CIEL questions President of Inter-American Development Bank over systematic problems with the structure and procedures of the Independent Investigation Mechanism

February 21, 2003

Mr. Enrique Iglesias
President, Inter-American Development Bank
1300 New York Avenue, N.W., E1213
Washington, DC 20577

Dear Mr. Iglesias:

The three cases currently before the Independent Investigation Mechanism (IIM) of the Inter-American Development Bank (IDB), i.e., the Yacyreta, Cañabrava, and Termoeléctrica del Golfo cases, are revealing systemic problems with the structure and procedures of the IIM. We submit these views and urge your support for the reform, transparency, and effectiveness required of the IIM.

Before addressing specific concerns relating to current cases, we wish to note that the experience of similar mechanisms at other multilateral development banks (MDBs) shows that the effectiveness of the IIM depends on three core postulates.

First, the rules of the IIM procedure must provide for strict and clear timelines, for the uninterrupted flow of information to the claimants, and for effective remedies on the ground. Further, the rules must also provide for independence from management and IDB legal counsel in determining the elegibility of complaints and other legal issues, in order to avoid conflicts of interests.

Second, we wish to underscore that an adequate institutional structure for the IIM necessarily involves an independent, permanent secretariat with sufficient funding. The experience of other MDBs shows that only a full-time secretariat with an independent budget can provide the necessary support for independent investigations.

Third, meaningful reform of the existing IIM can proceed only with the full support from your Office and from the Board of Directors. In fact, changing the structural inadequacies of the current IIM requires a political commitment to accountability and transparency at the IDB.

The current cases before the IIM reveal the mechanism’s failure, as the following select examples illustrate:

• Lack of transparency: in the Termoeléctrica del Golfo case claimants have never received adequate information
  on the status of their complaint. For example, neither the consultant’s report that compelled full investigation nor the terms of reference (TORs) of the investigation have been made pubic.
• Unpredictable timeline: in the Termoeléctrica del Golfo almost two full years went by before an investigation was authorized, after the first request for an investigation filed on August 11, 2000. And in the Cañabrava case, after more than a year, the IIM has yet to officially confirm receipt of a request for investigation.
• Inadequate remedies: the Yacyreta case clearly illustrates that the first investigation conducted by the IIM did not serve to remedy the problems of the ground.

The current IIM practices do not fare well when compared with other MDBs. Two examples illustrate this: the Asian Development Bank’s Samut Prakarn Investigation made the TORs available for public comment. Further, the World Bank (IBRD) Inspection Panel posts on its website information regarding registered complaints, updates of ongoing investigations, as well as the names and brief biographies of current Panel members.

The process followed by the World Bank’s Inspection Panel regarding the Yacyreta case further highlights the inadequacies of the IIM, as this case was filed concurrently with the IDB and the IBRD in May 2002. The following table illustrates the chronology:

In the Yacyreta case, the IDB has yet to provide any public notice of the complaint through the IIM procedures and to provide information regarding the timeline of the process. This failure, in striking contrast with the IBRD procedures, highlights the serious problems with the IIM.

The IIM stands to learn from the experiences of other MDBs in establishing and reforming its accountability mechanisms. For example, the Asian Development
Bank (ADB), after acknowledging significant difficulties with its accountability mechanism has embarked on a participatory process of reform. The ADBs new draft mechanism is now posted for comment on the internet. Also, the World Bank’s Board of Directors reviewed its Inspection Panel twice, each process clarifying its rules of procedure. The comparative experience of other MDBs clearly demonstrates that the challenges involved in the reform of the IIM are not insurmountable and certainly necessary.

The IDB needs to take two separate, but critically important, steps. First, the IDB needs to commit at the highest levels to processing the existing claims. The IDB should as soon as possible release a schedule with clear deadlines for processing the three pending claims.

Second, the IIM needs to be fundamentally reformed through a transparent, inclusive, and participatory process. Inclusiveness will require consultations and debate over the appropriate structures for an independent accountability mechanism. In any case, the proposed reforms should in no way hinder progress in the cases currently under the IIM mechanism.

The IIM is not working, and the IDB’s credibility among local communities, civil society, and Member Governments is at risk. An adequate institutional structure to hear and redress the grievances of project-affected peoples would reflect not only a commitment by the IDB to ensuring that its projects do no harm, but would also significantly benefit the Bank by fostering an internal culture of compliance with policies, improving project quality, and most important, promoting developmental results on the ground. The challenges involved in the transition towards sustainable development cannot be achieved without the active commitment of public financial institutions like the IDB.

Thank you for considering our suggestions. We would be happy to discuss them further with you or your staff at your convenience.

Sincerely Yours,

Marcos A. Orellana
Senior Attorney
Center for International Environmental Law

cc.
Executive Directors