Reckless Development: The IFC’s Dodgy Deals in Southeast Asia
Bank Information Center and 11.11.11, in collaboration with Inclusive Development International, Accountability Counsel, Urgewald, Ulu Foundation and Tarkapaw Youth Group, have released a report, Reckless Development: The IFC’s Dodgy Deals in Southeast Asia. The report is the third installment of an ongoing investigation, Outsourcing Development: Lifting the Veil on the World Bank's Lending Through Financial Intermediaries, which follows the trail of IFC money globally and looks at how it impacts people on the ground in developing countries.
According to the report, dozens of harmful and high-risk projects in Southeast Asia have received hidden funding from the World Bank Group. The International Finance Corporation (IFC), the World Bank’s private-sector arm, is surreptitiously channeling money to these projects through for-profit financial intermediaries, such as commercial banks and private equity funds.
The IFC’s financial-sector clients have funded some of the region’s most destructive projects, contravening the Performance Standards, the institution’s social and environmental guidelines. These projects include mega-hydropower dams in Vietnam and Cambodia, dirty coal-fired power plants and mines in the Philippines, Vietnam and Myanmar, and massive agro-industrial land grabs in Cambodia and Laos.
The report confirms the most damning conclusions of a monitoring report released last week by the Compliance Advisor/Ombudsman (CAO), the IFC’s independent watchdog. The CAO report found systemic non-compliance by the IFC with its policies and procedures across all stages of the investment process in a sample of financial intermediary investments.
The IFC’s due diligence failures have exposed the development bank to harmful projects across the region, according to this latest research.
These investments in Southeast Asia fit a global pattern. The IFC is increasingly outsourcing its development funds to commercial banks and private equity funds, which generate enormous profit for the World Bank Group. Although these IFC clients are required to apply the Performance Standards to their investments, there is little evidence that this is occurring. In 2016, the IFC made more than $5 billion in new commitments to financial intermediaries, bringing its total outstanding commitments by year’s end to $20.4 billion.