board final endorsement or 

approval. While these documents are not currently released to the public prior to 

Board consideration, considerable information is made available to the public 

about proposed projects, strategies and policies. For proposed projects, the 

AsDB releases a Project Profile on its website which describes, in summary form, 

the project and its intended objectives. The AsDB also makes available 

environmental assessments for projects that could have a significant impact on 

the environment. Draft strategy and policy papers are generally made publicly 

available for external consultations. The proposed new communications policy 

makes it clear that the AsDB would actively seek participation of its shareholders 

and other interested individuals and organizations during the formulation of policy 

and strategy papers, particularly in sector, thematic, and safeguard areas. The 

Bank would make publicly available a list of policies and strategies it expects to 

review during the next 12 months and, where applicable, a consultation plan for 

each policy or strategy review. With respect to country strategy and program 

documents, the AsDB and the concerned government are expected to provide 

information to in-country stakeholders while the documents are under 

preparation. This information may be communicated in the form of draft Country 

Strategy Papers (CSPs), excerpts of draft CSPs, discussion or issue documents, 

or oral communication, as deemed appropriate by the Bank. During the Board’s 
19

recent discussion of the draft Public Communications Policy (PCP) the U.S. 

Executive Director strongly advocated for circulation of public sector project 

documents, country assistance strategies, sector strategies and sector policies 

15 days prior to their consideration by the Board or when the final version is 

distributed. The Board will consider the draft PCP in the coming months. 

Policy Goal #3 (second part): Such documents shall include the resources and 

conditionality necessary to ensure that the borrower complies with applicable 

laws in carrying out the terms and conditions of such documents, strategies, or 

policies, including laws pertaining to the integrity and transparency of the process 

such as public consultation, and to public health and safety and environmental 

protection. 

Status: The Bank’s Office of the General Counsel (OGC) lawyers participate with 

regional department staff in country teams, project and program fact-finding and 

appraisal missions, and conduct due diligence, to identify local legislation 

relevant to AsDB’s portfolio in countries or sectors, projects or programs. This 

helps ensure AsDB considers local legal conditions in its financed projects, or 

engages local counsel as consultants to provide appropriate information. 

Both Special Operations and Ordinary Operations loan regulations and all loan 

agreements require the borrower to use the loan proceeds only for agreed 

project purposes in compliance with local laws and AsDB policies. In the case of 

safeguard policies, loan agreements provide that AsDB policy prevails in the 

event of any conflict between an AsDB policy and the national law. This is often 

especially relevant in the area of resettlement. 

Private sector loan agreements include a covenant on compliance with all 

relevant local laws and regulations. Noncompliance with this covenant can result 

in a default. 

For a loan to become effective, the AsDB requires a legal opinion from the 

borrower, and from states, provinces or independent agencies (such as a 

regulator) if they are involved as borrowers or executing agencies, that states the 

loan documents are legal and binding on the borrower and executing agencies. 

The attorney general or equivalent of a borrowing country or a state or province, 

and the general counsel or outside counsel to an independent agency normally 

provides these opinions. 

Increasingly, AsDB projects are establishing a role for civil society to incorporate 

redress mechanisms before project implementation and to ensure good 

governance and compliance with local laws. Also, with Regional Departments, 

the OGC identifies areas of legislation and regulation for technical assistance 

and investment projects, including ways to improve enforcement of laws (e.g., 

capacity building for the judiciary and for regulators in sectors relevant to the 

AsDB’s portfolio). 

The AsDB reviews compliance with loan covenants when administering projects 

and programs. Depending on the extent of the law reform-related components, 

the OGC will either participate in review missions or review mission reports to 
20

assess compliance with loan agreement covenants, including those on relevant 

local laws and regulations. 

The AsDB has a variety of remedies available under the applicable loan 

regulations and the project or program specific loan agreement to address 

noncompliance. Loan regulations provide for suspending, canceling and 

accelerating maturity of loans in cases of noncompliance. Events that can lead 

AsDB to take any of these actions include, among other things, failure to comply 

with any covenant, and where fraud and corruption is involved. For individual 

projects and programs, additional specific events (e.g., dissolution of a stateowned enterprise, or rescission of a relevant regulation) are added to events that 

may trigger suspending, canceling and accelerating maturity of the particular 

loan. 

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: The AsDB meets this policy goal. 

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: The AsDB has a results measurement framework system at the project 

level and has begun to strengthen its results measurement framework system at 

the sector, country and institutional levels. Using data from the results 

measurement system, the Bank provides information on results of individual 

projects upon completion and annually provides aggregate results during 

execution. The proposed new AsDB communications policy would require the 

disclosure of results on individual projects during execution through a Project 

Implementation Document. With respect to policies and strategies, the AsDB, 

with our urging and support, is increasingly setting explicit objectives in these 

documents that can serve as a basis for monitoring and evaluating their results. 

The AsDB’s Evaluation Department also makes available to the public its reviews 

of the results of the Bank’s work at the project, sector, country and institutional 

levels. 

Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status: The Auditor General of the AsDB conducts audits of internal 

management controls and procedures for meeting operational objectives, 

complying with Bank policies, and detecting and preventing fraud. The Bank 

does not currently have a plan for conducting independent audits of management 
21

controls over operations and compliance. However, in 2003 its Operations 

Evaluations Department conducted a special study of the Bank’s project 

performance management system which is available on the Bank’s website1

. 

The study assessed the efficiency, quality and use of the AsDB’s Project 

Performance Monitoring System (PPMS) to determine if the PPMS provides 

accurate and useful information on the effectiveness and efficiency of operations. 

In addition to the assessment, the study provided a number of recommendations 

on ways the system could be improved. Treasury will advocate for this study to 

be updated on a regular basis, and expanded to include an assessment of the 

system for ensuring compliance with policies, plans, procedures, laws and 

regulations as well as the one for ensuring the effectiveness and efficiency of 

operations. It should also be noted that the most recent Draft Public 

Communications Policy welcomes external involvement in monitoring internal 

management controls. 

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: The AsDB has established procedures for receiving and investigating 

allegations of fraud and corruption. Bank staff are required to report all 

allegations of fraud or corruption in AsDB-financed projects or among its staff. 

