World Bank Inspection Panel. Report I 1he Inspection Pane ~UW.~ s tor Re , lfl~~~ Association. 16029 <- r (") N (J'l N 0 (X) -......! The Inspection Panel International Bank for Reconstruction and Development International Development Association Report August 1, 1994 to July 31, 1996 INTERNATIONAL MONETARY FUND JOINT LIBRARY OCT 1 5 \996 INTERNATIONAL 6A~~K FOR cco•wTDI'CiiON ANO f.ft'l~t.OPM':NT A · r\;,·._':~~~~"-t';.; I·J. (, 2tf4l1 ni'\.)Ml111l ""' • • Published for The Inspection Panel The World Bank Washington, D.C. The Inspection Panel 1818 H Street, N.W. Washington, D.C. 20433 U.S.A. http:\ www.worldbank.org ISBN 0-8213-3821-8 Overview T he independent Inspection Panel is a three-member body created in 1993 to provide an independent forum to private citizens who believe that they or their interests have been or could be directly harmed by a project financed by the International Bank for Recon- struction and Development {IBRD) or the International Development Association (IDA)-together referred to as the "Bank". The Panel's authority comes from identical Resolutions (ffiRD No. 93-10 and IDA 93-6) ("Resolution") adopted by the Executive Directors of both institutions ("Board"). There has never before been a body of this kind to give voice to private citizens in this international context. Therefore, the Panel's structure and its operations had of necessity to be innovative and will be evolving as the Panel develops experience in carrying out its work. The Panel's current method of functioning is laid out in Operating Procedures that the Panel members developed to implement the Board Resolution that created the Panel. When the Panel receives a "Request for Inspection" about a Bank-financed project from affected people in a project area, the following steps are taken: • The Panel sends the Request to Bank Management who prepare a response to the allegations and submit it to the Panel. • The Panel makes a preliminary review of the Request, conducts an independent assess- ment of the merits of the Bank Management response to it, and recommends to the Bank Board whether or not the Request should be investigated. • If the Board approves a Panel recommendation to investigate, the Panel then proceeds with the investigation. • When the Panel finishes an investigation, it sends its findings to the Board as well as to Bank Management. • The Bank Management then has six weeks to submit its recommendations to the Board on what, if any, actions the Bank should take in response to the Panel's findings. • Based on the Panel's findings and the Bank Management's recommendations, the Board then takes the final decision on what should be done. What follows here is a report on the Panel's structure, initial operations and experience over the first two years of the Panel's existence. For convenience, the text of the Board Resolu- tion and the Panel's Operating Procedures are included in Annexes to this Report. 1 Table of Contents LETTER OF TRANSMITTAL 4 INTRODUCTION BY THE PANEL MEMBERS 5 PANEL COMPOSITION 8 INITIAL OPERATIONS 10 Operating Procedures 10 Information Activities 10 REQUESTS FOR INSPECTION 12 Formal Requests 14 Consultations on Potential Requests 21 LESSONS OF EXPERIENCE 22 Decisions of the Bank's Executive Directors 22 Panel Experience 22 Review of Panel Mechanism 22 Review of Operating Procedures 23 BUDGET 24 2 Annexes 1. Resolutions of the Executive Directors Establishing the Inspection Panel 25 2. Operating Procedures adopted by the Panel 31 3. Inspection Panel Documents 51 4. Decisions of the Executive Directors 55 5. Budget 59 Boxes 1. Inspection Panel Members 9 2. Procedure for Filing Requests for Inspection 12 3. Note on Processing Requests for Inspection 13 3 Letter of Transmittal T his Report, which covers the period August 1, 1994 to July 31, 1996, has been prepared by the members of the Inspection Panel for the International Bank for Reconstruction and Development and the International Development Association in accordance with the Resolution establishing the Panel. This Report has been circulated to the President and the Executive Directors of both institutions. The Panel members would like to take this opportunity to pay tribute to Lewis T. Preston and express appreciation for his support for the initial operations of the Panel until his untimely death on May 4, 1995. His successor, James D. Wolfensohn, has continued this support and highlighted the importance of the initiative as an integral part of his strategy for transparency, openness and accountability in Bank opera- tions. Ernst-Gunther Broder Chairman July 31, 1996 4 Introduction 0 n July 31, 1996 we completed our first two years as members of the independent Inspection Panel ("Panel") for the IBRD and IDA (collectively "Bank"). This report highlights successes and difficulties of an unprecedented international function whose practical application is still evolving. During these first two years many of the benefits intended by the Board of Executive Directors ("Board") when creating an inspection mechanism have been realized. Direct results include: • Providing some affected people with a formal mechanism to voice their concerns-particularly in the environmental and social areas. • Providing Bank Management and the Board with the results of an independent review of controversial Bank projects. • Enhancing public confidence in the Bank's commitment to greater transparency and accountability. The Panel's experience with two major Requests for Inspection also highlighted operational deficiencies in project monitoring, enforcement of loan/ credit covenants, and observance of policies and procedures. Efforts to deal with these institutional goals, stimulated by the Panel's existence and operation, include: • More focus on supervision of project implementation and moni- toring. • Management's increased internal observance of Bank policies and procedures-although the Panel observes that their plethora and detail makes full application at times unrealistic. • Internal response and constructive reaction to the public's criti- cisms of aspects of specific proposed or ongoing Bank projects. 5 The Panel started operations in August 1994 and in September published "Operating Procedures" to explain and regulate its role and processes. During the first two years we devoted a significant amount of time to (a) responding to requests for information on the Panel's role and function, (b) processing specific Requests for Inspection ("Re- quests"), and (c) advising potential Requesters. Five formal Requests were received. The processing of two-one on the proposed Arun III Hydroelectric Project in Nepal, the other on the Rondonia Natural Resources Management Project in Brazil-required extensive use of Panel resources. This helped define our role in relation to the Board, Bank Management, outside parties and the particularly important relationship with locally affected people. Public criticism of aspects of these two projects had gone on for years. To our knowledge, the intervention of the Panel as an indepen- dent body was instrumental in channeling this criticism into a formal debate and promoting constructive commitments from all parties concerned. In both cases, the Requesters saw the outcome of the process as positive. The President decided to withdraw IDA's support for the Arun III project. The final outcome in the Rondonia Request is pending while Bank Management and implementing agencies, with the partici- pation of NGOs, are taking corrective measures. The Board decided to review Management's progress later this year and will invite the Panel to assist in that review. The independent intervention of the Panel in these two major contro- versies clearly averted potential material damage at the local level. Nonetheless, the Panel met with unforeseen difficulties in establishing the eligibility of Requesters. We believe this was because of a misperception that the Panel's role was to accuse the Bank of violations of policies and procedures and an apparently mistaken assumption that Requests would come to the Panel with a full analysis of Bank policy violations. In fact the Panel's function is triggered by an allegation of damage. Requesters on the ground do not know what Bank policies say-rather, they know when damage has or is likely to occur to their livelihood and their prospects for the future. From the outset we have sought constructive solutions for all inter- ested parties when dealing both with formal Requests and with poten- tial Requesters. We avoided any negative accusatory role and instead shifted the focus to the Panel's fundamental task-determining the existence and extent of alleged damage. The Resolution outlined the general procedure for processing Re- quests. In a practical, day-to-day context, the Bank's Board applied the Resolution on a case by case basis as the processing of Requests 6 emerged. This pragmatic approach by the Board set the stage for the formal review of the Panel function. The Resolution calls for this review to be done at the end of the first two years of the Panel's operation. Recently the Board began this formal review. Both the public and the Bank staff viewed the establishment of an independent Panel with some skepticism. But that skepticism has had a positive effect on the direction of the Panel's evolution in the past two years by reinforcing the need to have a genuinely independent body with an arm's length, even-handed perspective. We sincerely value the confidence in our independence expressed by the Board, the President, Management and Staff, the Requesters, NGOs, the public and development experts. Ernst-Gunther Broder Alvaro Umana Quesada Richard Etter Bissell 7 Panel Composition he Panel consists of three members Directors for the first year. Thereafter, the T who were appointed by the Board in April, 1994, on the basis of qualities set out in the Resolution-" their ability to deal Panel members are required to select their Chairperson. Mr. Broder was subsequently elected by the Panel to serve as Chairman for thoroughly and fairly with the requests the second year and Mr. Bissell for the year brought to them, their integrity and their beginning August 1, 1996. independence from the Bank's Management, Secretariat. The Panel has a Secretariat, and their exposure to living conditions in headed by an Executive Secretary, which developing countries." The terms of the first provides administrative support to the appointees-Mr. Emst-Giinther Broder, a Chairman and Panel members; helps in the German national, Mr. Alvaro Umana processing of Requests, and coordinates Quesada, a Costa Rican national, and Mr. other activities such as information dissemi- Richard Bissell, a United States national-are nation, requests for information, Panel staggered respectively for five, four and three consultations inside and outside the Bank, years. Future members will each serve one and disclosure processes. The Bank's Presi- five-year term. To further guarantee indepen- dent in consultation with the Board assigned dent judgment, Panel members are prohib- Mr. Eduardo G. Abbott, a Chilean national, as ited from future employment with the Bank. Executive Secretary of the Secretariat, which The first chairperson, Mr. Emst-Giinther consists of an Assistant Executive Secretary Broder, was appointed by the Executive and two office staff. 8 BOX 1. Inspection Panel Members Foundation and the World Resources In- stitute. He has published several books Dr. Ernst-Gunther Broder is the former and many technical articles on energy, eco- President of the European Investment nomics of natural resources and environ- Bank (EIB) (1984-1993), where he also ment. Mr. Umana is a private entrepreneur served as a director from 1980-1984. He in the ecotourism and conservation areas held several supervisory and consultative and is involved in sustainable wildlife re- functions in international banks and other production and export. Mr. Umana holds institutions. Dr. Broder was a Governor of a Ph.D. in Environmental Engineering and the European Bank for Reconstruction and a Master in Economics from Stanford Uni- Development from 1991-1993, and a mem- versity. He also holds a Master's Degree ber of the special advisory group for the in Environmental Pollution Control and a Asian Development Bank in Manila from Bachelor's Degree in Physics from Penn- 1981-1982. He is a member of the Panel of sylvania State University. Conciliators for the International Centre for Settlement of Investment Disputes, Mr. Richard Etter Bissell is a former se- Washington. Before being appointed Presi- nior official with the U.S. Agency for In- dent of the EIB he served from 1964-1984 ternational Development (USAID). Cur- with the Kreditantstalt fiir Wiederaufbau rently a Research Fellow at the American in Frankfurt, where he was a member of University, he focuses on issues of aid the Managing Board from 1975-1984 and policy, particularly in Africa and Asia. He a spokesman since 1980. He has written founded and served as a senior manager and co-authored several books and articles of a high-technology pollution monitoring on financial and economic subjects. Dr. company with world-wide sales. He Broder holds a Doctorate in Economics served at USAID from 1986-1993, as head from the University of Freiburg, and stud- of policy and later as director of Science ied political and natural sciences at the and Technology, and was previously a pro- Universities of Cologne, Mainz, and Paris. fessor at several U.S. universities, includ- ing Georgetown University and the Uni- Mr. Alvaro Umana Quesada is Profes- versity of Pennsylvania. Between 1984 and sor and Director of the Natural Resources 1986, he was editor of The Washington Management Program at INCAE, a Latin Quarterly. He has published widely, in American Graduate School of Manage- both books and articles, on political ment. He served as Costa Rica's first Min- economy in developing countries. He was ister of Natural Resources from 1986-1990 educated at Stanford University, and took under President Arias. Mr. Umana is a his Ph.D. at the Fletcher School of Law and member of the Board of the Rockefeller Diplomacy, Tufts University. 