The Inquiries Presented to P&P Consulting - Case Study Example

The Inquiries Presented to P&P Consulting P&P Consulting was called by the management of the XYZ Bank regarding the problems faced by the claimants due to non-transparent working environment of the XYZ Bank in practicing independent investigation of the claimants’ cases. The board has not been diligently pursuing the investigation of a number of cases, such as: Inquiry in Golf Link Project, Mexico Inquiry in Hydroelectric project, Argentina Inquiry in Hydroelectric project, Brazil P&P Consulting made a cursory survey related to the business operations of XYZ Bank before fixing an appointment with the stakeholders. However, the P&P Consulting needed some particular details of the bank’s development initiative mechanism before starting its functions. It was found that only one project for development was being investigated by the XYZ Bank. The other two major projects requiring investigation were pending for the routine board decision to be taken. There is an investigation mechanism which needs to be followed by the XYZ Bank. As per the mechanism process, the bank is supposed to investigate whether the development project funded by it is harming the interests of the local communities where the project is going to take place. The XYZ Bank has made a declaration of the same intent that it will disclose all relevant information to bring transparency in its operations for accountability purpose. P&P Consulting found that there was lack of transparency in the functioning of the XYZ Bank; no timelines were fixed to finish investigations. Stakeholders were worried over the slow process of investigation. P&P Consulting saw an opportunity in the said case knowing the crucial role that the bank was supposed to play in the lives of people who had to vacate the adjoining lands, and requested compensation. P&P Consulting found flaws in the systems of working calling immediate attention of the concerned stakeholders – the Bank’s President and Board of Directors. Steps taken included: First of all, an outline of the issues faced in the processing of all pending cases is made to be presented to the P&P Consulting. All procedural problems present in the three cases are identified, which in our opinion are grave errors in the XYZ Bank processes, holding the bank from becoming accountable. The third section of the report outlines the recommendations made by P&P Consulting, assuming that XYZ Bank will look into issues and resolve them. Cases presented to the P&P Consulting P&P Consulting found that three claims were pending decision by the XYZ Bank. Claim for Golf Link project had been pending for the last seven years, awaiting decision. Rests of the two cases are fresh claims filed with the bank. These cases will test the current operational mechanism of the bank and we are not optimistic that the bank will pass the test. Golf Links Project, Mexico -- Diagnosis The Golf Links claim describes both the transparency and the timing issues. The affected people contacted the bank requesting an inquiry on August 11th, 2002. Yet, the inquiry was not ordered until July 2004, about two years late when the request for it was filed with the bank. The limit was crossed by not responding back to the claimants about what action the bank was going to initiate to resolve their problem. The consultant’s report was not disclosed to the claimants not any copies were made available to them, arguing that a consultant’s report is not a public document. The terms of reference were also not shared with the claimants, which have outlined the scope and matter of the inquiry. How can the XYZ Bank hope to make claimants partner in the inquiry process when they are totally unaware of the scope and matter of the inquiry? Hydroelectric project, Argentina -- Diagnosis In 1998, both the XYZ Bank and its Independent Inquiry Mechanism (IIM) besides the International Bank’s inquiry commission investigated this project. It was found that no action was taken on the claimants’ request for action even after six years; problem was left unresolved. New claims were filed by the affected people to the XYZ Bank and International Bank on May 2, 2004. On November 2, 2004, claimants were old by the IIM coordinator that the initial action would be made as soon as the consultant member of the Roster is appointed. Nine more months passed without providing any clue of the problem to the claimants. The bank did not issue even the acknowledgement of the letters to the claimants nor posted any relevant information on its website. It was found that at the same time the International Bank made a site visit. The International Bank took the decision to inquire in a given time frame unfolding the process. The difference in the treatment of both the banks clearly indicates the delay in taking action by the XYZ Bank. Hydroelectric Project, Brazil -- Diagnosis P&P Consulting came to know that a claim was sent to the XYZ Bank’s s inspection mechanism signed by people who had lost their land and jobs because of the project on May 30, 2002. Soon, another document followed blaming the bank of severe negligence of its policies and procedures. False excuses were made by the bank for not acknowledging the documents. The bank in stead laid all blame on the locals that they wanted not to further their claim. It is very much clear from the bank’s correspondence that it is not interested in resolving the issues faced by the affected communities and is lingering on by passing time. It