Reporting procedures for both internal and external sources are clearly spelled 

out, and reports may be filed by e-mail, facsimile (fax), mail, in person, or by 

telephone. When reporting on fraud, detailed information is required, insofar as 

possible, including who, what, when, where, why, and how. Any investigation 

based on reported allegations is to be conducted with the utmost confidentiality 

and discretion, and the Bank utilizes a range of measures to protect 

whistleblowers. Information reporting mechanisms in the AsDB include the use 

of a special telephone line that reaches all members of the Anti-corruption Unit 

simultaneously. There is also a secured facsimile and a special e-mail address 

for the Anticorruption Unit. The U.S. Executive Director has stated that he 

believes these AsDB mechanisms are effective. 

 

1

 Asian Development Bank, “Special Evaluation Study on Project Performance Management in the Asian 

Development Bank and its Projects in Developing Member Countries,” November, 2003. 
22

European Bank for Reconstruction and Development (EBRD) 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: In the most recent review of the EBRD’s implementation of its Public 

Information Policy, the U.S. Executive Director recommended that the EBRD 

permit disclosure of the minutes of its Board meetings. However, his proposal 

did not receive any support from other Board members. The U.S. Executive 

Director opposed the Public Information Policy because it was not progressive 

enough in several areas of disclosure, including release of Board minutes. He 

continues to urge adoption of this policy at every appropriate opportunity. When 

all the other MDIs have this practice in place, the EBRD Board might be 

persuaded to take action by adopting best practices in this area. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The EBRD meets this policy goal. 

Policy Goal #3 (first part): All public sector loan, credit and grant documents, 

country assistance strategies, sector strategies, and sector policies prepared by 

the institution and presented for endorsement or approval by its Board of 

Directors, with materials deemed too sensitive for public distribution redacted or 

withheld, shall be made available to the public 15 calendar days before 

consideration by the Board or, if not then available, when the documents are 

distributed to the Board. 

Status: The EBRD does not disclose to the public internal documents prepared 

for the Board of Directors’ final endorsement or approval prior to the Board’s 

consideration. While these documents are not released to the public prior to 

Board consideration, considerable information is made available to the public 

about proposed projects, strategies and policies. For proposed projects, the 

EBRD releases a Project Summary Document on its website which describes, in 

summary form, the project and its intended objectives. These are released at 

least 30 days prior to Board consideration for private sector projects and 60 days 

prior to Board consideration for public sector projects. For projects that could 

have a significant impact on the environment, the EBRD also requires 

environmental impact assessments, which must be made public 60 days in 

advance of Board consideration (120 days for public sector projects). Draft 

strategy and policy papers are generally made publicly available for external 

consultations. Under the EBRD Public Information Policy, all (draft) Sectoral 

Policies, after pre-Board discussion by the Directors, are posted on the Bank’s 

Web site for a period of 45 calendar days, during which time the public is invited 

to send comments on the policy. Furthermore, Management proactively 

stimulates stakeholders’ interest in, and contributions to, the drafting of these 
23

policies and the comments are summarized and distributed to Directors before 

approval of the relevant policy. With respect to Country Strategies, comments 

are invited from the public as input to the preparation of each new (draft) 

strategy. This input is on the basis of the existing Country Strategy, already 

available on the Web site, and an accompanying management note outlining the 

main areas to be focused upon in the Review. 

Policy Goal #3 (second part): Such documents shall include the resources and 

conditionality necessary to ensure that the borrower complies with applicable 

laws in carrying out the terms and conditions of such documents, strategies, or 

policies, including laws pertaining to the integrity and transparency of the process 

such as public consultation, and to public health and safety and environmental 

protection. 

Status: The EBRD undertakes a financial due diligence process before pursuing 

any transaction. Part of that initial due diligence involves reviewing a borrower or 

client’s audited financial reports and management letters, which enables the 

EBRD to determine the financial condition of a company, including its ability to 

fulfil terms and conditions of an operation. 

The monitoring phase of a project begins immediately after Board approval and 

continues throughout the physical implementation of an EBRD project and the 

beginning of commercial operations and continues until repayment in full or, for 

an equity position, divestment. EBRD staff prepare detailed monitoring reports 

based on quarterly client reports and, where relevant, field visits and annual 

financial statements. These monitoring reports are first done six months after 

signing and at six-month intervals thereafter. Monitoring reports may take place 

quarterly if a previous report indicates a serious deterioration in a project’s 

performance. In addition, at each loan drawdown or interest rate rollover period, 

a borrower has to report that it is compliant with covenants at that time. If it is 

not, a borrower must report the violation(s). The EBRD has regular contact with 

respective government authorities and would be informed through that channel, 

as well. 

Environmental supervision is undertaken while an operation is being monitored 

by the EBRD. As part of the legal documentation associated with a project, the 

Bank normally requires an Environmental Action Plan to which the project 

sponsor commits. Environmental monitoring is undertaken in a number of ways, 

through routine reporting and emergency notification (with regard to 

environmental accidents or fatalities/safety accidents). For more complex 

projects or where there are sensitive issues, Environment Department staff also 

undertake site visits, and independent audits are often required periodically 

throughout the EBRD's involvement in the project. 

The Bank’s Operations Administration Unit has the responsibility to certify that 

material loan conditions have been met prior to disbursement of EBRD funds. 

Any breach of a loan covenant triggers an internal review procedure involving IS 

several divisions of the EBRD, including the General Counsel’s office. If there is 

a breach of a loan condition, EBRD has several remedies. A borrower’s failure to 
24

meet loan conditions or covenants could render a contract null and void and 

could lead EBRD to call or accelerate repayment of the loan. Depending upon 

the circumstances, EBRD could waive the condition or defer the condition to a 

certain date in the future, or require the borrower to undertake remedial 

measures. Since the environmental requirements, including the Environment 

Action Plan, are part of the legal documentation and covenanted by the client, 

the recourse on environmental and safety conditions is the same as it is with 

respect to other conditions in the legal documentation. 

Urged strongly by the U.S., the Audit Committee has been increasingly interested 

in the process of assessing the systems in place for ensuring compliance with 

these legal covenants. As a result, the EBRD now informs the Board of the 

issuance of any waivers of material conditions. 

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: Management has approved in principle the production and publication of 

an anti-corruption report. The Chief Compliance Officer is currently putting 

together an internal working group which will meet to consider the scope and 

format of such a report, and the U.S. Executive Director has requested that 

statistical summaries and case studies of fraud and corruption cases pursued by 

its investigations unit be part of it. 