9 Initial Operations T he Panel members took office on Information Activities August 1, 1994 and its office opened for business in September 1994. The Panel has made every effort to keep its processes open and transparent-consistent Operating Procedures with the new public disclosure policy adopted by the Bank's Board in 1993, which To ensure maximum transparency of its was intended to increase transparency and operations, procedures and processes, the accountability in World Bank operations. Panel gave priority to providing detailed Information about the existence, purposes public information on how Requests would and the procedural steps required for-and be processed and guidance on how to file limits to-the Panel's intervention in re- Requests. In this context, the Panel formulated sponse to Requests is disseminated mainly operating and administrative procedures. through the Operating Procedures, which Because of the obvious lack of national or also include the text of the Resolution. The international precedents, the initial operating Procedures are available on the Internet, at and administrative procedures are provisional. World Bank offices and to participants at the The Operating Procedures were adopted Bank's Annual Meetings. Translations into by the Panel on August 19, and published Spanish, Portuguese and French are available and circulated to the Board on September 7, on request at the Panel's office. 1994. They are intended to provide detail to Processing of Requests. In an effort to operational provisions of the Resolution deal transparently with Requests, the Panel creating the Panel. They also explain how the introduced a Register. There the Executive Panel discloses information to Requesters Secretary records the dates and all actions and the public during the processing of taken in connection with the processing of a Requests. The text of the Resolution is in Request, as well as the dates on which any ANNEX 1 and the Panel Operating Proce- document or notification under the Panel dures are in ANNEX 2 of this Report. procedures is received in or sent from the Administrative Procedures, designed to Panel's Office. This Register is open to the regulate the internal administration of the public. Similar information is also dissemi- Panel, were developed and adopted at the nated through the Internet to ensure wider same time. disclosure. 10 A notice that a Request has been regis- Public Inquiries tered and all other notices or documents Responding to general and specific questions issued by the Panel are made available to the accounted for a significant portion of the public at: (1) the Bank's Public Information Panel's workload. Center in Washington, D.C.; (2) the Bank's General Information. During the first two Resident Mission in the country where the ~ears the.re was a heavy demand for general project relating to a Request is located or at Information on the Panel and its activities the relevant regional office; and (3) at the from the press, NGOs and other organiza- Bank's Paris, London and Tokyo offices. tions, academics, Bank staff and others. In Documents relating to each Request are response, copies of the Operating Proce- made available to the public by the Bank dures-including French, Spanish and when permitted by the Resolution. Under Portuguese translations-were provided, as Paragraph 25 of the Resolution, Requests were further clarifications when requested. for Inspection, Panel Recommendations In addition, both members and staff of the and Board decisions are to be made avail- Panel were invited to participate in seminars able to the public after the Executive Direc- and meetings with academics, NGOs and tors have considered a Panel recommenda- Bank staff. t~on on, and/ or the results of, an investiga- Specific Queries. The Panel office received tion. a proliferation of questions on both the sub- World Bank Annual Meetings. The Panel stance and processing of all five Requests filed began participating in the World Bank An- as well as many other queries related to on- nual Meetings in 1994. Its office was the focal going and proposed Bank projects. point for individual meetings with Govern- Internet Queries. To help the public ment officials, private organizations and become more aware of its function, the Panel citizens and numerous NGO representatives. created an Internet home page in 1994, which In addition several meetings were held with offers a broad range of information on the individual Executive Directors. Panel and on Requests. (See ANNEX 3.) Panel members participated in open Internet queries have proven to be a power- meetings with representatives of a substan- ful additional medium for the Panel to tial number of NGOs from several develop- communicate with the public. While recog- ing and industrialized countries. These nizing that direct access by potentially af- meetings were aimed at improving the NGO fected people at the local level around the community's understanding of the precise world is limited, provision of information on role and the nature of Panel operations, and the Internet has in general evidently either to explain who may file a Request and how answered queries or educated users. On the to do it. Copies of the Operating Procedures average more than one hundred files a day were widely available. have been transmitted to more than 55 At the 1995 Annual Meetings in Washing- countries via the Internet. ton, D.C., the Panel was involved in similar Documents. ANNEX 3 of this report consultations, including one with NGOs contains a list of Panel documents. The list interested in reviewing the first year of Panel does not include academic and other com- operations. mentaries on the creation and operations of the Panel. 11 Requests for Inspection BOX 2. Procedure for Filing Requests for which is attached to this report as ANNEX Inspection. 2. At minimum Requesters must show Comment: The five formal Requests re- that they: ceived have been in the form of sophisti- cated legal documents aimed at address- • live in or represent people in the ing all the complex filing requirements in project area the Resolution and reflecting considerable • are or are likely to be affected ad- study and analysis of Bank policies and versely by project activities procedures. This was expensive and time • believe that actual or likely harm consuming and did not necessarily focus results from failure by the Bank to on what the Panel needed to know. The follow its policies and procedures Panel anticipated receiving statements or • discussed their concerns with Bank short letters along the lines suggested in Management and are not satisfied with the Model Request Form attached to its the reaction. Procedures. To ensure access to the Panel by those intended and to allow concerns Detailed steps are explained in the to be heard as quickly and expeditiously Panel's Operating Procedures and the at- as possible, the Panel expects in the future tached Model Request Form, the text of to receive simply essential factual informa- tion. 12 BOX 3. Note on Processing Requests for • The Bank Management then has six Inspection weeks to submit its recommendations to the Board on what, if any, actions the According to the Resolution, after the Bank should take in response to the Panel receives a Request: Panel's findings. • Based on both the Panel's findings and • The Panel sends the Request to Bank the Bank Management's recommenda- Management who prepare a response tions, the Board then takes the final to the allegations and submit it to the decision on what should be done. Panel. • A Panel investigation report as well as • The Panel makes a preliminary review Management recommendations are of the Request, and of the merits of the made public after the Board decision. Bank Management response to it and recommends to the Bank Board Comment: During the processing of all whether or not the Request should be Requests, the Bank Management gives the investigated. Panel unlimited access to files and upon • The Board then meets to decide on request, provides other records. The Panel whether to accept or reject a Panel maintains constant contact with represen- recommendation. tatives of the Requesters, frequently ask- • After the Board has considered the ing them to clarify statements or provide Panel's preliminary review and recom- further information. The Requesters gen- mendation it is made public as is the erally seek detailed explanations of every Request. The Resolution is silent on step in the process. Panel members visit release of the Management Response. project sites to hear concerns of groups of • If the Board approves a Panel recom- locally affected people. In addition, the mendation to investigate, the Panel Panel meets with Bank staff and Manage- then proceeds with the investigation. ment as needed. All correspondence from • When the Panel finishes an investiga- interested members of the public is care- tion, it sends its findings to the Board fully reviewed and taken into consider- as well as to Bank Management. ation. 13 The outlines that follow show the continu- Request and Management Response and sent ously evolving process for dealing with its report to the Board on December 16, 1994. Requests through first, processing the five The members of the Panel unanimously formal Requests received and, second, re- found that apparent violations of IDA policy sponding to representatives of potential existed and recommended further investiga- Requesters through numerous informal tion in three areas: environmental assess- consultations on filing specific Requests. ment, involuntary resettlement, and treat- ment of indigenous peoples. Formal Requests The Panel did not recommend further investigation of two areas: REQUEST NO.1: NEPAL: PROPOSED ARUN III HYDROELECTRIC PROJECT • (i) Disclosure of Information Policy. In its preliminary review the Panel stated In October 1994 the Panel received its first that although there was a formal non- formal Request. It concerned the proposed compliance with the provisions of BP Arun III Hydroelectric project and restructur- 17.50, the disclosure policy was evolv- ing of a 1989 IDA Credit (No. 2029) which ing so rapidly during the later phases had been extended to Nepal for construction of project preparation that full compli- of an access road over the hills to the future ance may not have been feasible. On hydroelectric dam site in the Arun Valley. this issue, the Panel concluded that an The proposal was to restructure the Credit to investigation by the Panel was not finance an alternative access road through warranted because it would not add to the Arun Valley. the facts and policy violations estab- The Request was submitted by a citizens lished in its preliminary review. group from Katmandu as well as people • (ii) Economic Analysis of Project living at the project site claiming to be ad- Alternatives. On compliance with versely affected by the 1989 Credit for the hill policy directives on economic analysis access road. The Requesters claimed harm or of project alternatives, including potential harm through alleged non-compli- environmental and social aspects, the ance by IDA with inter-alia five operational Panel concluded that the Bank Man- policies and procedures: economic evaluation agement response did "not demon- of investment operations, disclosure of strate that equivalent levels of effort information policy, environmental assess- were devoted to alternative economic ment, involuntary resettlement and indig- analysis. In light of the decision to enous peoples. change the route of the access road, the On November 22,1994, Bank Manage- extensive environmental assessments ment responded to the Request and reported that had been under taken for Arun III to the Panel that it had complied with all have to be updated. The cost of the requirements of such policies and proce- project, greater than one year's budget dures. for the Kingdom of Nepal, will have an 1st Stage-Preliminary Review extensive impact on living conditions through the country. This suggests that After one of the Panel members had met with if a more exhaustive study of alterna- the Requesters and others in Nepal, the Panel tives is made, it would enable Manage- completed its preliminary review of the ment to deal with the numerous nega- 14 tive side effects ... even if immediate project information not included in its construction of Arun III were the November 22,1994 Response. The preferred option. The absence of a close Board agreed that Management would examination of the alternatives makes furnish the Panel with more informa- it difficult for this Panel to draw more tion on IDA's actions with regard to the than prima facie conclusions in that alleged violations of IDA policies regard." claimed in the Request, and following a review by the Panel, that the Board On the question of the adequacy of alter- would act on the Panel's recommenda- native economic analysis, the Panel con- tion by the end of January. cluded an investigation was not warranted • As requested, the Panel then had -since the Panel could do no more than meetings with Management and staff point out the shortcoming based on the facts and received a number of documents established in the preliminary review. In deemed by Management to be further addition the Panel considered an investiga- evidence of compliance with IDA tion inappropriate since the extensive work policies or of its current efforts to take needed-examination of alternatives-is remedial action in order to comply clearly a Bank Management, not a Panel fully with such policies. function. • After thorough consideration of the The Resolution envisaged that the next documents received, and in light of the step would be a decision within the usual2-3 discussions with Management, the weeks by the Board on whether or not they Panel decided to reiterate its original would authorize the recommended investi- recommendation for an investigation gation. In fact a number of additional steps on possible violations of IDA policies were taken before the Board made a decision: relating to environmental assessment, involuntary resettlement and indig- • At the Board meeting of December 20, enous peoples-as set forth in its 1995 the IDA Management offered a December 16, 1994 Report and informal status report on the proposed project. note of January 9, 1995. This recom- • Following a suggestion by an Executive mendation was contained in a Memo- Director, the Senior Vice President and randum to the Board dated January 20, General Counsel, on January 3, 1995, 1995. provided the Board with a Legal Opinion on the "Role of the Inspection In this Memorandum the Panel reiterated Panel in the Preliminary Assessment of its conclusion that "with regard to [alterna- Whether to