On March 19, 1997, a request for investigation was filed at the World Bank by 121 individuals and Pólo Sindical do Submédio São Francisco, an organization representing 8,100 families displaced by the flooding of the Itaparica Dam’s reservoir on the Sao Francisco River in Bahia and Pernambuco, Brazil.
Although the World Bank had not funded the construction of the dam, it had funded the resettlement of communities displaced by the process through the Itaparica Resettlement Project. The request claimed that in addition to the hardships imposed by their involuntary resettlement, the World Bank’s omissions and failures in the preparation and implementation of the project had resulted in further adverse affects on their livelihoods. Specifically, the project failed to construct adequate irrigation, health, and education infrastructure, resulting in worse social and economic conditions than before the construction of the Itaparica dam. The request further alleged that policies and procedures of the Bank had not been followed in the design and implementation of the project.
The World Bank’s own Inspection Panel recommended an investigation into the claims against the Itaparica investment. The Executive Director representing Brazil at the Bank objected to the Panel’s recommendation and challenged the eligibility of the claimants. The process became highly politicized, and in a close vote of 48% for and 52% against on September 9, the Executive Directors of the World Bank denied the Panel an investigation of the Bank’s role in the Itaparica Resettlement Project. They cited the Government of Brazil’s eagerness to implement the project correctly as a sign that an investigation would be unnecessary. This conclusion was largely based on Brazil’s proposed Action Plan, which promised a completion and extension of the benefits of the Itaparica Resettlement Project, including the disbursement of an additional $290 million in government funds towards the project.
Bank supervisors were to oversee the Action Plan’s execution, and the Bank’s Inspection Panel was to review the Plan’s progress in 12 months. Much to the regret of humanitarian and environmental activists, Brazil’s Action Plan was never supervised nor reviewed by the World Bank. Subsequently, the Brazilian government admitted that its contribution fell far short of its promised $290 million, and World Bank never analyzed the failure of the Itaparica Resettlement Project.