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: As an institution focused predominantly on promoting private sector 

activity, the EBRD generally does not finance health, education, and povertyfocused projects. With respect to results measurement, the EBRD has a 

thorough results measurement framework system at the project level. However, 

since the majority of EBRD projects are with the private sector, release of 

project-specific information is constrained by obligations not to release businessconfidential information. Nonetheless, the EBRD endeavors to provide indicative 

information through aggregate information, case studies, and analysis of selected 

projects. The EBRD’s Evaluation Department publishes on the EBRD website its 

annual report as well as other special reports. 

Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status: The Internal Audit office of the EBRD conducts audits pertaining to 

internal management controls and the procedures for meeting operational 
25

objectives, compliance with Bank policies, and the prevention of fraud. The 

EBRD Management has begun to implement a regular process for assessing its 

internal controls systems in a manner consistent with the approach of the 

Committee of Sponsoring Organizations of the Treadway Commission (COSO). 

The 2004 Annual Report will include management's assertion letter on the 

effectiveness of these internal controls and the external auditor’s attestation 

letter. The Bank has established a COSO and Operational Risk Management 

Unit to oversee the system’s functioning. The plan is to implement this in a 

sequential manner, first addressing internal controls over external financial 

reporting and subsequently addressing the Bank’s operational risk policies. 

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: The EBRD has established procedures for receiving and investigating 

allegations of fraud and corruption. The EBRD’s Office of the Chief Compliance 

Officer handles all matters relating to fraud and corruption. Under current 

practice, any person within or outside the Bank may report suspected fraud and 

corruption in the EBRD and EBRD-financed projects. Also, allegations regarding 

misconduct of Bank officials, employees or consultants in Bank operations are to 

be reported. Such reporting can be made either by calling a hotline number or by 

submission of a written report. The hotline number for reporting allegations is 

operated by an independent contractor under the strictest confidentiality. The 

hotline is accessible from all member countries of the Bank. Reports can be 

made in any official language of the Bank or of the Bank's countries of operation. 

However, calls to the hotline number will be answered in English, with interpreter 

services made available. The Bank is responding to doubts raised about the 

effectiveness of its procedures by reviewing its whistleblower policy with the 

expectation of strengthening, where necessary, the protection of whistleblowers. 

The United States has strongly encouraged the management to, at a minimum; 

adopt the best practices in place at the other MDIs. This work is being facilitated 

through continued coordination among the various investigative functions and 

units. 
26

Inter-American Development Bank (IADB) 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: The IADB meets this policy goal. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The IADB meets this policy goal. 

Policy Goal #3 (first part): All public sector loan, credit and grant documents, 

country assistance strategies, sector strategies, and sector policies prepared by 

the institution and presented for endorsement or approval by its Board of 

Directors, with materials deemed too sensitive for public distribution redacted or 

withheld, shall be made available to the public 15 calendar days before 

consideration by the Board or, if not then available, when the documents are 

distributed to the Board. 

Status: The IADB does not disclose to the public internal documents prepared 

for Board of Directors’ final endorsement or approval prior to the Board’s 

consideration. While these documents are not released to the public prior to 

Board consideration, considerable information is made available to the public 

about proposed projects, strategies and policies. For proposed projects, the 

IADB releases a Project Concept Document on its website which describes, in 

summary form, the project and its intended objectives. The IADB also makes 

available to the public environmental assessments for projects that could have a 

significant impact on the environment. Draft strategy and policy papers are 

generally made publicly available for external consultations. Under the new 

IADB information disclosure policy, profiles or draft versions of the text of 

proposals for new or modified sector policies, sector strategies and sector 

guidelines may be made available to the public during the process of preparation 

by Bank staff of such proposals, for purposes of gathering opinions and input 

from institutions and individuals outside the Bank. The IADB has developed a 

webpage specifically for the purpose of soliciting input into proposed strategy and 

policy papers. With respect to country strategies, the current Board-approved 

guidelines urge a systematic effort to reach out to non-government parties such 

as the private sector, labor, civil society, and academia, in the early stages of 

their preparation to ensure that the strategy captures as comprehensive a 

societal view as possible.

Policy Goal #3 (second part): Such documents shall include the resources and 

conditionality necessary to ensure that the borrower complies with applicable 

laws in carrying out the terms and conditions of such documents, strategies, or 

policies, including laws pertaining to the integrity and transparency of the process 
27

such as public consultation, and to public health and safety and environmental 

protection. 

Status: To verify that the borrower has complied with local funding obligations, 

the Bank makes the first disbursement of the loan conditioned on the borrower 

demonstrating that it has allocated sufficient resources to cover, at least during 

the first calendar year, the execution of the project in accordance with an 

investment schedule. After the first calendar year following the initiation of the 

project and during the period of its execution, the borrower must demonstrate to 

the Bank (in the first 60 days of each calendar year) that it will have available, 

when needed, the resources to make the local contribution to the project during 

that year. Overall, the borrower must maintain records that show the amount of 

resources needed to comply with local funding obligations. The borrower must 

submit to the Bank, prior to the first disbursement of the loan and annually 

thereafter, acceptable evidence that it has allocated sufficient local funds to 

complete the execution of the project. Appropriation of funds for a particular 

project in the borrower’s official budget followed by their inclusion in the detailed 

annual investment schedule has been accepted by the Bank as evidence of 

compliance with local funding obligations. Non-compliance entitles the Bank to 

terminate the loan contract within 180 days from its effective date. 

Prior to issuing each call for public tendering or the acquisition of goods for the 

initiation of the construction works, the borrower must submit to the Bank for 

consideration: the general plans, specifications, budgets, and other documents 

required for the acquisition or the construction; and in the case of works, 

evidence that it has the right of legal possession, easements or other rights 

necessary to initiate construction on the real property as well as the riparian 

rights required for the respective works. The borrower must meet the conditions 

that the project shall be executed with due diligence in conformity with sound 

financial and technical practices in accordance with the plans, specifications, 

investment schedule, budgets, regulations, and other documents approved by 

the Bank. The borrower is required to inform the Bank and obtain its written 

consent whenever there are modifications of legal provisions that may affect the 

project. The loan contracts do not provide for any specific remedies in case of 

non-compliance by the borrower with local legislation; however, if a specific 

requirement under local legislation happens to be a requirement under the loan 

contract then the Bank can avail itself of any of the remedies set forth in the 

contract related to non-compliance. 

The IADB’s Country Office is responsible for supervising and monitoring the 

administration and disbursements of Bank approved projects. Its responsibilities 

include the review and approval of compliance with all contractual conditions of 

loan contracts and financing agreements and the technical, institutional and 

financial monitoring of the project, through project and institutional visits. 
28

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: The Office of Institutional Integrity plans to release the Annual Fraud and 

Corruption Report, which will include statistics and case studies, at the end of 

March 2005. 

