The World Bank’s internal watchdog on Thursday criticized the handling and oversight of its investment in a chain of Kenyan schools that were the subject of an internal investigation following allegations of student abuse.
The investigation, which began in 2020, has consumed World Bank officials and shareholders in recent months and led to scrutiny of its investment arm, the International Finance Corporation, which invested in the education project a decade ago.
The countries that make up the IFC’s board of directors have discussed how to compensate victims of abuse. While the scandal predates the tenure of Ajay Banga, the new president of the World Bank, it has emerged as one of the first tests of his administration.
Mr. Banga will be responsible for directing any changes related to the way the bank invests in private sector projects. He has already faced criticism for appearing to dismiss suggestions that the IFC was interfering in the investigation, and US lawmakers have told him that the bank’s future funding could depend on its handling of the matter.
The oversight report, published by the World Bank’s Compliance Ombudsman, concluded that IFC “did not consider the project’s potential child sexual abuse risks nor did it consider its client’s ability to meet environmental and social requirements in relation to the risks and the effects of child sexual abuse.”
The World Bank held a $13 million stake in Bridge International Academies from 2013 to 2022. It pulled out of the program after allegations of sexual abuse at the schools led to internal investigations into the incidents and a review of how the investment arm of .
The report, citing Bridge International Academies, added that “IFC failed to regularly monitor or effectively address the risks and impacts of child sexual abuse and gender-based violence with its client.”
He then recommended that victims of abuse receive financial compensation.
However, a management “action plan” agreed by the IFC board did not fully take these recommendations into account. Instead, the plan said it would “directly fund a rehabilitation program for survivors of child sexual abuse” for up to 10 years. The plan will pay an unspecified amount of money for psychological support and adolescent sexual and reproductive health services.
The decision to immediately compensate victims was the subject of intense internal debate among board members, with some arguing that the bank should not take such immediate financial responsibility for what happened to the program.
In an email to World Bank staff sent Wednesday night, Mr. Banga, who was not at the helm at the time of the abuse, acknowledged that mistakes had been made in the handling of the program and the investigation and was remorseful. .
“I am sorry for the trauma these children have suffered, committed to supporting survivors and determined to make sure we do better in the future,” Mr Banga wrote.
Acknowledging concerns about the integrity of the investigation, Mr. Banga added that he would appoint an outside investigator to ensure that the earlier investigation was free of interference.
“We should have responded sooner and more aggressively,” he said. “This is a difficult time for our institution, but it should be a time of introspection.”
Human rights groups and civil society organizations have criticized the proposed action plans, arguing that they do not go far enough to compensate victims.
On Thursday, they continued to bemoan the lack of immediate financial support in the action plan, which proposes to pay for counseling and health care for victims.
“IFC’s action plan fails to do the one thing that is required of it: to provide healing to Bridge survivors,” said David Prend, executive director of the human rights group Inclusive Development International.
In recent days, US lawmakers have also urged the Treasury Department, which helped steer Mr Banga’s nomination to lead the bank, to push for more and reject the action plan.
“I am concerned that the failure to provide immediate and substantial compensation will not only harm the survivors and their families, but will also harm the reputation of IFC, which has a critical mission around the world, and that of the United States as its largest shareholder of,” Representative Maxine Waters, the top Democrat on the House Financial Services Committee, wrote in a letter to Treasury Secretary Janet L. Yellen on Wednesday.
The Treasury Department, which had pushed for compensation for the victims, said in a statement on Thursday that it accepted the report’s findings. However, he suggested that survivors be consulted as the IFC determines how best to compensate them.
“We believe that the IFC should keep all alternatives on the table while consultations continue,” the finance ministry said in a statement.
The statement added that the department was also concerned about allegations of interference in the investigation and welcomed an independent review of its handling.
“We are deeply troubled by the broader accountability issues raised by this case,” it said.