Recommend Inspection." tive] economic analysis, the application of the • In response to a question by an Execu- relevant policies by IDA to Arun III generates tive Director, on January 9, 1995 the continued concern on the part of the Panel, Panel provided an informal note to the particularly in light of additional information Board summarizing its recommenda- provided by Management. It also believes tion. On the same date the Panel met that an investigation of environmental informally with the Board to discuss risks-environmental assessment, involun- the recommendation. At this meeting tary resettlement and indigenous peoples the Panel was advised that Manage- issues-would shed useful light on the ment had offered to provide detailed overall economic analysis, as called for in 15 operational policies on the latter." families for land acquired by the Government The Panel estimated that an investigation with OD 4.30 (Involuntary Resettlement). as proposed would need approximately three The Board asked the Panel to "take into months. The exact length would be subject account information and studies subse- inter-alia to: the extent of cooperation the quently provided by the Government of Panel received from Management and the Nepal, the Bank and other cofinanciers, as proposed borrower; other factors including well as any remedial measures agreed by actual progress in the then current efforts Nepal and the Bank, and taking into account being made by the Government and IDA to the complexities of the issues involved, will update the Regional Action and Indigenous examine whether the requirements of the Peoples Plans; and, the time required to reach above-mentioned ODs were observed in an agreement on resettlement issues arising substance." out of expropriation actions already taken in Because a new Government had been preparation for construction of the hill access elected in Nepal during the period between road now to be abandoned in favor of a the filing of the Request and this decision, the valley access road. Board instructed the Panel to commence field The Panel also informed the Board that it work only after the Bank received a decision felt that efforts by the Government and IDA from the new Government of Nepal on the should be pursued concurrently with the Bank's financing of the Project. proposed investigation. On the same day the Board decision was made public through a World Bank News • On January 31, 1995, IDA Management Release and by the Panel through Internet. sent "Background Material relevant to Then the Request for Inspection and the the recommendations put forward by Panel's Reports to the Board were made the Inspection Panel in their Memoran- public. dum ... dated January 20, 1995." 2nd Stage-The Investigation Board Decision To avoid delays while the recently elected Government of Nepal considered whether to On February 2, 1995, the Board, after exten- reiterate Nepal's request for project financ- sive deliberations accepted the Panel's ing, the Panel decided to divide the investi- unanimous recommendation that the allega- gation into two phases, i.e. a desk study in tions of damage resulting from apparent Washington followed by field work subject to violations of IDA policies-in the areas of the Government's decision. environmental assessment, involuntary The Requesters, as well as a number of resettlement and indigenous peoples-had to concerned NGOs expressed dissatisfaction be investigated. Specifically, the Board autho- that there was no investigation of compliance rized the Panel to investigate (1) the consis- with economic analysis and disclosure tency of the determination of the road align- policies. By letter dated February 22, 1995 the ment with Operational Directive 4.01 (Envi- Requesters called for an investigation into ronmental Assessment); (2) the consistency of these two areas. the treatment of indigenous peoples, if any, On March 16, 1995 Bank Management with Operational Directive 4.20 (Indigenous informed the Panel that the Government of Peoples); and (3) the consistency of arrange- Nepal had requested IDA's financing. After ment for compensating seriously affected 16 this the Panel requested a progress report stated that the Bank needed to pay attention from Management. to remedial measures relating to implementa- On March 31, 1995 the Panel sent the tion and whether these measures "could be Board a note summarizing the status of the implemented in the time frame proposed for investigation. The Panel concluded at this construction of the project taking into ac- stage that work was now in progress in the count the existing institutional capacities in three areas where the investigation was Nepal". authorized; Management's agreement to take In the report, the Panel reiterated its remedial actions and the work in progress concern about the lack of equivalent levels of seemed to indicate that it intended to observe effort devoted to alternative economic analy- the requirements of the three policies; and, to sis particularly in view of the size and se- avoid delays, duplication of time and finan- quencing of the proposed project in relation cial resources, the Panel's planned field to the overall economic and institutional investigation would be postponed to allow framework of the country. time for Management to take or propose The next step in the process calls for the remedial measures which the Panel could Management to submit to the Board for their then take into account when assessing com- consideration within six weeks, a report pliance. indicating its recommendations in response The public was informed of the status of to the investigation findings. the investigation through a Panel Press After receipt of the Panel's investigation Release on Aprilll, 1995. report Bank Senior Management reassessed After receiving a report from Management the project as proposed and upon their on proposed remedial measures, the Panel, recommendation, the Bank's President with the consent of the Government of Nepal informed the Board on August 2, 1995 that he conducted a site investigation. Two Panel had decided not to proceed with the project. members walked through areas proposed for In this response to the Panel's investiga- the access road through the Arun valley tion report the Bank's President stated that where they consulted with local populations the Management was in broad agreement through public and individual meetings. with the Panel's findings and conclusions. The Panel completed its investigation in Given the decision not to support the project June 1995 and sent its report to the Board and the President, noting that it was not neces- to the President of IDA on June 21, 1995. The sary to elaborate on the corrective measures Panel stated that "based on its assessment of Management had proposed, stated however the proposed remedial measures the Panel that "the highly appreciated work of the concludes that IDA is moving towards and Inspection Panel on the Arun ill Hydroelec- intends to comply in substance with the tric project remains relevant to the Bank's requirements of the three operational direc- work generally and to future Bank invest- tives" and that the "specific remedial mea- ments in the power sector of Nepal in par- sures proposed by management of the Bank ticular". The President informed the Board appear to be adequate as long as they con- that he had assured the Nepalese authorities tinue to be consistent with the specific opera- that IDA attached the highest priority to tional directives and appropriate follow-up supporting Nepal in devising and imple- mechanisms are introduced". The Panel also menting an alternative strategy for meeting its needs for electric power. 17 The Panel's investigation report was made reported on it to the Executive Directors public after the Board was formally informed before they approved IDA's financing under of the President's decision. the existing Credit. The Requesters also claimed potential harm as a result of an REQUEST NO.2: COMPENSATION FOR alleged violation of environmental policies. EXPROPRIATED FOREIGN ASSETS IN The Panel found that the Requesters were not ETHIOPIA eligible to file that claim since they could not In April 1995 the Inspection Panel received a possibly be harmed directly by the alleged Request alleging that IDA failed to observe violation. the provisions of Operational Manual State- The Panel made its decision and sent its ment 1.28 when it granted several credits to report to the Board on August 15, 1995, after Ethiopia and now was negotiating more careful review and consideration of the financial assistance with the Transitional Request, of the evidence and other informa- Government of Ethiopia ("TGE"), even tion provided by the Requesters, by Tanza- though TGE had refused to deal with the nian Government officials, IDA Management Requesters' claim for compensation for a in its Response to the Request and of the Panel previous government's expropriation of their member's report on his visit to Dar es Salaam. assets and blocking of their bank accounts. The Board approved the Panel's recom- The Panel did not accept this request because mendation not to investigate on a no-objec- (1) the Requester had not exhausted local tion basis on September 11, 1995. remedies before submitting the Request (2) REQUEST NO. 4: BRAZIL: RONDONIA the Requester failed to establish how this lack NATURAL RESOURCES MANAGEMENT of compensation was the consequence of any PROJECT ("PLANAFLORO") alleged acts or omissions of IDA, as required by paragraph 12 of the Resolution. For fur- Early in 1992 the Bank approved a loan (No. ther details relating to this Request see 3444BR) to Brazil to support the above ANNEX4. project in Rondonia known locally as PLANAFLORO. Implementation of the REQUEST NO.3: EMERGENCY POWER environmental and social components of a PROJECT IN TANZANIA series of Bank-financed projects in Rondonia In this instance, the Requesters claimed that in the 1980s-known as POLONOROESTE- financing to be provided under IDA Credit had been neither adequate nor implemented. 2489-TA (Power VI Project) to buy and install PLANAFLORO, intended to redress this emergency power generating units was failure, was designed in accordance with against IDA's Articles of Agreement because strengthened Bank environmental and social private sector financing was available on policies and procedures introduced in the reasonable terms (from the firm they owned late 1980s/early 1990s. This was meant to be or worked for). a showcase project for a new era in Bank The Panel did not recommend an investi- lending for sustainable development. gation because it found during its prelimi- Communities previously adversely af- nary review that the Bank Management had fected in Rondonia by the POLONOROESTE considered the alternative financing pro- program expected beneficial effects from the posed by the Requesters and adequately implementation of PLANAFLORO according to the standards and timetable agreed by the 18 Federal and State governments and the Bank. numbers of intended project beneficiaries. But expectations were not met. On the basis of the Panel member's review On June 14, 1995 intended beneficiaries and a preliminary review of project files and living in the project area-such as rubber records the Panel concluded that the rights tappers and indigenous peoples-repre- and interests of intended beneficiaries of sented by local non-governmental organiza- PLANAFLORO may have been or are likely tions ("NGOs"), requested the Panel to to be directly and adversely affected in a investigate the Bank's failure to enforce its material way as a result of alleged failures in commitment to prevent further damage to design, delays in the execution, and omis- their land, incomes and health. sions in supervision or monitoring of The Requesters' fundamental complaint PLANAFLORO. was that PLANAFLORO-intended to The Panel acknowledged the effort-made benefit fragile communities and the natural by Bank Management in its response to the environments they depend on for their Request-to provide extensive information livelihood-had not been adequately imple- and a fair and realistic assessment of most of mented since Board approval three and a half the project's difficulties and delays. However, years ago especially since the Closing Date of the Panel was not convinced that there had the Loan was December 31,1996. been full compliance with policies and The Requesters claimed that the project procedures. Nor was it convinced that pro- design of PLANAFLORO and the Bank's lack posed remedial measures were adequate in of enforcement of several project covenants the instances where Management admitted had resulted in the damage claimed. They failures. On August 17, 1995 the Panel recom- alleged that such acts and omissions violated mended that the Board authorize an investi- the Bank's policies on indigenous peoples, gation. forestry, investment lending, accounting, The next step in the procedure outlined in financial reporting and auditing, project the Resolution calls for a Board decision on monitoring and evaluation, procurement, whether to accept or reject the Panel recom- wildlands, use of consultants, project super- mendation. At its meeting on September 12, vision, borrower compliance with audit 1995, the Board concluded that it needed covenants, suspension of disbursements, and more factual information on which to base a involvement of NGOs in Bank-supported decision on whether an investigation should activities. be carried out. They instructed the Panel"to Bank Management response to the Re- further substantiate the materiality of the quest, delivered to the Panel on July 19, 1995, damages and to establish whether such acknowledged and explained a number of damages were caused by a deviation from instances of lack of compliance with policies. Bank policies and procedures." The following The Panel considered that an initial field additional steps were therefore taken: study was required to assess the Requesters' claims of damage and the adequacy of the • The Panel conducted an "Additional Management response. In August a Panel Review" of the complaints in the member consulted with the Government of Request, taking into account further Brazil, federal entities involved in information from the Requesters, Bank PLANAFLORO, Rondonia State authorities Management and outside parties. and institutions, and people in the project • At the end of November, the Bank area and