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: The IADB has a results measurement framework system at the project 

level and has begun to strengthen its results measurement framework system at 

the sector, country and institutional levels. Using data from this system, the Bank 

provides information on results of individual projects upon completion and 

annually provides aggregate results during execution. With respect to policies 

and strategies, the IADB, with U.S. urging and support, is increasingly setting 

explicit objectives in these documents that can serve as a basis for monitoring 

and evaluating project results. The IADB’s Office of Evaluation and Oversight 

also makes available to the public its reviews of the results of the Bank’s work at 

the project, sectoral, country and institutional levels. The U.S. Executive Director 

has requested that the IADB begin to issue a report on the status of projects in 

execution modeled after the report issued by the World Bank. 

Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status: The Auditor General of the IADB conducts audits pertaining to internal 

management controls and procedures for meeting operational objectives, 

complying with Bank policies, and preventing fraud. In addition to this internal 

auditing function, last year the IADB, through its independent Office of Evaluation 

and Oversight, conducted an evaluation of the use of the Bank’s supervision 

instruments and assessed the extent to which they comply with the requirements 

established in Bank manuals and standards and how these instruments relate to 

the management risks associated with the execution of operations and to the 

internal control systems2

. Building on this experience, the Board of Directors has 

recently approved a new lending framework that requires periodic and publicly 

available, independent assessments of the internal control systems over 

operations and compliance. 

 

2

 Office of Evaluation and Oversight, Inter-American Development Bank, “The Project Supervision 

System: An Evaluation of Use of its Instruments” (RE-293). April 13, 2004. 
29

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: The IADB has established procedures for receiving and investigating 

allegations of fraud and corruption. The IADB’s Office of Institutional Integrity 

(OII) is the central unit responsible for the detection, investigation and prevention 

of fraud, waste, abuse and misconduct. The OII’s Chief reports directly to the 

President of the IADB. OII is responsible for receiving and investigating 

allegations of corrupt or fraudulent activities or unethical behavior involving Bankfinanced activities or Bank staff. Allegations may be reported to OII in person, by 

telephone, by e-mail, by facsimile, by regular mail, or through the allegations 

forms on its website. The Bank has a staff rule that provides protection for 

whistleblowers and witnesses. This staff rule strictly prohibits retaliation against 

any staff member for reporting an allegation of fraud or corruption or a violation of 

a law or rule or regulation of the Bank. Moreover, requests for confidentiality or 

anonymity when presenting an allegation will be honored. OII staff is also 

available to provide counseling on matters related to these issues. OII also plans 

to develop training and proactive prevention programs to deter fraud and 

corruption before they occur. Despite the existence of all these procedures, 

outside parties continue to express serious doubts about their effectiveness. 

These doubts, in and of themselves, discourage the use of existing mechanisms. 

As a result, the newly-created OII continues to review its procedures for handling 

allegations of fraud and corruption with the objective of instituting best practices 

for international organizations. Much of this work is being undertaken through 

consultations among the multilateral development bank investigative functions 

and units. 
30

Inter-American Investment Corporation (IIC) 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of the 

institution approves the minutes of a Board meeting, the institution shall post on 

its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: The IIC does not currently release the minutes of its Board meetings. 

The United States is working through the U.S. Executive Director to propose 

modifications to the current IIC information disclosure policy that would, among 

other things, include release of the Board minutes and have these modifications 

discussed by the Board in 2005. The IIC is in the process of reviewing its current 

Disclosure of Information Policy to broaden the scope of the information available 

to the public, based on the principle that information concerning the IIC and its 

activities will be made public in the absence of a compelling reason for 

confidentiality. If approved as proposed, under the new Disclosure of Information 

Policy: (a) minutes of the meetings of the Board of Executive Directors will be 

made available to the public within 60 days of being approved; and (b) the 

Environmental Impact Assessments for Category IV projects will be made public 

at least 120 days prior to final Board approval. 

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: The IIC meets this policy goal. 

Policy Goal #3: All public sector loan, credit and grant documents, country 

assistance strategies, sector strategies, and sector policies prepared by the 

institution and presented for endorsement or approval by its Board of Directors, 

with materials deemed too sensitive for public distribution redacted or withheld, 

shall be made available to the public 15 calendar days before consideration by 

the Board or, if not then available, when the documents are distributed to the 

Board. Such documents shall include the resources and conditionality necessary 

to ensure that the borrower complies with applicable laws in carrying out the 

terms and conditions of such documents, strategies, or policies, including laws 

pertaining to the integrity and transparency of the process such as public 

consultation, and to public health and safety and environmental protection. 

Status: This provision is not applicable to the IIC since all projects are with the 

private sector, and the IIC does not prepare any stand-alone country assistance 

strategies, sector strategies, and sector policies. 

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: The IADB Office of Institutional Integrity, which covers the IIC as well as 

the IADB, plans to release the Annual Fraud and Corruption Report, which will 

include statistics and case studies, at the end of March 2005. 
31

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: The IIC works solely with private sector businesses. Due to concerns 

about the release of business confidential material, the IIC does not publicly 

disclose detailed information on specific projects. 

Policy Goal #6: The institution shall establish a plan and schedule for conducting 

regular, independent audits of internal management controls and procedures for 

meeting operational objectives, complying with Bank policies, and preventing 

fraud, and making reports describing the scope and findings of such audits 

available to the public. 

Status:. The IIC recently created a Policy and Internal Controls Committee with 

the mandate to steer the development of a comprehensive and coherent set of 

formal operating documents and internal control systems. The Committee 

convenes on a monthly basis to review and create governing documents relating 

to the IIC’s operational objectives. In addition, the Committee is currently 

focusing on bolstering the IIC’s controls over external financial reporting and 

compliance with its Charter and other governing policies. The IIC is in the 

process of requesting bids from independent auditing firms, excluding the current 

external auditors to avoid a conflict of interest, in order to select, by the end of 

the first quarter, a firm that will perform an independent audit of internal 

management controls for 2005.

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: Allegations of fraud and corruption at the IIC are handled by the IADB’s 

Office of Institutional Integrity. Please refer to the status of Policy Goal #7 for the 

IADB for more information. 
32

Section II – Status of Section 581 by Each Policy Goal 

Policy Goal #1: No later than 60 calendar days after the Board of Directors of 

the institution approves the minutes of a Board meeting, the institution shall post 

on its website an electronic version of the minutes, with material deemed too 

sensitive for public distribution redacted. 