asked the claimants to send fresh claims to follow on with the matter. It came to the knowledge of P&P Consulting that a manager of the bank tried to pressurize the affected families to not come forward with their claim. Inquiry made by P&P Consulting revealed that the bank never acknowledged any of the claims made by the affected people. Problems with the IIM Lack of Transparency Lack of Independence Unacceptable delays in the process Lack of Resources Intervention on Lack of transparency There is no doubt over the lack of transparency in the working of XYZ Bank. P&P Consulting advised the bank to post all inquiry requests on the bank website as they are acknowledged so that any third party could track the proceedings of the decisions taken. By not disclosing the TOR in the Golf Links case, the XYZ Bank breached the accountability practices followed by multilateral development banks (MDB). For example the South-Asian Development Bank while conducting inquiry sent a draft TOR to the claimants. P&P Consulting made specific suggestions to the XYZ Bank to provide information on the independent members on the Roster. All MDBs do the same. It should display on its website the names of all members of the Roaster. Intervention on Lack of Independence P&P Consulting made it clear to the XYZ Bank that lack of transparency is increasing and leading to dependency on others in the absence of any mechanism. The management and project designers at XYZ Bank should provide all relevant information to the claimants on what is going on in the investigation on their requests for claims. The role of the XYZ Bank in the Brazil project, for example, indicates that the indirect interference by one of the bank managers in dictating terms to take their claims back won’t help in strengthening the mechanism for functioning independently. It was made clear to the management that the office of IIM should have the post equal to the rank of Vice-President, eligibility criteria for passing claims should be decided by not the management but IIM administrators and finally, it should have a budget of its own to bring about the independency in the operations of IIM. Intervention on Unacceptable delays in the process P&P Consulting advised the bank to make the information sharing and delivery process smooth and quick. As it was found in the Golf Links Project, Mexico and Hydro-electric project, Argentina that claimants were made to wait for consecutive nine and six months to whether and how the eligibility of their claims will be decided! Although the case of Hydro-electrical project, Brazil was filed for more than two years, investigation was made quite late, recently. It was advised that as soon as time lines are determined, consultants should be selected from the Roster or at least claimants be informed on their eligibility. Time taken in deciding the validity of investigation should be under a limit. Redundant processes like taking the permission of the President of the bank to select a consultant from the Roster should be gotten rid of because evaluation has already been made by the coordinator and the legal cell. Recommendations Greater accountability on the bank’s functions Greater accountability towards affected communities Independent processes on claims to reduce negative impact on communities Transparency in the processes of current cases Provision of additional budgetary resources Evaluation of IIM to make it effective and efficient Recommendations in Detail Greater transparency P&P Consulting suggested to the XYZ Bank management that unless all documents, reports and TORs are disclosed, the bank cannot be successful in showing its commitment and win the claimants’ confidence on transparency. Only transparency will facilitate independent functioning by IIM. Investigation reports should be made public as soon as received. Information should be updated on the bank website and directly to the claimants. Proactive communication and partnering with claimants Claimants’ inputs should be given credit and weight in the IIM processes. Cross-verification of information on the consultant’s report will ensure that information is correct. They should be a part of the drafting process of the TOR. Consultants’ visits should be timed when claimants are there. All members of the Roster of Experts should get a place in the bank’s website. After organizing a panel on a case, information regarding the names and addresses of the panel members for claimants be made available through the bank website. Timely processing of cases For quick disposal of cases, the XYZ Bank should provide more resources to the IIM to finish their tasks well in stipulated time. Claimants should be provided information regarding timelines on the processes to be followed in future. The impression that IIM comes into action only when investment has been made by XYZ Bank needs to be removed, as it is a violation of the bank’s policies and procedures. Distribution of loan amounts should be held if claim requests are received by the bank. Loan should be continued after the claimant is found ineligible. In case, the claimant is found eligible and it is concluded that the project has violated the bank’s governing standards, the balance loan should be canceled and compensation demanded from the violators. P&P Consulting will attend the annual meeting to monitor compliance. Reference Bank Information Center. 2003. Washington D.C. USA. Retrieved March 1, 2010, from http://www.bicusa.org/Legacy/2-18-03-IIM-letter-to-IDB.pdf Read More