their organizations. He interviewed Management presented the Panel with 19 a draft project progress report and 13.40 on application of lessons of experience. "plan of action" to remedy past failures The Panel again recommended that the and refocus project design and imple- Board authorize an investigation and attached mentation. This was discussed with the to its report a "Work Plan" which summarized Panel on December 4, 1995. the principal issues to be investigated. • On December 8, 1995, the Panel sent a report on its Additional Review to the • On December 20, 1995, Bank Manage- Board, with copies to Bank Manage- ment submitted to the Board its "Re- ment. port on the Status of Implementation", which included a Plan of Action- The Panel established that specific lessons agreed with the Federal and State of experience from POLONOROESTE, Governments-to deal with the princi- pointed out by the Bank's own Operational pal issues listed by the Panel in its Evaluation Department (OED), had not been Additional Review and proposed taken into account when designing investigation "Work Plan". PLANAFLORO. The Panel pointed out that the draft "plan Board Decision of action" presented by Management On January 25, 1996 the Bank Board consid- "pushes forward dates of compliance ered the Panel's Additional Review and Bank through actions and plans to be defined in Management's Status Report and Agreed the future." In its view, the project needed to Plan of Action. be restructured "around a comprehensive The Board decision-World Bank News and realistic assessment of available remedies Release (No. 96/537) summarizing the and attainable objectives. To do so would Decision of the Board-notes that the "Presi- necessarily take into account OED lessons of dent of the World Bank and Chairman of the experience from POLONOROESTE and the Bank's Board concluded the meeting by past flaws and shortcomings of thanking the Inspection Panel on behalf of PLANAFLORO." the Executive Directors for providing invalu- It also informed the Board that the situa- able insights and thorough assessment of the tion for many intended beneficiaries is by issues, which allowed staff and Management and large worse than two years ago when the to critically examine responses to the difficul- project started. ties faced in the implementation of this The Panel concluded that there was complex operation." sufficient preliminary evidence of harm "In light of [the agreed] action plan and linked to policy violations to warrant an the follow-up now underway, the Executive investigation. The Bank's policies and proce- Directors concluded it would not be advis- dures included: Operational Manual State- able to proceed with the investigation as ment 2.34 and Operational Directive 4.20 on recomrriended by the Panel. However, in indigenous peoples; Operational Directives view of the complexity of the project and the 10.70, 13.05 and 13.40 on supervision, moni- desire of the Bank to help assure its success, toring and evaluation, on accounting and the Executive Directors agreed to review auditing, and on suspension of disburse- Management's progress report in six to nine ments; Operational Directive 14.70 on NGO months and will invite the Inspection Panel participation; and, Operational Manual to assist in that review." Statement 2.12 and Operational Directive 20 On the same day the Board decision was project. The results of this review are made public through a World Bank News pending. Release and by the Panel through Internet. • The Executive Directors are reviewing Then the Request for Inspection, the Panel's a joint proposal for an inspection Reports and Recommendation and the mechanism for IFC and MIGA projects. Management Response [and Report] were made public. Consultations on Potential Re- While there has been public criticism of quests the decision not to authorize an investigation into the Rondonia Request, the approach The Panel received a continuous flow of taken by the Board achieved a similar result: queries from potential requesters. Most of the the Panel's Additional Review provided not representatives of potential requesters asked only sufficient preliminary evidence of for confidentiality, often to protect locally possible material harm but also the basis for affected peoples' perceived fear of being corrective action-achieving in fact impor- identified. Although the confidential nature tant objectives of the Request and Panel of these consultations does not allow provi- function. sion of specific information, it can be noted that they related mostly to projects in the REQUEST NO. 5: CHILE: PANGUEI Africa, South Asia, East Asia, and the Latin RALCO HYDROELECTRIC COMPLEX America and Caribbean Regions-four of the Bank's six Regions. This Request, received in November 1995, The issues raised most frequently were on came from a Chilean NGO, representing the resettlement, environmental protection and people living in the project area. They allege rights of indigenous peoples, as well as matters that the International Finance Corporation's outside the Panel's mandate, such as procure- ("IFC") participation in the construction of ment issues raised by suppliers or contractors. the Pangue/Ralco complex of hydroelectric The complexity of potential requests dams on the upper BioBio River violates a varied widely. In most cases representatives number of IFC and World Bank policies. The lacked up-to-date project-specific information Chairman of the Panel informed the Request- or were unfamiliar with the details of the ers and Executive Directors of IBRD, IDA and many applicable Bank operational policies IFC that the Request was inadmissible be- and procedures. The Panel, through its cause the Panel has no authority to look at members and Secretariat, made its best complaints about IFC projects. The IBRD I efforts to facilitate access to the required IDA Resolutions that established the Inspec- information. Where appropriate, the Panel tion Panel, restrict its mandate to review advised representatives to seek further alleged violations of operational polices and discussion with relevant Bank Management procedures in the design, approval or imple- and staff in the hope that constructive dia- mentation of projects financed by the IBRD logue would resolve questions of alleged or IDA only. damage, thus avoiding the need to resort to a Although the Panel had to reject this formal Request for Inspection. This approach Request, afterwards: seems to have succeeded: in several instances Bank Management has taken constructive • Mr. Wolfensohn, as President of IFC, steps to meet the Requesters' concerns, instructed IFC Management to conduct removing the need for formal Requests. an impartial internal review of the 21 Lessons of Experience Decisions of the Bank's Execu- affected people or the environment has, or is likely to occur in connection with Bank- tive Directors financed projects. This is a factual and techni- D uring the first year of Panel opera- cal exercise for which Panel members were tions the Executive Directors carefully selected. Only when alleged dam- clarified two provisions of the age is confirmed does the question of any Resolution. Details are in ANNEX 4. failure to observe Bank policies arise. The The first decision dealt with the exclusion Panel avoided a negative or accusatory focus from Panel scrutiny of procurement matters by concentrating on the Requesters' real arising from the procurement of goods and concern-the question of whether allegations services financed by the Bank. of actual or potential harm are justified. This The second decision supported the Bank allows the Bank to take early corrective action. Management's view that the Resolution does not give the Panel an absolute mandate Review of Panel Mechanism to review the consistency of all Bank actions In September 1995 the Board agreed that an with its policies and procedures: it is only informal review of the Panel's functions when they relate to the design, appraisal or should start before the formal two-year implementation of specific projects financed deadline required by the Resolution. To this or to be financed by the Bank. The Board end the Board asked the Panel to prepare a also agreed with the Panel and Management working paper. The Panel proposed focusing view that the term "project" in the Resolution its work on an examination of whether or not has the same meaning as used in Bank prac- alleged damage had or was likely to occur tice: which is that it includes loans supporting prior to making any recommendation on an projects consisting of programs or activities investigation to the Board. This would other than specific physical works (e.g. struc- mean-as instructed by the Board in the tural adjustment loans and sector loans). Rondonia Request-that the Panel would conduct an assessment of harm at the outset Panel Experience and if necessary extend the preliminary The independent Panel's task is to deter- review time-frame. The Board is reviewing mine whether alleged damage to locally this proposition. 22 The Panel observed that access to the new processing of Requests. In light of this experi- mechanism by potentially affected people ence, as well as the outcome of the current themselves had proved difficult since they n Bank Board review of Panel functions and did not know of the Panel's existence. The constructive comments received from the Board recognized that efforts to inform public, the Operating Procedures will be locally affected people of the Panel's exist- revised in the coming months. In the mean- ence and role could be improved. The Board, time two particular areas for possible change Management and the Panel are discussing have been identified: solutions to these issues. (1) The Operating Procedures includes a The review, which will also examine two page model form for filing a Request. whether and how the International Finance This was aimed at making it easier for locally Corporation and the Multilateral Investment affected people to access the Panel. However, Guarantee Agency (the two other members this approach has not succeeded because the of the World Bank Group) can fall under the Resolution's demanding and multiple pre- Panel's mandate, is expected to be completed requisites for filing a Request have made it in fiscal year 1997. necessary for Requesters to call on seasoned international lawyers to prepare Requests. Review of Operating (2) The Operating Procedures also tried to Procedures provide clear guidance on the novel proce- dural requirements for the processing of In the "Introduction" to the Operating Proce- Requests. However, some details, in particu- dures the Panel indicated that it would lar the addition of a "Registration" proce- review and revise the Operating Procedures, dure, appear to have complicated rather than as necessary from experience gained in Panel simplified the process and given rise to operations. Consistent with this, the Panel unforeseen legal questions at all stages from has continuously explored ways to expedite Requesters, Bank Executive Directors, Man- agement and staff. 23 Budget T he Resolution provides that the "Panel During the first years, the start-up work of shall be given such budgetary resources the Panel demanded a substantial amount of as shall be sufficient to carry out its work by all three Panel members and the activities". Due to the unprecedented nature Secretariat. Except to acquire empirical of the Panel and the unpredictability of its technical data in connection with the operations, the Panel's annual funding level Rondonia Request, the Panel used in-house was tentatively set at about $1.5 million for resources. This cost effective approach re- each of the first two years. sulted in substantial savings in budgeted The administrative arrangements for the resources. Panel provide for the Chairman to work on a The demand-driven nature of the Panel's full-time basis supported by a small secre- work requires a flexible budgetary strategy to tariat. He calls on the two part-time Panel ensure that sufficient resources are available members on a case-by-case basis as required to process all Requests received. At the same by the Panel's workload related to Requests, time, experience has demonstrated that public inquiries and consultations as well as significant cost containment can be achieved institutional and administrative matters. In by relying on a small and efficient Secretariat practice the Panel has worked by consensus to conduct the Panel's affairs. In spite of with the two part-time members fully in- significant start-up costs, the handling of two volved in all activities related to Requests, complex Requests, an unpredictably high informational, institutional and administra- number of public inquiries and consultations tive matters. The Resolution provides that if and the participation of the whole Panel in the workload reaches a level that would the preparation of institutional and adminis- make it reasonable for the Panel to recom- trative documents, the Panel's FY 95 and FY mend it, the Board would appoint one or 96 expenditures were nevertheless about one both part-time members on a full-time basis. third under budget. ANNEX 5 contains a The Panel has not yet recommended this. breakdown of the Panel's administrative and operational expenses for FY 1995 and 1996. 24 ANNEXl Resolutions of the Executive Directors Establishing the Inspection Panel September 22, 1993 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Resolution No. IBRD 93-10 Resolution No. IDA 93-6 "The World Bank Inspection Panel" The Executive Directors: Hereby resolve: 1. There is established an independent Inspection Panel (hereinafter called the Panel), which shall have the powers and shall function as stated in this resolution. Composition of the Panel 2. The Panel shall consist of three members of different nationalities from Bank member countries. The President, after consultation with the Executive Directors, shall nominate the members of the Panel to be appointed by the Executive Directors. 3. The first members of the Panel shall be appointed as follows: one for three years, one for four years and one for five years. Each vacancy thereafter shall be filled for a period of five years, provided that no member may serve for 25 more than one term. The term of appointment of each member of the Panel shall be subject to the continuity of the inspection function established by this Resolution. 