Status: 

Almost all of the MDIs now disclose minutes of their Board meetings or will begin 

to do so in the near future. The exceptions are the private sector institutions 

(EBRD, IFC, MIGA and IIC). At the EBRD, the U.S. has continued to advocate 

for the release of Board minutes, but has not received support from the other 

members. The International Finance Corporation (IFC) and the Inter-American 

Investment Corporation (IIC) are both scheduled to review their disclosure 

policies in the near future, and we expect that disclosure of minutes will be part of 

this. We also expect that this issue will be discussed by the MIGA Board after 

the IFC Board has concluded its deliberations, and we will then and once again 

advocate for disclosure of MIGA Board minutes. 
33

Policy Goal #2: The institution shall keep a written transcript or electronic 

recording of each meeting of its Board of Directors and preserve the transcript or 

recording for at least 10 years after the meeting. 

Status: 

Based on information made available to us by the institutions, each MDI keeps a 

written transcript or electronic recording of each meeting of its board and 

preserves the transcripts or recordings for at least 10 years after the meeting. 
34

Policy Goal #3 (First part): All public sector loan, credit and grant documents, 

country assistance strategies, sector strategies, and sector policies prepared by 

the institution and presented for endorsement or approval by its Board of 

Directors, with materials deemed too sensitive for public distribution redacted or 

withheld, shall be made available to the public 15 calendar days before 

consideration by the Board or, if not then available, when the documents are 

distributed to the Board. 

Status: 

None of the multilateral development institutions currently disclose to the public 

internal documents for the Board of Directors’ final endorsement or approval prior 

to the Board’s consideration of these documents. However, the World Bank has 

recently approved a pilot program for public distribution of certain Board 

documents prior to Board consideration. More significantly, the African 

Development Bank Board of Directors will soon consider a proposal to make 

available to the public project appraisal documents 15 days before Board 

consideration or when the final versions are distributed. Also, the AsDB’s draft 

Public Communications Policy (PCP) provides Management the possibility to 

disclose internal documents prior to the Board’s consideration. When the PCP is 

discussed by the Executive Board in early 2005, the U.S. Executive Director 

intends to strongly advocate for circulation of these documents 15 days prior to 

Board consideration. We intend to continue to advocate strongly for prior 

release of Board documents, pointing to the AfDB as a model for other 

institutions once they begin to implement this practice. 

While the final Board documents themselves are not currently released to the 

public prior to Board consideration, all the institutions make available to the 

public considerable information about proposed projects, policies and strategies. 

For proposed public sector projects, all the development institutions, with the 

exception of the AfDB, currently provide information on their websites that 

describe, in summary form, the projects and their intended objectives. In the 

case of the World Bank, the document is called the Project Information 

Document. In the case of the IADB, it is called the Project Concept Document. 

In the case of the EBRD, it is called the Project Summary Document. In the case 

of the AsDB, it is called a Project Profile. Under the new AfDB information 

disclosure policy, Prospective Project Briefs are to be disclosed, through the 

Bank’s Public Information Center, at least 6 months prior to presentation of the 

relevant projects to the Board. All the institutions also make publicly available 

environmental assessments for projects that could have a significant impact on 

the environment, in most cases at least 120 days in advance of Board 

consideration. 

For the documents setting out country assistance strategies, sector strategies, 

and sector policies, all the institutions have in place procedures which provide for 

active consultations with interested stakeholders and civil society during the 

drafting of these documents. At the World Bank Group, draft Country Assistance 

Strategies (portions), draft policy documents, and draft Sector Strategy Papers 
35

are made publicly available prior to formal Board approval to facilitate the public 

consultation process. The feedback received during these consultations is 

regularly summarized and posted on the Bank’s external website, along with 

explanations by Bank staff on how it has been or will be used. A 2003 

retrospective on World Bank Country Assistance Strategies (CASs) showed that 

almost 90 percent involved civil society in the “upstream” formulation process. 

The AsDB does not disclose to the public the documents prepared for Board of 

Directors final endorsement or approval prior to the Board’s consideration. 

However, the AsDB’s draft Public Communications Policy (PCP) provides 

Management the possibility to do so. As mentioned previously, when the PCP is 

discussed by the Executive Board in early 2005, the U.S. Executive Director 

intends to strongly advocate for circulation of these documents 15 days prior to 

Board consideration. While these documents are not currently released to the 

public prior to Board consideration, considerable information is made available to 

the public about proposed projects, strategies and policies. For proposed 

projects, the AsDB releases a Project Profile on its website which describes, in 

summary form, the project and its intended objectives. The AsDB also makes 

available environmental assessments for projects that could have a significant 

impact on the environment. Draft strategy and policy papers are generally made 

publicly available for external consultations. The proposed new communications 

policy makes it clear that the AsDB would actively seek participation of its 

shareholders and other interested individuals and organizations during the 

formulation of policy and strategy papers, particularly in the sector, thematic, and 

safeguard areas. The Bank would make publicly available a list of policies and 

strategies it expects to review during the next 12 months and, where applicable, 

a consultation plan for each policy or strategy review. With respect to country 

strategy and program documents, the AsDB and the concerned government are 

expected to provide information to in-country stakeholders while the documents 

are under preparation. This information may be communicated in the form of 

draft Country Strategy Papers (CSPs), excerpts of draft CSPs, discussion or 

issue documents, or oral communication, as deemed appropriate by the Bank. 

Under the new Inter-American Development Bank information disclosure policy, 

profiles or draft versions of the text of proposals for new or modified sector 

policies, sector strategies and sector guidelines may be made available to the 

public during the process of preparation by Bank staff of such proposals, for 

purposes of gathering opinions and input from institutions and individuals outside 

the Bank. The IADB has developed a webpage specifically for the purpose of 

soliciting input for proposed strategy and policy papers. With respect to country 

strategies, the current Board-approved guidelines urge a systematic effort to 

reach out to non-government parties such as the private sector, labor, civil 

society, and academia, in the early stages of their preparation to ensure that the 

strategy captures as comprehensive a societal view as possible.

