At the World Bank’s annual meetings last year in Morocco, the organization’s new president, Ajay Banga, outlined a sweeping vision of how he wanted to rid the world of poverty while keeping the planet habitable.
Four months later, Mr Banga, who took the top job last June, faces his first major management test and some early signs of turmoil that have nothing to do with his ambitions to modernize the bank and strengthen its to combat climate change.
The challenge relates to an investment the World Bank made a decade ago in a chain of schools in Kenya. The educational project was funded in part through the International Finance Corporation, the bank’s investment arm. It became a source of controversy when allegations surfaced in 2020 of widespread sexual abuse at schools, prompting an investigation by the bank’s internal watchdog.
The IFC’s executive board is reviewing a revised “action plan” that could take effect as soon as this week.
In recent months, the World Bank’s leadership has been engaged in acrimonious debates over how much responsibility it will take and whether victims will be compensated. The debate has divided countries that have invested in the bank and put the spotlight on Mr Banga, who will be responsible for finalizing and implementing the action plan.
The case has drawn scrutiny from development experts and lawmakers, amid allegations that the World Bank failed to control how its money was used and even took steps to cover up wrongdoing.
While fielding questions at an event sponsored by the Center for Global Development in early February, Mr. Banga, a former financial 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 over a job he traveled around the world to secure just a year ago.
“I’d be happy to be fired, by the way,” Mr. Banga said. “I can go back to my life in the private sector. Much more interesting.”
A spokesman for Mr. Banga stressed that he does not resent the job, that he joined the bank because he wants to lead it and that he strongly believes in the bank’s mission and staff.
Mr. Banga was selected by President Biden to bolster the bank’s efforts to combat climate change and give a new sense of urgency to a timber institution founded after World War II.
His appointment follows the resignation of David Malpas, who was appointed by President Donald J. Trump and who disappointed the Biden administration and many Democratic lawmakers when he questioned the causes of climate change.
In his first year on the job, Mr. Banga encouraged rich countries to increase their contributions to the bank and recently took steps to restructure its loan guarantee program to boost private investment in renewable energy.
World Bank presidents have often faced thorny management tests, and although the latest controversy over the bank’s investment in Bridge International Academies in Kenya predates Mr Banga, it is now his own problem.
“The honeymoon is over,” said Paul M. Cadario, a former senior director at the World Bank, who popped the question to Mr. Banga at the forum in February. He said he thought Mr Banga’s answer was deceptive.
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 International Finance Corporation oversees such programs.
A draft of the bank’s ombudsman’s report, reviewed by The New York Times, describes more than a dozen cases of child sexual abuse at Bridge-run schools in Kenya. The report, uncovered last year by The Intercept, also criticized IFC for its lack of oversight of the project and suggested it looked the other way when complaints surfaced. It recommended counseling and compensation for victims.
The IFC’s executive board, which is overseen by World Bank members and Mr. Banga, has spent the past few months trying to agree on a plan of action. The bank’s member countries have been divided over how much responsibility the IFC should take for school abuse and whether directly compensating victims would set a precedent that could complicate other World Bank projects.
Civil society groups called on the bank to do more to help victims and expressed concern over an agreement between the IFC and Bridge to keep some of its research findings 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 a failure of due diligence on a poorly designed investment is far from a remedy for the people who were actually harmed,” said David Pred, the executive director and partner. -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 issue for the World Bank, it had broader implications for Mr. Banga as a leader trying to forge more partnerships with the private sector. sector.
“I think symbolically now it’s starting to become a big deal in that he’s willing to shoot straight and turn a new page on it,” Mr Sandefur said.
The process 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, Sen. Elizabeth Warren, D-Massachusetts, and Sen. Peter Welch, D-Vermont, warned that future funding for the World Bank could depend on his handling of the school investigation. of Kenya.
“We see the Bridge case as a litmus test for the debate currently taking place around 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 foundation for any proposal to increase funds available to the World Bank Group.”
Ms Warren and Mr Welch have also raised concerns with the Treasury Department, which guided Mr Banga’s selection to the World Bank and assisted him in the nomination process. In late December, a senior Treasury official told lawmakers that the department was looking into allegations of school violence and was concerned about allegations that the IFC tried to cover them up.
“We share your deep concern and concern at the prospect that children may have been sexually abused as part of an IFC project,” wrote Corey Tellez, deputy assistant secretary of the Treasury Department’s Office of Legislative Affairs. “The Ministry of Finance unequivocally condemns violence against children and any other violation of human rights.”
A World Bank spokesman declined to make Mr. Banga available for an interview. The board, which failed to agree on an action plan in January, plans to reconvene to consider a “survivor-centered” response.
During the public hearing in February, Mr. Banga said he did not believe a sexual abuse scandal had been covered up and noted that other institutions besides the IFC were also invested in the Bridge schools.
“I think there are a number of things that management could have done better, and that’s the discussion we’ll have with the board shortly,” Mr Banga said.
The board meeting was supposed to take place in February, but has not yet been scheduled. According to a person familiar with the process, the revised action plan will take effect Thursday if the board does not convene a meeting to consider it further.