4. Members of the Panel shall be selected on the basis of their ability to deal thoroughly and fairly with the requests brought to them, their integrity and their independence from the Bank's Management, and their exposure to devel- opmental issues and to living conditions in developing countries. Knowledge and experience of the Bank's operations will also be desirable. 5. Executive Directors, Alternates, Advisors and staff members of the Bank Group may not serve on the Panel until two years have elapsed since the end of their service in the Bank Group. For purposes of this Resolution, the term "staff" shall mean all persons holding Bank Group appointments as defined in Staff Rule 4.01 including persons holding consultant and local consultant appointments. 6. A Panel member shall be disqualified from participation in the hearing and investigation of any request related to a matter in which he/ she has a personal interest or had significant involvement in any capacity. 7. The Panel member initially appointed for five years shall be the first Chairperson of the Panel, and shall hold such office for one year. Thereafter, the members of the Panel shall elect a Chairperson for a period of one year. 8. Members of the Panel may be removed from office only by decision of the Executive Directors, for cause. 9. With the exception of the Chairperson who shall work on a full-time basis at Bank headquarters, members of the Panel shall be expected to work on a full-time basis only when their workload justifies such an arrangement, as will be decided by the Executive Directors on the recommendation of the Panel. 10. In the performance of their functions, members of the Panel shall be officials of the Bank enjoying the privileges and immunities accorded to Bank officials, and shall be subject to the requirements of the Bank's Articles of Agreement concerning their exclusive loyalty to the Bank and to the obliga- tions of subparagraphs (c) and (d) of paragraph 3.1 and paragraph 3.2 of the Principles of Staff Employment concerning their conduct as officials of the Bank. Once they begin to work on a full-time basis, they shall receive remu- neration at a level to be determined by the Executive Directors upon a recom- mendation of the President, plus normal benefits available to Bank fixed-term staff. Prior to that time, they shall be remunerated on a per diem basis and shall be reimbursed for their expenses on the same basis as the members of the 26 Bank's Administrative Tribunal. Members of the Panel may not be employed by the Bank Group, following the end of their service on the Panel. 11. The President, after consultation with the Executive Directors, shall assign a staff member to the Panel as Executive Secretary, who need not act on a full-time basis until the workload so justifies. The Panel shall be given such budgetary resources as shall be sufficient to carry out its activities. Powers of the Panel 12. The Panel shall receive requests for inspection presented to it by an affected party in the territory of the borrower which is not a single individual (i.e., a community of persons such as an organization, association, society or other grouping of individuals), or by the local representative of such party or by another representative in the exceptional cases where the party submitting the request contends that appropriate representation is not locally available and the Executive Directors so agree at the time they consider the request for inspection. Any such representative shall present to the Panel written evidence that he is acting as agent of the party on behalf of which the request is made. The affected party must demonstrate that its rights or interests have been or are likely to be directly affected by an action or omission of the Bank as a result of a failure of the Bank to follow its operational policies and procedures with respect to the design, appraisal and/ or implementation of a project financed by the Bank (including situations where the Bank is alleged to have failed in its follow-up on the borrower's obligations under loan agreements with respect to such policies and procedures) provided in all cases that such failure has had, or threatens to have, a material adverse effect. In view of the institutional respon- sibilities of Executive Directors in the observance by the Bank of its operational policies and procedures, an Executive Director may in special cases of serious alleged violations of such policies and procedures ask the Panel for an investi- gation, subject to the requirements of paragraphs 13 and 14 below. The Execu- tive Directors, acting as a Board, may at any time instruct the Panel to conduct an investigation. For purposes of this Resolution, "operational policies and procedures" consist of the Bank's Operational Policies, Bank Procedures and Operational Directives, and similar documents issued before these series were started, and does not include Guidelines and Best Practices and similar docu- ments or statements. 13. The Panel shall satisfy itself before a request for inspection is heard that the subject matter of the request has been dealt with by the Management of the Bank and Management has failed to demonstrate that it has followed, or is taking adequate steps to follow the Bank's policies and procedures. The Panel shall also satisfy itself that the alleged violation of the Bank's policies and procedures is of a serious character. 27 14. In considering requests under paragraph 12 above, the following requests shall not be heard by the Panel: (a) Complaints with respect to actions which are the responsibility of other parties, such as a borrower, or potential borrower, and which do not involve any action or omission on the part of the Bank. (b) Complaints against procurement decisions by Bank borrowers from suppliers of goods and services financed or expected to be financed by the Bank under a loan agreement, or from losing tenderers for the supply of any such goods and services, which will continue to be addressed by staff under existing procedures. (c) Requests filed after the Closing Date of the loan financing the project with respect to which the request is filed or after the loan financing the project has been substantially disbursed. (This will be deemed to be the case when at least ninety-five percent of the loan proceeds have been disbursed.) (d) Requests related to a particular matter or matters over which the Panel has already made its recommendation upon having received a prior request, unless justified by new evidence or circumstances not known at the time of the prior request. 15. The Panel shall seek the advice of the Bank's Legal Department on mat- ters related to the Bank's rights and obligations with respect to the request under consideration. Procedures 16. Requests for inspection shall be in writing and shall state all relevant facts, including, in the case of a request by an affected party, the harm suffered by or threatened to such party or parties by the alleged action or omission of the Bank. All requests shall explain the steps already taken to deal with the issue, as well as the nature of the alleged actions or omissions and shall specify the actions taken to bring the issue to the attention of Management, and Management's response to such action. 17. The Chairperson of the Panel shall inform the Executive Directors and the President of the Bank promptly upon receiving a request for inspection. 18. Within 21 days of being notified of a request for inspection, the Manage- ment of the Bank shall provide the Panel with evidence that it has complied, or intends to comply with the Bank's relevant policies and procedures. 19. Within 21 days of receiving the response of the Management as provided 28 in the preceding paragraph, the Panel shall determine whether the request meets the eligibility criteria set out in paragraphs 12 to 14 above and shall make a recommendation to the Executive Directors as to whether the matter should be investigated. The recommendation of the Panel shall be circulated to the Executive Directors for decision within the normal distribution period. In case the request was initiated by an affected party, such party shall be informed of the decision of the Executive Directors within two weeks of the date of such decision. 20. If a decision is made by the Executive Directors to investigate the request, the Chairperson of the Panel shall designate one or more of the Panel's mem- bers (Inspectors) who shall have primary responsibility for conducting the inspection. The Inspector(s) shall report his/her (their) findings to the Panel within a period to be determined by the Panel taking into account the nature of each request. 21. In the discharge of their functions, the members of the Panel shall have access to all staff who may contribute information and to all pertinent Bank records and shall consult as needed with the Director General, Operations Evaluation Department and the Internal Auditor. The borrower and the Execu- tive Director representing the borrowing (or guaranteeing) country shall be consulted on the subject matter both before the Panel's recommendation on whether to proceed with the investigation and during the investigation. In- spection in the territory of such country shall be carried out with its prior consent. 22. The Panel shall submit its report to the Executive Directors and the President. The report of the Panel shall consider all relevant facts, and shall conclude with the Panel's findings on whether the Bank has complied with all relevant Bank policies and procedures. 23. Within six weeks from receiving the Panel's findings, Management will submit to the Executive Directors for their consideration a report indicating its recommendations in response to such findings. The findings of the Panel and the actions completed during project preparation also will be discussed in the Staff Appraisal Report when the project is submitted to the Executive Directors for financing. In all cases of a request made by an affected party, the Bank shall, within two weeks of the Executive Directors' consideration of the matter, inform such party of the results of the investigation and the action taken in its respect, if any. Decisions of the Panel 24. All decisions of the Panel on procedural matters, its recommendations to the Executive Directors on whether to proceed with the investigation of a 29 request, and its reports pursuant to paragraph 22, shall be reached by consen- sus and, in the absence of a consensus, the majority and minority views shall be stated. Reports 25. After the Executive Directors have considered a request for an inspection as set out in paragraph 19, the Bank shall make such request publicly available together with the recommendation of the Panel on whether to proceed with the inspection and the decision of the Executive Directors in this respect. The Bank shall make publicly available the report submitted by the Panel pursuant to paragraph 22 and the Bank's response thereon within two weeks after consid- eration by the Executive Directors of the report. 26. In addition to the material referred to in paragraph 25, the Panel shall furnish an annual report to the President and the Executive Directors concern- ing its activities. The annual report shall be published by the Bank. Review 27. The Executive Directors shall review the experience of the inspection function established by this Resolution after two years from the date of the appointment of the first members of the Panel. Application to IDA projects 28. In this resolution, references to the Bank and to loans include references to the Association and to development credits. 30 ANNEX2 Operating Procedures as adopted by the Panel on August 19, 1994 CONTENTS Introduction 33 Composition 33 Purpose 33 Functions 33 Participants 34 Administration 34 I. Subject Matter of Requests 34 Scope 34 Limitations 34 II. Preparation of a Request 35 A. Who Can File a Request 35 B. Contents of a Request 35 C. Form of a Request 36 Written 36 Format 36 Language 36 Representations 36 Documents 37 D. Delivery of Request 37 E. Advice on Preparation 37 Ill. Procedures on Receipt of a Request 37 A. Register 37 Contents of Notice 37 B. Request Additional Information 37 C. Outside Scope 38 Records 38 31 D. Need for Review 39 E. Revised Request 39 IV. Management's Response 39 Clarification 39 v. Panel Recommendation 39 A. Basis 40 B. Required Criteria 40 Criteria for Satisfactory Response 40 Preliminary Review 40 Initial Study 41 C. Contents 41 D. Submission 41 VI. Board Decision and Public Release 41 Notification 42 Public Information 42 VII. An Investigation 42 A. Initial Procedures 42 B. Methods of Investigation 42 Consent Required 43 C. Participation of Requester 43 D. Participation of Third Parties 43 VIII. Panel Report 43 Contents 43 Submission 44 IX. Management's Recommendations 44 X. Board Decision and Public Release 44 XI. General 45 Business Days 45 Copies 45 Consultations 45 Access to Bank Staff and Information 45 Legal Advice 45 Confidentiality 45 Information to Requester and Public 45 Annexes Annex 1: The Resolution 46 Annex 2: Guidance & Model Request Form 46 32 INTRODUCTION The Inspection Panel (the "Panel") is an independent forum established by the Executive Directors of the International Bank for Reconstruction and Develop- ment ("IBRD") and the International Development Association ("IDA") by IBRD Resolution No. 93-10 and the identical IDA Resolution No. 93-6 both adopted by the Executive Directors of the respective institutions on September 22, 1993 (collectively the "Resolution"). The text of the Resolution is in Annex 1. References in these procedures to the "Bank" includes the IBRD and IDA. The Panel's authority is dictated by the Resolution: within that framework, these Operating Procedures are adopted by the Panel to provide detail to the operational provisions. The text is based on the Resolution and takes into account suggestions from outside sources. In view of the unprecedented nature of the new inspection function the current procedures are provisional: the Panel will review them within 12 months, and in light of experience and comments received, will revise them if necessary; and will recommend to the Executive Directors ("Executive Directors") amend- ments to the Resolution that would allow a more effective role for the Panel. Composition The Panel consists of three Inspectors. At the outset, one Inspector, the Chair- person, will work on a full-time basis: the other two will