Under the EBRD Public Information Policy, all (draft) Sectoral Policies, after preBoard discussion by the Directors, are posted on the Bank’s Web site for a 

period of 45 calendar days, during which time the public is invited to send 
36

comments on the policy. Furthermore, Management proactively stimulates 

stakeholders’ interest in, and contributions to, the drafting of these policies and 

the comments are summarized and distributed to Directors before approval of the 

relevant policy. With respect to Country Strategies, comments are invited from 

the public as input to the preparation of each new (draft) strategy. This input is 

based on the existing Country Strategy, already available on the Web site, and 

an accompanying management note outlining the main areas to be focused upon 

in the Review. 
37

Policy Goal #3 (Second part): Such documents shall include the resources and 

conditionality necessary to ensure that the borrower complies with applicable 

laws in carrying out the terms and conditions of such documents, strategies, or 

policies, including laws pertaining to the integrity and transparency of the process 

such as public consultation, and to public health and safety and environmental 

protection. 

Status: 

Based on information we have received from the institutions, we believe they all 

have rigorous procedures, including resources and conditionality, necessary to 

ensure that borrowers comply with applicable laws in carrying out the terms and 

conditions of projects they finance in accordance with the institutions’ documents, 

strategies and policies, including laws pertaining to the integrity and transparency 

of the process such as public consultation, and to public health and safety and 

environmental protection. 
38

Policy Goal #4: The institution shall post on its website an annual report 

containing statistical summaries and case studies of the fraud and corruption 

cases pursued by its investigations unit. 

Status: 

The multilateral development institutions are at varying stages of meeting the 

fourth policy goal. 

The Asian Development Bank and the World Bank Group post on their respective 

websites annual reports containing statistical summaries and descriptions of 

cases concluded by its investigations unit. 

The Inter-American Development Bank’s (which for the purposes of this goal 

includes the Inter-American Investment Corporation) Office of Institutional 

Integrity plans to release its Annual Fraud and Corruption Report, which will 

include statistics and case studies, at the end of March 2005. 

Following Board approval in early 2004 of the Guidelines for Preventing and 

Combating Corruption and Fraud in AfDB Group Operations, Management has 

presented to the Board a proposal for the establishment of an anti-corruption and 

fraud investigation unit. Management’s proposal included provision for issuing 

annual statistical summaries and case studies of the fraud and corruption cases 

pursued by the Anti-Corruption and Fraud Investigation Division (ACFD). If the 

Board approves the proposal as expected in the first half of 2005, the ACFD 

would become fully operational in early 2006 and the first report could be 

produced to cover 2006 activities. The US has made extensive suggestions to 

improve the proposed investigative unit. 

EBRD Management has approved in principle the production and publication of 

an anti-corruption report. The Chief Compliance Officer is currently putting 

together an internal working group which will meet to consider the scope and 

format of such a report, and the U.S. Executive Director has requested that 

statistical summaries and case studies of fraud and corruption cases pursued by 

its investigations unit be part of it. 
39

Policy Goal #5: The institution shall require that any health, education, or 

poverty-focused loan, credit, grant, document, policy, or strategy prepared by the 

institution includes specific outcome and output indicators to measure results, 

and that the indicators and results be published periodically during the execution, 

and at the completion, of the project or program. 

Status: 

As mentioned in the September report, all the multilateral development 

institutions, with our strong support, are focusing much greater attention on 

implementation of transparent and rigorous results measurement systems. This 

is reflected in the “Joint Marrakech Memorandum” of February 2004 in which the 

heads of the African Development Bank, Asian Development Bank, InterAmerican Development Bank, European Bank for Reconstruction and 

Development, and World Bank, recognized their need to enhance their 

organizational focus on results. Among the principles endorsed by the heads of 

the institutions in Marrakech was the public availability of information on results. 

With respect to individual projects, the World Bank, upon completion of each 

lending operation financed by the Bank, reviews the results and prepares an 

assessment of the operation, known as an Implementation Completion Report 

(ICR). These reports are publicly available after they have been distributed to 

the Executive Directors for information. The World Bank has also begun to 

publish its annual “Status of Projects in Execution” which provides information on 

each active project, bridging the gap on information available to the public 

between project appraisal and completion. The Asian Development Bank, upon 

the completion of each lending operation, reviews the results and prepares an 

assessment of the operation, known as a Project (or Program) Completion 

Report (PCR), which is made available to the public after circulation to the 

Executive Board for information. Select PCRs are then subject to independent 

evaluation by the Operations Evaluation Department (OED). The African 

Development Bank and the Inter-American Development Bank also provide 

information on results of individual projects upon completion and provide 

aggregate results during execution. The proposed new AsDB communications 

policy would require the disclosure of results on individual projects as they are 

being implemented through a Project Implementation Document. The EBRD, 

due to its private-sector-focused mandate, is much more constrained in providing 

information on individual projects (and, in any case, generally does not finance 

health, education, and poverty-focused projects). Nonetheless, it provides 

indicative information through aggregate information, case studies, and analysis 

of selected projects. 

With respect to policies and strategies, the development institutions, with our 

urging and support, are increasingly setting explicit objectives in these 

documents that can serve as a basis for monitoring and evaluating their results. 

Particularly noteworthy are the World Bank and AfDB’s initiatives to implement 

results-based Country Assistance Strategies. These documents will link results 

to country goals and require a more explicit link between individual Bank 
40

interventions, actions to achieve intermediate outcomes, and intermediate 

outcome indicators. Among the indicators most commonly used to monitor 

progress of country assistance strategies are the internationally agreed goals of 

the Millennium Declaration. Although the results-based CAS is a recent initiative, 

the regional development banks have already expressed an interest in pursuing 

this methodology in their country strategy documents. The AfDB will roll out its 

results-based Country Strategy Papers when the ADF-10 replenishment cycle 

begins next year. 

It is also worth noting that all of the development institutions have evaluation 

units which are responsible, among other things, for assessing which projects 

and programs are achieving expected results and which ones are not. The goals 

of these units are to provide lessons learned that the management can use to 

improve performance, to provide an independent view for assessing the results 

of the Bank's work, and to provide accountability in the achievement of their 

objectives. Reports of the evaluation units are generally made publicly available 

though exceptions can be made in accordance with each institution’s information 

disclosure policy. 

In addition to all these measures, both the African Development Fund and IDA 

replenishment agreements include explicit commitments to publish indicators and 

results of projects and programs, both periodically during their execution as well 

as upon completion. 
41

Policy Goal #6: The institution shall establish a plan and schedule for 

conducting regular, independent audits of internal management controls and 

procedures for meeting operational objectives, complying with Bank policies, and 

preventing fraud, and making reports describing the scope and findings of such 

audits available to the public. 

