Mar 20, 2024
US Investigates Loan to Schools in Kenya After Sexual Abuse Reports
, Bloomberg News
(Bloomberg) -- The US government’s lender for development projects is investigating its oversight of a loan it made for schools in Kenya after allegations emerged of sexual abuse.
Scott Nathan, the US International Development Finance Corp.’s chief executive officer, has requested the review by its office of accountability, according to a March 19 memorandum posted on the agency’s website. The DFC said this is the first time that the agency’s management has asked for such a review of a loan.
The situation presents an early test for the relatively young DFC. The institution was created in 2019 by the Trump administration and touted as an instrument for countering China’s global infrastructure lending.
The World Bank’s International Finance Corp. already launched a separate investigation into its own $13.5 million investments from 2013 to 2016 in NewGlobe Schools, Inc., which owned Bridge International Academies. The World Bank’s internal probe, released last week, confirmed incidents of child sexual abuse from 2013 to 2020 at Bridge’s schools in Kenya.
Nathan said in the letter that the DFC’s own environmental and social due diligence found and addressed issues relating to school licenses and teacher certification, but wasn’t aware of the allegations of sexual abuse. He added that the agency currently has the tools and knowledge needed to address such a problem if it were to take place today.
Nathan asked for the DFC to probe whether its predecessor organization, the Overseas Private Investment Corp. performed adequate due diligence when it lent to the project in 2013 and whether it was made aware of the alleged abuse. The loan was fully repaid in 2022, the same year that IFC sold its stake in the project.
The loan was a small part of OPIC’s work. It lent $10 million to Bridge over 10 years, according to a statement on the company’s website, while lending more than $3 billion in that fiscal year.
The US Treasury Department said last week that it’s “deeply troubled by the broader accountability issues raised by this case,” referring specifically to a confidentiality agreement between IFC and Bridge at the beginning of the internal World Bank probe. World Bank President Ajay Banga has called for an external investigation into the situation, which Treasury supports.
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