work part-time. This arrangement is provisional. The Panel's workload will be dictated by the number and nature of requests received. If necessary, the Panel will recom- mend alternative arrangements to the Executive Directors. Purpose The Panel has been established for the purpose of providing people directly and adversely affected by a Bank-financed project with an independent forum through which they can request the Bank to act in accordance with its own policies and procedures. It follows that this forum is available when adversely affected people believe the Bank itself has failed, or has failed to require others, to comply with its policies and procedures, and only after efforts have been made to ask the Bank Management ("Management") itself to deal with the problem. Functions The role of the Panel is to carry out independent investigations. Its function, which will be triggered when it receives a request for inspection, is to inquire and recommend: it will make a preliminary review of a request for inspection and the response of Management, independently assess the information and then recommend to the Board of Executive Directors whether or not the mat- 33 ters complained of should be investigated. If the Board decides that a request shall be investigated, the Panel will collect information and provide its find- ings, independent assessment and conclusions to the Board. On the basis of the Panel's findings and Management's recommendations, the Executive Directors will consider the actions, if any, to be taken by the Bank. Participants During the preliminary review period-up to the time the Panel makes a recommendation to the Board on whether or not the matter should be investi- gated-the Panel will accept statements or evidence from (a) the Requester, i.e. either the affected people and/ or their duly appointed representative, or an Executive Director; (b) Management; and, (c) any other individual or entity invited by the Panel to present information or comments. During an investigation, any person who is either a party to the investigation or who provides the designated Inspector(s) with satisfactory evidence that he/she has an interest, apart from any interest in common with the public, will be entitled to submit information or evidence relevant to the investigation. Administration The Panel has approved separate Administrative Procedures which are avail- able from the Office of The Inspection Panel. Please note that all heading are for ease of reference only. They do not form part of these procedures and do not constitute an interpretation thereof. I. SUBJECT MATTER OF REQUESTS Scope 1. The Panel is authorized to accept requests for inspection ("Request(s)") which claim that an actual or threatened material adverse effect on the affected party's rights or interests arises directly out of an action or omission of the Bank as a result of a failure by the Bank to follow its own operational policies and procedures during the design, appraisal and/ or implementation of a Bank financed project. Before submitting a Request steps must have already been taken (or efforts made) to bring the matter to the attention of Management with a result unsatisfactory to the Requester. Limitations 2. The Panel is not authorized to deal with the following: (a) complaints with respect to actions which are the responsibility of other 34 parties, such as the borrower, or potential borrower, and which do not involve any action or omission on the part of the Bank; (b) complaints against procurement decisions by Bank borrowers from suppliers of goods and services financed or expected to be financed by the Bank under a loan/ credit agreement, or from losing tenderers for the supply of any such goods and services, which will continue to be addressed by Bank staff under existing procedures; (c) Requests filed after the Closing Date of the loan/credit financing the project with respect to which the Request is filed or when 95% or more of the loan/ credit proceeds have been disbursed; or (d) Requests related to a particular matter or matters over which the Panel has already made its recommendation after having received a prior Request, unless justified by new evidence or circumstances not known at the time of the prior Request. II. PREPARATION OF A REQUEST 3. The Panel's operational proceedings begin when a Request is received. This section of the procedures is primarily designed to give further guidance to potential Requesters on what facts and explanations they should provide. A. Who Can File a Request 4. The Panel has authority to receive Requests which complain of a violation of the Bank's policies and procedures from the following people or entities: (a) any group of two or more people in the country where the Bank-financed project is located who believe that as a result of the Bank's violation their rights or interests have been, or are likely to be adversely affected in a direct and material way. They may be an organization, association, society or other group- ing of individuals; or (b) a duly appointed local representative acting on explicit instructions as the agent of adversely affected people; or (c) in exceptional cases, referred to in paragraph 11 below, a foreign represen- tative acting as agent of adversely affected people; or (d) an Executive Director of the Bank in special cases of serious alleged violations of the Bank's policies and procedures. B. Contents of a Request 5. In accordance with the Resolution, Requests should contain the following information: (a) a description of the project, stating all the relevant facts including the harm suffered by or threatened to the affected party; (b) an explanation of how Bank policies, procedures or contractual docu- ments were seriously violated; 35 (c) a description of how the act or omission on the part of the Bank has led or may lead to a violation of the specific provision; (d) a description of how the party was, or is likely to be, materially and adversely affected by the Bank's act or omission and what rights or interests of the claimant were directly affected; (e) a description of the steps taken by the affected party to resolve the violations with Bank staff, and explanation of why the Bank's response was inadequate; (f) in Requests relating to matters previously submitted to the Panel, a statement specifying what new evidence or changed circumstances justify the Panel revisiting the issue; and (g) if some of the information cannot be provided, an explanation should be included. C. Form of a Request Written 6. All Requests must be submitted in writing, dated and signed by the Requester and contain his/her name and contact address. Format 7. No specific form is necessary: a letter will suffice. A Requester may wish to refer to the guidance and use the model form specifying required informa- tion. (Attached as Annex 2) Language 8. The working language of the Panel is English. Requests submitted directly by affected people themselves may be in their local language if they are unable to obtain a translation. If requests are not in English, the time needed to translate and ensure an accurate and agreed translation may delay acceptance and consideration by the Panel. Representatives 9. If the Requester is a directly affected person or entity representing af- fected people, written signed proof that the representative has authority to act on their behalf must be attached. 10. If the Request is submitted by a non-affected representative, he/ she must provide evidence of representational authority and the names and contact address of the party must be provided. Proof of representational authority, which shall consist of the original signed copy of the affected party's explicit instructions and authorization, must be attached. 11. In addition, in the cases of non-local representation, the Panel will require clear evidence that there is no adequate or appropriate representation in the country where the project is located. 36 Documents 12. The following documents should be attached: (a) all correspondence with Bank staff; (b) notes of meetings with Bank staff; (c) a map or diagram, if relevant, showing the location of the affected party or area affected by the project; and (d) any other evidence supporting the complaint. 13. If all the information listed cannot be provided an explanation should be included. D. Delivery of Request 14. Requests must be sent by registered or certified mail or delivered by hand in a sealed envelope against receipt to the Office of The Inspection Panel at 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. or to the Bank's resident representative in the country where the project is located. In the latter case, the resident representative shall, after issuing a receipt to the Requester, forward the Request to the Panel through the next pouch. E. Advice on Preparation 15. People or entities seeking advice on how to prepare and submit a Request may contact the Office of The Inspection Panel, which will provide information or may meet and discuss the requirements with potential requesters. III. PROCEDURES ON RECEIPT OF A REQUEST 16. When the Panel receives a Request the Chairperson, on the basis of the information contained in the Request, shall either promptly register theRe- quest, or ask for additional information, or find the Request outside the Panel's mandate. A. Register 17. If the request, appears to contain sufficient required information the Chairperson shall register the Request in the Panel Register; promptly notify the Requester, the Executive Directors and the Bank President ("President") of the registration; and transmit to the President a copy of the Request with the accompanying documentation, if any. Contents of Notice 18. The notice of registration shall: (a) record that the Request is registered and indicate the date of the registra- tion and dispatch of that notice; 37 (b) the notice will include the name of the project, the country where the project is located, the name of the Requester unless anonymity is requested, and a brief description of the Request; (c) notify the Requester that all communications in connection with the Request will be sent to the address stated in the Request, unless another ad- dress is indicated to the Panel Secretariat; and (d) request Management to provide the Panel, within 21 days after receipt of the notice and Request, with written evidence that it has complied, or intends to comply with the Bank's relevant policies and procedures. The notice shall specify the due date of the response. B. Request Additional Information 19. If the chairperson finds the contents of the Request or documentation on representation insufficient, he/she may ask the Requester to supply further information. 20. Upon receipt of a Request, the chairperson shall send a written acknowl- edgement to the Requester, and will specify what additional information is required. 21. The Chairperson may refuse to register a Request until all necessary information and documentation is filed. C. Outside Scope 22. If the Chairperson finds, that the matter is without doubt manifestly outside the Panel's mandate, he/she will notify the Requesters, of his/her refusal to register the Request and of the reasons therefor; this will include but not be limited to the following types of communications: (a) Requests which are clearly outside the Panel's mandate including those listed above at paragraph 2; (b) Requests which do not show the steps taken or effort made to resolve the matter with Management; (c) Requests from an individual or from a non-authorized representative of an affected party; (d) any correspondence, including but not limited to letters, memoranda, opinions, submissions or requests on any matter within the Panel's mandate which are not requests for an inspection; and (e) Requests that are manifestly frivolous, absurd or anonymous. Records 23. The number of such Requests and communications received shall be noted in the Register on a quarterly basis and the yearly total included in the Annual Report. 38 D. Need for Review 24. In cases where additional information is required, or where it is not clear whether a Request is manifestly outside the Panel's mandate, the Chairperson shall designate a Panel member to review the Request. E. Revised Request 25. If the Requester receives significant new evidence or information at any time after the initial Request was submitted, he/she may consider whether or not it is serious enough to justify the submission of a revised Request. 26. If a revised Request is submitted, the time periods for Management's response and the Panel recommendation will begin again from the time such Request is registered. lV. MANAGEMENT'S RESPONSE 27. Within 21 days after being notified of a Request, Management shall provide the Panel with evidence that it has complied, or intends to comply with the Bank's relevant policies and procedures. After the Panel receives Management's re- sponse, it shall promptly enter the date of receipt in the Panel Register. 28. If there is no response from Management within 21 days, the Panel shall notify the President and the Executive Directors and send a copy to the Requester. Clarification 29. In order to make an informed recommendation, the Panel may request clarification from Management; in the light of Management's response, request more information from the Requester; and provide relevant portions of Management's response for comment. A time limit for receipt of the informa- tion requested shall be specified; and (a) whether or not such clarification or information is received within the time limit, make its recommendation to the Executive Directors within 21 days after receipt of Management's response; or (b) in the event it is not possible for the Requester to provide the information quickly, the Panel may advise the Requester to submit an amended Request; the Executive Directors and Bank Management will be notified that the process will begin again when the amended Request is received. V. PANEL RECOMMENDATION 30. Within 21 days after receiving Management's response, the Panel shall make a recommendation to the Executive Directors as to whether the matter should be investigated. 