Status: 

All the multilateral development institutions currently have internal processes in 

place, through their auditors general or other units, for conducting assessments 

or audits of internal management controls and procedures for meeting 

operational objectives, complying with Bank policies, and preventing fraud. 

In addition, all the MDIs with the exception of the Asian Development Bank, have 

made commitments to conduct periodic, publicly available independent 

assessments of internal controls over operations and compliance, or are in the 

process of instituting such assessments. We do note that the most recent AsDB

Draft Public Communications Policy welcomes external involvement in 

monitoring internal management controls. 

With respect to the Asian Development Bank, in 2003 its independent Operations 

Evaluations Department conducted a special study of the Bank’s project 

performance management system which is available on the Bank’s website3

. 

The study assessed the efficiency, quality and use of the AsDB’s Project 

Performance Monitoring System (PPMS) to determine if the PPMS provides 

accurate and useful information on the effectiveness and efficiency of operations. 

The AsDB Management Committee has developed an action plan for improving 

the PPMS and will report its plan to the Executive Board by the end of 2004. 

Assuming changes are made to the PPMS, we have made it known we would 

like to see this study updated in the next few years, and expanded to include an 

assessment of the issues covered in the aforementioned IADB evaluation report 

on project supervision. Further, the Office of the Auditor General has established 

a long-term work plan for conducting audits of internal management. 

 

3

 Asian Development Bank, “Special Evaluation Study on Project Performance Management in the Asian 

Development Bank and its Projects in Developing Member Countries,” November, 2003. 
42

Policy Goal #7: The institution shall establish effective procedures for the 

receipt, retention, and treatment of (A) complaints received by the Bank 

regarding fraud, accounting, mismanagement, internal accounting controls, or 

auditing matters; and (B) the confidential, anonymous submission by employees 

of the Bank of concerns regarding fraud, accounting, mismanagement, internal 

accounting controls, or auditing matters. 

Status: 

The multilateral development institutions currently have in place procedures for 

the receipt, retention and treatment of complaints and concerns regarding fraud, 

accounting, mismanagement, internal accounting controls, or auditing matters. 

The systems in place in the development institutions for receiving and 

investigating allegations of fraud and corruption are constantly being updated to 

increase their effectiveness and to reflect “best practices”. Due, in part, to 

increased criticism of “whistleblower protection” systems, the various MDI 

investigative units and functions have begun to meet on a regular basis to review 

and compare policies with an effort to move toward harmonization of “best 

practices”. 

In an effort to ensure that its whistleblower protections reflect evolving best 

practices in the public and private sectors, the World Bank is currently 

undertaking an independent external review of its policies to evaluate any areas 

for improvement. The U.S. strongly supports this external review and sees it as 

an opportunity to affirm the credibility of the Bank’s system for protecting 

whistleblower rights, and thus enhance its effectiveness. Moreover, we utilize 

the results of the independent review to push for improvements, as needed, in 

the regional development banks. 

Despite public criticism of the current systems for protecting whistleblowers, we 

have received various accounts of these systems functioning well. For example, 

at the EBRD a staff member reported another for what amounted to a serious 

breach of the travel policy. The allegation was investigated and found to be 

correct. The subject of the inquiry was dealt with and a sum of money was 

refunded to the bank. The staff member who complied with his duty to report the 

misconduct was not in anyway affected adversely by complying with his duty. In 

another case at the AsDB, a staff was reinstated after being dismissed for 

blowing the whistle on her supervisor for abusing benefits. The supervisor was 

ultimately dismissed. 

In all these institutions, the U.S. Government, through the Executive Directors, 

has taken a leadership role in supporting implementation of the most effective 

systems possible for the receipt, retention, and treatment of allegations of fraud 

and corruption. We are committed to help prevent, detect, and punish corruption 

associated with development assistance provided by the MDIs. Such corrupt 

acts are intolerable and, as custodians of taxpayer dollars intended to stimulate 

economic growth and alleviate global poverty, it is our obligation to help ensure 
43

that the MDIs take all the steps necessary to ensure an effective anti-corruption 

apparatus. 

 
44

SUMMARY TABLE ON SECTION 581 GOALS 

Institution Goal 

1 

Goal 

2 

Goal 

3 

Goal 

4 

Goal 

5 

Goal 

6 

Goal 

7 

African Development Bank M M MTM MTM MTM MTM MTM 

Asian Development Bank MTM M PM M MTM PM M 

European Bank for Reconstruction 

and Development NM M PM MTM NA MTM MTM 

Inter-American Development Bank M M PM MTM PM MTM MTM 

Inter-American Investment 

Corporation MTM M NA MTM NA MTM MTM 

International Finance Corporation MTM M NA M NA MTM MTM 

Multilateral Investment Guarantee 

Association NM M NA M NA MTM MTM 

World Bank (IBRD/IDA) M M MTM M MTM MTM MTM 

M: Meets; MTM : Moving Toward Meeting; PM: Partially Meets; NM: Does not Meet; NA: Not 

Applicable 

Note: The description of the seven goals can be found in Annex A.
45

ANNEX A – SECTION 581 GOALS

(1) No later than 60 calendar days after the Board of Directors of the institution 

approves the minutes of a Board meeting, the institution shall post on its website 

an electronic version of the minutes, with material deemed too sensitive for public 

distribution redacted. 

(2) The institution shall keep a written transcript or electronic recording of each 

meeting of its Board of Directors and preserve the transcript or recording for at 

least 10 years after the meeting. 

(3) All public sector loan, credit and grant documents, country assistance 

strategies, sector strategies, and sector policies prepared by the institution and 

presented for endorsement or approval by its Board of Directors, with materials 

deemed too sensitive for public distribution redacted or withheld, shall be made 

available to the public 15 calendar days before consideration by the Board or, if 

not then available, when the documents are distributed to the Board. Such 

documents shall include the resources and conditionality necessary to ensure 

that the borrower complies with applicable laws in carrying out the terms and 

conditions of such documents, strategies, or policies, including laws pertaining to 

the integrity and transparency of the process such as public consultation, and to 

public health and safety and environmental protection. 

(4) The institution shall post on its website an annual report containing statistical 

summaries and case studies of the fraud and corruption cases pursued by its 

investigations unit. 

(5) The institution shall require that any health, education, or poverty-focused 

loan, credit, grant, document, policy, or strategy prepared by the institution 

includes specific outcome and output indicators to measure results, and that the 

indicators and results be published periodically during the execution, and at the 

completion, of the project or program. 

