Sexual abuse investigations provide a leadership test for the World Bank’s Ajay Banga
At the World Bank’s annual meetings in Morocco last year, the organization’s new president, Ajay Banga, laid out a far-reaching vision for how he wanted to rid the world of poverty while keeping the planet habitable.
Four months later, Mr Banga, who took over the top job last June, is facing his first major management test and some early signs of turmoil that have little to do with his ambitions to modernize the bank and its ambitions to combat climate change to give a boost.
The challenge is related to an investment that the World Bank made ten years ago in a chain of schools in Kenya. The educational project was partially financed through the International Finance Corporation, the bank’s investment arm. It became a source of controversy when allegations emerged in 2020 of widespread sexual abuse at the schools, prompting an investigation by the bank’s internal watchdog.
The IFC’s board of directors has reviewed a revised ‘action plan’ that could come into effect as early as this week.
In recent months, the World Bank’s leadership has been engaged in fraught deliberations over how much responsibility to accept and whether to compensate victims. The debate has divided the bank’s invested countries and focused attention on Mr Banga, who will be responsible for finalizing and implementing the action plan.
The case has attracted the attention of development experts and lawmakers, amid suggestions that the World Bank failed to monitor how its money was used and even took steps to cover up misconduct.
While answering questions in early February at an event sponsored by the Center for Global Development, Mr. Banga, a former finance executive, surprised some in the audience when he dismissed the possibility of a cover-up. In response to another question about labor disputes and the bank’s integrity, he expressed frustration with a job for which he traveled the world campaigning just a year ago.
‘By the way, I would be happy if I were fired’ said Mr. Banga. “I can go back to my life in the private sector. Much more interesting.”
Mr. Banga was picked by President Biden to strengthen the bank’s efforts to combat climate change and inject a new sense of urgency into a lumbering institution created in the wake of World War II.
His appointment came after the resignation of David Malpass, who was appointed by President Donald J. Trump and who frustrated the Biden administration and many Democratic lawmakers when he cast doubt on the causes of climate change.
In his first year in office, Mr Banga has encouraged wealthy countries to increase their contributions to the bank, and recently took steps to restructure the loan guarantee program to increase private investment in renewable energy.
World Bank presidents have often faced thorny management tests, and while the latest controversy surrounding the bank’s investments in Bridge International Academies in Kenya predates Mr. Banga, it is now his problem.
“The honeymoon is over,” said Paul M. Cadario, a former senior manager at the World Bank, who posed the question to Mr. Banga at the forum in February. He said he found Mr Banga’s response flippant.
The World Bank had a $13 million stake in Bridge International Academies from 2013 to 2022. She quit the program after complaints of sexual abuse at the schools, which led to an internal investigation into the events and a review of how the International Finance Corporation oversees such cases. programs.
A draft of the bank’s ombudsman report, which was reviewed by The New York Times, details more than a dozen cases of child sexual abuse at Bridge schools in Kenya. The report, that was disclosed last year by The Intercept, also criticized the IFC for its lack of oversight of the project and suggested it had looked the other way when complaints emerged. It recommended counseling and compensation for the victims.
The IFC’s executive council, which is overseen by World Bank members and Mr Banga, has struggled in recent months to agree on an action plan. Bank member countries are divided over how much responsibility the IFC should take for the school abuses and whether directly compensating victims would set a precedent that could complicate other World Bank projects.
Civil society groups have called on the bank to do more to help victims and have raised concerns about an agreement between the IFC and Bridge to retain some of the assets. findings of her research are confidential. They have also criticized a plan proposed by the IFC that would not directly compensate victims of abuse.
“IFC’s proposed response to one of the most egregious cases of harm resulting from failed due diligence on an ill-conceived investment does not at all remedy the people who actually suffered harm,” said David Pred, Executive Director and co. -founder of Inclusive Development International, a human rights group.
Justin Sandefur, a senior fellow at the Center for Global Development, said that while the issue may be a small financial one for the World Bank, it has broader implications for Mr. Banga as a leader trying to forge more partnerships with the private sector. sector.
“I think symbolically it’s starting to become a big deal now, in the sense that he’s willing to address this head-on and turn over a new page,” Mr. Sandefur said.
The procedure is also closely watched by lawmakers, who are responsible for approving the money the United States provides to the bank. In a letter to Mr. Banga in January, Senator Elizabeth Warren, Democrat of Massachusetts, and Senator Peter Welch, a Democrat of Vermont, warned that future World Bank funding could depend on its handling of the Kenyan school investigation.
“We view the Bridge case as a litmus test for the conversation currently taking place about IFC’s responsibility to remediate the social and environmental harm caused by its projects,” the senators wrote, “particularly those where IFC does not follow its own policies, which we see as an important basis for any proposal to increase the resources available to the World Bank Group.”
Ms. Warren and Mr. Welch also raised concerns with the Treasury Department, which forwarded Mr. Banga’s selection to the World Bank and helped him through the appointment process. In late December, a senior Treasury Department official told lawmakers that the department was investigating claims of violence at the schools and was concerned about allegations that the IFC was trying to cover them up.
“We share your deep concern and concern about the prospect that children may have been sexually abused in the context of an IFC project,” wrote Corey Tellez, acting assistant secretary of the Treasury Department’s Office of Legislative Affairs. “The Ministry of Finance strongly condemns violence against children and all other human rights violations.”
A World Bank spokesperson declined to make Mr. Banga available for an interview. The board, which failed to agree on an action plan in January, plans to do so are meeting again to consider a ‘survivor center’ answer.
During the public discussion in February, Mr Banga said he did not believe a sexual abuse scandal was being covered up and noted that other foundations besides the IFC were also investing in the Bridge schools.
“I think there are a number of things that management could have done better, and that is the discussion we will have with the board shortly,” Mr Banga said.
The board meeting was supposed to take place in February, but has yet to be scheduled. The revised action plan will take effect Thursday if the board does not hold a meeting to review it further, according to a person familiar with the process.