39 A. Basis 31. The Panel shall prepare its recommendation to the Board on the basis of the information contained in: (a) the Request; (b) Management's response; (c) any further information the Panel may have requested and received from the Requester and/ or Management and/ or third parties; and (d) any findings of the Panel during this stage. B. Required Criteria 32. If, on the basis of the information contained in the Request, it has not already been established that the Request meets the following three conditions required by the Resolution, the Chairperson, in consultation with the other Panel members may, if necessary, designate a Panel member to conduct a preliminary review to determine whether the Request: (a) was filed by an eligible party; (b) is not time-barred; and (c) relates to a matter falling within the Panel's mandate. Criteria for Satisfactory Response 33. The Panel may proceed to recommend that there should not be an investi- gation, if, on the basis of the information contained in the Request and Management's response, the Panel is satisfied that Management has done the following: (a) dealt appropriately with the subject matter of the Request; and (b) demonstrated clearly that it has followed the required policies and proce- dures; or (c) admitted that it has failed to follow the required policies and procedures but has provided a statement of specific remedial actions and a time-table for implementing them, which will, in the judgment of the Panel, adequately correct the failure and any adverse effects such failure has already caused. Preliminary Review 34. If, on the basis of the information contained in Management's response and any clarifications provided, the Panel is satisfied that Management has failed to demonstrate that it has followed, or is taking adequate steps to follow the Bank's policies and procedures, the Panel will conduct a preliminary review in order to determine whether conditions required by provisions of the Resolution exist. 35. Although it may not investigate Management's actions in depth at this 40 stage, it will determine whether Management's failure to comply with the Bank's policies and procedures meets the following three conditions: (a) whether such failure has had, or threatens to have, a material adverse effect; (b) whether the alleged violation of the Bank's policies and procedures are, in the judgment of the Panel, of a serious character; and (c) whether remedial actions proposed by Management do not appear adequate to meet the concerns of the Requester as to the application of the Bank's policies and procedures. Initial Study 36. If the Chairperson considers, after the preliminary review and consulta- tion with the other Panel members, that more factual data not already provided by the Requester, Management or any other source is required to make an informed recommendation to the Executive Directors, he/she may designate a Panel member to undertake a preliminary study. The study may include, but need not be limited to, a desk study and/ or a visit to the project site. C. Contents 37. On the basis of the review, the Panel shall make its recommendation to the Board as to whether the matter should be investigated. Every recommen- dation shall include a clear explanation setting forth reasons for the recommen- dation and be accompanied by: (a) the text of the Request and, where applicable, any other relevant informa- tion provided by the Requester; (b) the text of Management's response and, where applicable, any clarifica- tions provided; (c) the text of any advice received from the Bank's Legal Department; (d) any other relevant documents or information received; and (e) statements of the majority and minority views in the absence of a consen- sus by the Panel. D. Submission 38. The recommendation shall be circulated by the Executive Secretary of the Panel to the Executive Directors for decision. The Panel will notify the Re- quester that a recommendation has been sent to the Executive Directors. VI. BOARD DECISION AND PUBLIC RELEASE 39. The Board decides whether or not to accept or reject the Panel's recom- mendation; and, if the Requester is a non-local representative, whether excep- 41 tional circumstances exist and suitable local representation is not available. Notification 40. The Panel shall promptly inform the Requester of the Board's decision on whether or not to investigate the Request and, shall send the Requester a copy of the Panel's recommendation. Public Information 41. After the Executive Directors have considered a Request the Bank shall make such Request publicly available together with the Panel's recommenda- tion on whether to proceed with the inspection and the decision of the Execu- tive Directors in this respect. VII. AN INVESTIGATION A. Initial Procedures 42. When a decision to investigate a Request is made by the Board, or the Board itself requests an investigation, the Chairperson shall promptly: (a) designate one or more of the Panel's members (Inspector(s)) to take primary responsibility for the investigation; (b) arrange for the Panel members to consult, taking into account the nature of the particular Request, on: (i) the methods of investigation that at the outset appear the most appropri- ate; (ii) an initial schedule for the conduct of the investigation; (iii) when the Inspector(s) shall report his/her (their) findings to the Panel, including any interim findings; and (iv) any additional procedures for the conduct of the investigation. 43. The designated Inspector(s) shall, as needed, arrange for a meeting with the Requester and schedule discussions with directly affected people. 44. The name of the Inspector(s) and an initial work plan shall be made public as soon as possible. B. Methods of Investigation 45. The Panel may, taking into account the nature of the particular Request, use a variety of investigatory methods, including but not limited to: (a) meetings with the Requester, affected people, Bank staff, government officials and project authorities of the country where the project is located, representatives of local and international non-governmental organizations; (b) holding public hearings in the project area; (c) visiting project sites; 42 (d) requesting written or oral submissions on specific issues from the Re- quester, affected people, independent experts, government or project officials, Bank staff, or local or international non-governmental organizations; (e) hiring independent consultants to research specific issues relating to a Request; (f) researching Bank files; and (g) any other reasonable methods the Inspector(s) consider appropriate to the specific investigation. Consent Required 46. In accordance with the Resolution, physical inspection in the country where the project is located will be carried out with prior consent. The Chair- person shall request the Executive Director representing such country to pro- vide written consent. C. Participation of Requester 47. During the course of the investigation, in addition to any information requested by the Inspector(s), the Requester (and affected people if theRe- quester is a non-affected Representative or an Executive Director) or Bank staff may provide the Inspector(s) either directly or through the Executive Secretary with supplemental information that they believe is relevant to evaluating the Request. 48. The Inspector(s) may notify the Requester of any new material facts provided by Bank staff or by the Executive Director for, or authorities in the country where the project is located. 49. To facilitate understanding of specific points, the Panel may discuss its preliminary findings of fact with the Requester. D. Participation of Third Parties 50. During the course of the investigation, in addition to any information requested by the Inspector(s), any member of the public may provide the Inspector(s), either directly or through the Executive Secretary, with supple- mental information that they believe is relevant to evaluating the Request. 51. Information should not exceed ten pages and include a one-page sum- mary. Supporting documentation may be listed and attached. The Inspector(s) may request more details if necessary. VIII. PANEL REPORT Contents 52. The report of the Panel (the "Report") shall include the following: 43 (a) a summary discussion of the relevant facts and of the steps taken to conduct the investigation; (b) a conclusion showing the Panel's findings on whether the Bank has complied with relevant Bank policies and procedures; (c) a list of supporting documents which will be available on request from the Office of The Inspection Panel; and (d) statements of the majority and minority views in the absence of a consen- sus by the Panel. Submission 53. Upon completion of the Report, the Panel shall submit it to: (a) the Executive Directors: accompanied by notification that the Report is being submitted to the President on the same date; and (b) the President: accompanied by a notice against receipt that within 6 weeks of receipt of the Report, Management must submit to the Executive Directors for their consideration a report indicating Management's recommen- dations in response to the Panel's findings. IX. MANAGEMENT'S RECOMMENDATIONS 54. Within 6 weeks after receiving the Panel's findings, Management will submit to the Executive Directors for their consideration a report indicating its recommendations in response to the Panel's findings. Upon receipt of a copy of the report, the Panel will notify the Requester. X. BOARD DECISION AND PUBLIC RELEASE 55. Within 2 weeks after the Executive Directors consider the Panel's Report and the Management's response, the Bank shall inform the Requester of the results of the investigation and the action decided by the Board, if any. 56. After the Bank has informed the Requester, the Bank shall make publicly available: (a) the Panel's Report; (b) Management's recommendations; and (c) the Board's decision. These documents will also be available at the Office of The Inspection Panel. 57. The Panel will seek to enhance public awareness of the results of investi- gations through all available information sources. 44 XI. GENERAL Business Days 58. "Days" under these procedures means days on which the Bank is open for business in Washington, D.C. Copies 59. Consideration of Requests and other documents submitted throughout the process will be expedited if an original and two copies are filed. When any document contains extensive supporting documentation the Panel may ask for additional copies. Consultations 60. The borrower and the Executive Director representing the borrowing (or guaranteeing) country shall be consulted on the subject matter before the Panel's recommendation and during an investigation. Access to Bank Staff and Information 61. Pursuant to the Resolution and in discharge of their functions, the mem- bers of the Panel shall have access to all Bank staff who may contribute infor- mation and to all pertinent Bank records and shall consult as needed with the Director General, Operations Evaluation Department, and the Internal Auditor. Legal Advice 62. The Panel shall seek, through the Vice President and General Counsel of the Bank, the written advice of the Bank's Legal Department on matters related to the Bank's rights and obligations with respect to the Request under consider- ation. Any such advice will be included as an attachment to the Panel's recom- mendation and/ or Report to the Executive Directors. Confidentiality 63. Documents, or portions of documents of a confidential nature will not be released by the Panel without the express written consent of the party con- cerned. Information to Requester and Public 64. The Executive Secretary shall record in the Register all actions taken in connection with the processing of the Request, the dates thereof, and the dates on which any document or notification under these procedures is received in or sent from the Office of The Inspection Panel. The Requester shall be informed promptly. The Register will be publicly available. 65. A notice that a Request has been registered and all other notices or docu- ments issued by the Panel will be available to the public through the Bank's PIC in Washington, D.C.; at the Bank's Resident Mission in the country where 45 the project is located or at the relevant regional office; at the Bank's Paris, London and Tokyo offices; or on request from the Executive Secretary of the Panel. ANNEXl Text of this ANNEX [the Resolutions] is reproduced as ANNEX 1 to this 1996 Report. ANNEX2 GUIDANCE ON HOW TO PREPARE A REQUEST FOR INSPECTION The Inspection Panel needs some basic information in order to process a Re- quest for Inspection: 1. Name, contact address and telephone number of the group or people making the request. 2. Name and description of the Bank project. 3. Adverse effects of the Bank project. 4. If you are a representative of affected people attach explicit written instructions from them authorizing you to act on their behalf. These key questions must be answered: 1. Can you elaborate on the nature and importance of the damage caused by the project to you or those you represent? 2. Do you know that the Bank is responsible for the aspects of the project that has or may affect you adversely? How did you determine this? 3. Are you familiar with Bank policies and procedures that apply to this type of project? How do you believe the Bank may have violated them? 4. Have you contacted or attempted to contact Bank staff about the project? Please provide information about all contacts, and the responses, if any, you received from the Bank. You must have done this before you can file a request. 5. Have you tried to resolve your problem through any other means? 46 6. If you know that the Panel has dealt with this matter before, do you have new facts or evidence to submit? Please provide a summary of the information in no more than a few pages. Attach as much other information as you think necessary as separate documents. Please note and identify attachments in your summary. You may wish to use the attached model form. 47 MODEL FORM: REQUEST FOR INSPECTION TO: THE INSPECTION PANEL: 1818 H St., N.W., Washington, D.C. 20433, U.S.A. We, , and , and other persons whose names and addresses are attached live/represent others, living in the area known as: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ [and shown in the attached map or diagram] claim the following: 1. The Bank is financing the design/appraisal and/or implementation of a project [name and brief description] 2. We understand that the Bank has the following policy(ies) and/ or proce- dures [list or describe]: 3. Our rights/interests are [describe]: 4. The Bank has violated its own policies/procedures in this way: 5. We believe our rights/interests have been, are likely to be adversely affected as a direct result of the Bank's violation. This is, or is likely to cause us to suffer [describe harm]: 48 6. We believe the action/ omission is the responsibility of the Bank. 7. We have complained/made an effort to complain to Bank staff by [describe]: Please attach evidence or explanation. 