(6) The institution shall establish a plan and schedule for conducting regular, 

independent audits of internal management controls and procedures for meeting 

operational objectives, complying with Bank policies, and preventing fraud, and 

making reports describing the scope and findings of such audits available to the 

public. 

(7) The institution shall establish effective procedures for the receipt, retention, 

and treatment of (A) complaints received by the Bank regarding fraud, 

accounting, mismanagement, internal accounting controls, or auditing matters; 

and (B) the confidential, anonymous submission by employees of the Bank of 

concerns regarding fraud, accounting, mismanagement, internal accounting 

controls, or auditing matters. 
46

ANNEX B – REPLENISHMENT LANGUAGE

From the AfDF-10 replenishment: 

Transparency and Anti-Corruption Measures. Participants urged the Bank to 

take additional steps to enhance its institutional transparency and be a leader, in 

this regard, among its sister institutions. In this light, they welcomed the Boards 

recent decision to disclose the minutes of their Board meeting with material 

deemed too sensitive for public distribution redacted. Such measures promote 

greater accountability and better results. The Bank should use its website to 

provide information on proposed projects, sector strategies, sector policies and 

country strategy papers. The draft versions of strategy and policy proposals 

prepared for Board endorsement shall be made available to the public 

immediately after the Board approval. Participants also recommended that the 

Board consider changes to the Bank's Disclosure Policy to make available to the 

public 15 days before consideration of the Board -- or if not available when the 

documents are distributed -- the final versions of strategy, policy proposals, and 

appraisal documents. The Bank should also publish on the website specific 

indicators and results of projects and programs, both periodically during the 

execution and at their completion. Participants noted that a proposal on the 

establishment of Anti-Corruption and Investigation Unit is under Board 

consideration and procedures for reporting on allegations of fraud and corruption 

will be decided in that context. 

From the IDA-14 replenishment: 

Transparency and Accountability in IDA

Transparency is fundamental to development progress in three ways. It draws 

more stakeholders, supporters and ideas into the development process; it 

facilitates coordination and collaboration among development partners; and it 

improves development effectiveness by fostering public integrity and 

accountability for results. Just as IDA urges transparency and openness in the 

governance of its client countries, IDA should aim to meet the highest standards 

of transparency in its operations, policies and publications, and recognize a 

responsibility to make available as rich a range of information as possible for 

poor countries and the international development community. 

There have been many initiatives in recent years to increase IDA's openness, 

including consulting with and involving stakeholders in its deliberations, and 

enhancing public information about IDA's policies and activities. In IDA14, IDA 

aims to continue the leadership role it is playing among development partners in 

increasing transparency and will take additional steps to enhance the openness 

of its work. Means by which IDA works toward its objective of increased 

transparency and accountability include: 
47

* IDA Replenishment Discussions. To ensure an open and transparent 

deliberative process, the IDA replenishment discussions now include 

representatives from borrower countries; the policy papers discussed at the 

replenishment meetings are made available to the public; and public comments 

are sought on the policy recommendations contained in this report. IDA also 

consults with regional stakeholders to hear their views on how to tackle the key 

challenges that IDA countries and their partners confront. 

* Disclosure. Sharing of information on IDA policies and operations 

stimulates public debate on and broadens understanding of development issues, 

and also helps to create public support for development efforts. Accordingly, 

Participants welcome the enhancement of IDA's disclosure of information in 

recent years. IDA now makes an enormous amount of operational information 

available to the public, ranging from project and policy documents to strategy and 

evaluation documents. Bank Management has also initiated an extensive 

program to proactively enhance information dissemination and outreach, 

including a program to strengthen Public Information Centers across the world 

through which IDA's knowledge resources are made more widely accessible. 

Participants urge IDA to continue to demonstrate leadership among the 

multilateral development institutions on transparency in its own deliberations and 

the accountability of its operations and to continue to enhance public access to 

information on Board proceedings, including the disclosure of Board minutes. In 

particular, Participants request that progress in the implementation of projects 

and programs receiving financial support from IDA (including performance 

indicators and results, as appropriate) be published at the completion of such 

projects and programs, in addition to periodically during their execution. 

Moreover, during the period of IDA14, Participants noted that Management has 

committed to carry out an independent comprehensive assessment of its control 

framework including internal controls over IDA operations and compliance with its 

charter and policies, and that such assessment would be made available to the 

public after disclosure has been approved by IDA's Executive Directors. 

* Country performance assessments. Central to IDA's effectiveness is its 

practice of allocating its resources in accordance with assessments of the 

performance of each IDA country as measured by key social and economic 

policies and with a strong focus on governance. A key means of strengthening 

the performance assessment system, and thus ensuring that IDA's resources are 

even better aligned with countries' capacity to use these scarce resources with 

maximum impact on shared poverty-reduction goals, is the disclosure of its 

country performance assessment ratings. Participants therefore welcome the 

recent decision by IDA's Executive Directors to fully disclose the Country Policy 

and Institutional Assessment (CPIA) ratings for IDA countries, starting in IDA14. 

They noted that this will provide client countries and other stakeholders with 

transparent information about CPIA methodology, findings and ratings for all IDA 

countries, which, in turn, should enhance the quality and robustness of the 

ratings, as well as public confidence in IDA's performance assessment. 
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* Consultation. Strengthening the voices of locally-affected stakeholders in 

IDA-financed project decisions remains an important challenge. Experience has 

demonstrated that consultation with co-financiers, partners, and groups and 

individuals with relevant knowledge of development issues also helps to enhance 

the quality of Bank-financed operations. For this reason, Participants call on IDA 

to strengthen documentation of stakeholder feedback from consultations required 

under the Bank's safeguard policies. 

* Financial flows. Participants recognized the need for increased 

transparency of revenue flows from extractive industry projects to governments. 

They emphasized that IDA's financial assistance to a project with a significant 

impact on revenues should be predicated upon the government having in place, 

or committing to establish, a functioning system for accounting for revenues and 

their use. The government should also have in place, or commit to establish, a 

functioning system for the independent auditing of such revenue receipts and the 

public dissemination of the results. IDA should closely monitor the 

implementation of these systems and take appropriate (and timely) actions if they 

are not being effectively implemented. Although these actions are especially 

relevant to extractive industry projects with significant revenue impacts, they are 

also applicable to IDA's budget support operations, as set out in IDA's 

operational policy OP/BP 8.60 Development Policy Lending, recently approved 

by IBRD and IDA's Executive Directors.