8. We received no response; or We believe that the response(s) (attached/not attached) is unsatisfactory be- cause: [describe why]: 9. In addition we have taken the following steps to resolve our problem: We therefore believe that the above actions/omissions which are contrary to the above policies or procedures have materially and adversely affected our rights/interests and request the Panel to recommend to the Bank's Executive Directors that an investigation of these matters be carried out in order to resolve the problem. 49 As advised in your Operating Procedures, this Request for Inspection is brief. We can provide you with more particulars. DATE: ---------------- SIGNATURES: - - - - - - - CONTACT ADDRESS: ______________________ Attachments: [Yes][No] We authorize you to make this Request public [Yes][No] 50 ANNEX3 Inspection Panel Documents All documents are available from the World Bank Public Information Cen- ters. The texts marked * are available on the Internet. The list was taken from the Inspection Panel Internet home page which the Panel updates constantly. General Inspection Panel Operating Procedures (August 1994) (English, French, Spanish, Portuguese)* Inspection Panel Overview (Rev. June 1996) (English, French, Spanish, Portuguese)* Biographical Summaries of Panel Members (August 1994)* Information Releases: New Independent Inspection Panel Office Opens (September 1994)* Decision of the Executive Directors of IBRD & IDA on Panel's mandate over Procurement Matters (April1995)* Election of the Chairperson (August 1995)* Election of the Chairperson Guly 1996)* Request for Inspection #1 The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection -Nepal: Arun ill Hydroelectric Project- Notification of Registra- tion," (November 3, 1994). Request for Inspection - Nepal: Arun ill Hydroelectric Project -Notice of Registration.* The Inspection Panel: Memorandum to the Executive Directors re: "Request 51 for Inspection: Panel Report- Nepal: Arun III Hydroelectric Project (Credit 2029-NEP)," (December 16, 1994). The Inspection Panel: "Note for the Executive Directors in Response to a Question from an Executive Director on the Request for Inspection: Nepal- Proposed Arun III Hydroelectric Project and Restructuring of the May 1989 IDA Credit-2029 (Nepal- Arun III Access Road)'', Oanuary 9, 1995). The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection- Nepal: Arun III Hydroelectric Project," Oanuary 20, 1995). Board of Executive Directors of the International Development Association ("IDA"): Decision authorizing an inspection of the Proposed Arun III Hydro- electric Project, (February 2, 1995). (Text in the World Bank Information Release of February 2, 1995.) The Inspection Panel: Memorandum to the Executive Directors re: "Nepal: Proposed Arun III Hydroelectric Project - Initial Work Plan for Investigation," (February 15, 1995.)* The Inspection Panel: Note to the Executive Directors re: "Request for Inspection Nepal: Proposed Arun III Hydroelectric Project- Note on Investiga- tion by the Inspection Panel," (April3, 1995).* The Inspection Panel: Note to the Executive Directors re: "Nepal: Arun III Proposed Hydroelectric Project and Restructuring of IDA Credit-2029 -Note on Investigation by the Inspection Panel," dated May 31, 1995. The Inspection Panel: Memorandum to the Executive Directors re: "The Inspection Panel Investigation Report - Nepal: Arun III Proposed Hydroelectric Project and Restructuring of IDA Credit-2029-NEP," Oune 22, 1995). Arun III Hydroelectric Project: President's Memorandum to the Executive Directors on: "Management Response to the Inspection Panel's Investigation Report of June 21, 1995," (August 2, 1995). Information Releases: First Request for Inspection- NEPAL: ARUN III (November 4, 1994)* NEPAL: Arun III Hydroelectric Project- Response from Bank Manage- ment (November 23, 1994)* Inspection of Arun ill Hydroelectric Project Authorized (February 3, 1995)* Proposed Arun III Hydroelectric Project- Inspection Panel Investigation Report Oune 23, 1995)* 52 Request for Inspection #2 The Inspection Panel: Note to the Executive Directors re: "Request for Inspection: Compensation for Expropriation and Extension of IDA Credits to Ethiopia," (April 4, 1995). The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection: Compensation for Expropriation and Extension of IDA Credits to Ethiopia," (May 19, 1995). Request for Inspection #3 The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection: Tanzania: Power VI Project (Cr. 2489-TA)- Notification of Regis- tration" (June 16, 1995.) Request for Inspection- Tanzania: Power VI Project (Cr. 2489-TA)- Notice of Registration.* The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection: Tanzania: Power VI Project (Cr. 2489TA) - Panel Recommenda- tion," (August 15, 1995). Memorandum from the Vice President and Secretary re: "Inspection Panel- Request for Inspection - Tanzania: Power VI Project (Cr. 2489TA) - Panel Recommendation," (August 18, 1995). Information Releases: TANZANIA: Power VI Project (June 20, 1995)* TANZANIA: Power VI Project (July 25, 1995)* TANZANIA: Power VI Project (August 25, 1995)* TANZANIA: Power VI Project (September 26, 1995)* Request for Inspection #4 The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection: Brazil - Rondonia Natural Resources Management Project (Loan 3444-BR) - Notification of Registration," (June 19, 1995). Request for Inspection - Brazil - Rondonia Natural Resources Management Project (Loan 3444-BR) - Notice of Registration.* The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection: Brazil - Rondonia Natural Resources Management Project (Loan 3444-BR) - Panel Recommendation," (August 17, 1995). 53 The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection: Brazil - Rondonia Natural Resources Management Project (Loan 3444-BR)- Report on Additional Review," (December 12, 1995}. Status Report submitted to the Executive Directors by Country Department I, Latin America & Caribbean Regions "BRAZIL: Rondonia Natural Resources Management Project (Ln. 3444-BR) Status Report," (December 20, 1995). Information Releases: BRAZIL: Rondonia Natural Resources Management Project Oune 20, 1995)* BRAZIL: Rondonia Natural Resources Management Project Ouly 25, 1995)* BRAZIL: Rondonia Natural Resources Management Project (August 25, 1995)* BRAZIL: Rondonia Natural Resources Management Project Oanuary 23, 1996)* BRAZIL: Rondonia Natural Resources Management Project Oanuary 25, 1996)* Request for Inspection #5 The Inspection Panel: Memorandum to the Executive Directors re: "Request for Inspection: Alleged Policy Violations by IFC in the Financing of Hydroelec- tric Dams in the Biobio River in Chile," (December 1, 1995). Information Releases: CHILE: Alleged Policy Violations by IFC in the Financing of Hydroelec- tric Dams in the Biobio River Oanuary 23, 1996)* 54 ANNEX4 Decisions of the Executive Directors Decision Number 1: Inspection Panel's Mandate on Procurement Matters In February 1995 the Inspection Panel received a query from a Bangladesh firm that wanted to know whether the Inspection Panel could deal with com- plaints on procurement decisions made by Bank staff. The query was based on the text of paragraph 14(b) of the Resolution that reads as follows: "In considering request under paragraph 12 above, the following requests shall not be heard by the Panel...(b) [c]omplaints against procurement decisions by Bank borrowers from suppliers of goods and services financed or expected to be financed by the Bank under a loan agreement, or from losing tenders for the supply of any such goods and services, which will continue to be addressed by staff under existing procedures." In March of the same year, the Chairman of the Inspection Panel sent a memorandum requesting a clarification of this provision from the Board of Executive Directors. In his memorandum, the Chairman referred to a book, "The World Bank Inspection Panel" (Oxford University Press, 1994), by Mr. Shihata, Senior Vice President and General Counsel, of the Bank. The Chairman noted that Mr. Shihata has indicated that although "a literal reading of the text of paragraph 14(b) of the Resolution, could suggest ... that the exclusion is limited in all cases to complaints against procurement decisions of Bank bor- rowers and does not apply to any decision by the Bank or its staff with respect to procurement, the Board's intention was to exclude procurement matters whether the complaint is against action by the borrower or by the Bank." This opinion is substantiated by providing detailed information on the Board dis- 55 cussions of this part of the Resolution (pages 51 and 52). Mr. Shihata reiterates his opinion in Part III, paragraph 3 of his Legal Opinion on the "Role of The Inspection Panel in the Preliminary Assessment of Whether to Recommend Inspection" dated January 3, 1995 (SecM95-11)." The Chairman's memorandum ended by stating "[b]ased on the above- mentioned opinion and the information provided in Mr. Shihata's book, unless other instructions are received from the Board of Executive Directors by c.o.b. Aprilll, 1995, I intend to inform the inquirer that the Inspection Panel has no jurisdiction over procurement matters whether the complaint is against an action of borrowers or Bank staff." The Chairman's request for clarification did not suggest or imply an amendment to paragraph 14(b) of the Resolution but rather sought a Board interpretation of the text. In their meeting of Aprilll, 1995, "[t]he Executive Directors recorded their approval on Aprilll, 1995 of the recommendation contained in paragraph 4 of the memorandum from the Chairman of the Inspection Panel. Entitled "Inspec- tion Panel's Jurisdiction over Procurement Matters" (R95-60)." Decision Number 2: Scope of the Inspection Panel's Mandate Compensation for Expropriation and Extension of IDA Credits to Ethiopia under OMS 1.28 In April 1995 the Inspection Panel received a Request for Inspection alleging that IDA failed to observe the provisions of OMS 1.28, when it granted several credits to Ethiopia and now was negotiating more financial assistance with the Transitional Government of Ethiopia ("TGE"), even though TGE had refused to deal with the Requesters' claim for compensation for a previous government's expropriation of their assets and blocking of their bank accounts. Before re- questing a response from IDA's Management, the Panel asked for more infor- mation from the Requesters and some specific information from IDA Manage- ment, since "the Request involved a number of unusual features relating to the standing of the Requester8." On May 19, 1995, the Inspection Panel-after reviewing the Request, the evidence and additional information submitted by the Requesters and the information provided by Management-decided that the Requesters had failed to file a claim for compensation for the expropriation of assets and blocking of accounts in accordance with the laws of Ethiopia and therefore had not estab- lished "that the lack of compensation is the direct consequence of any alleged acts or omissions of IDA as required by the terms of paragraph 12 of the Reso- lution... " 56 On May 30, 1995, the then Bank President ad interim sent a memorandum to the Executive Directors entitled "Request for Inspection: Compensation for Expropriation and Extension of IDA credits to Ethiopia." The memorandum stated Management's belief that the Request was " ... com- pletely outside the mandate of the Panel as detailed in the provisions of the Resolution, and should not, therefore, have been considered in terms of whether the lack of compensation was or was not a consequence of IDA's actions or omissions." After stating that paragraph 12 of the Resolution referred to "a failure of the Bank to follow its operational polices and procedures with respect to the design, appraisal and/ or implementation of a project financed by the Bank" (emphasis added), the memorandum stated that "[n]either the Requesters' claim nor OMS 1.28, which is the basis of the Requesters' claim, covers any matters related to the design, appraisal and/ or implementation of any project financed by the Bank." Finally, the memorandum concluded that " ... Bank management is of the view that the correct reading of the Resolution makes this particular request inadmissible irrespective of whether or not it meets the eligibility requirements set forth in the Resolution. This Resolution does not give the Panel an absolute mandate to review the consistency of Bank or IDA actions with any of their policies, but only with those policies and procedures which relate to the ap- proval or implementation of projects financed by the Bank or IDA." The cover memorandum from the Vice President and Secretary that circu- lated the Memorandum of the President ad interim, dated May 30, 1995 added that "[s]ubject to any comments to be communicated to the Vice President and Secretary or the Deputy Secretary by close of business on June 8, 1995, Bank Management will inform the Inspection Panel that the interpretation of the Resolution contained in the President's Memorandum has been endorsed by the Executive Directors and will be so recorded in the minutes of a subsequent meeting of the Executive Directors." The members of the Inspection Panel felt that while the Executive Directors have the final authority to determine whether a particular Request for Inspec- tion is admissible or not, the method used by Management could cast doubts on the effective independence of the Panel from Management. In addition, regarding the specific claim, the Panel's view was that not only did paragraph 10(a) of OMS 1.28 direct the Bank not to lend for or appraise projects in a country where its position on expropriation could affect its credit standing, but also the apparently narrow interpretation given to paragraph 12 of the Resolution and the term "project" could preclude the Panel's reviewing loans supporting projects consisting of programs or activities other than specific physical works. 57 After a meeting between Management represented by Messrs. Ibrahim Shihata, Richard Frank, Gautam I