A. Scenarios for P4R in World Bank Lending:

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1 P4R Update: World Bank Approves Program for Results Policy 5% Cap over Two Year Pilot Period, but Questions Remain about how P4R Expansion will be Conditional upon Results of Management and IEG Evaluations Vince McElhinny Bank Information Center (Feb. 2012) 1 On January 24 th, the World Bank recast the rules of the game for international project finance. The Bank s Board of Directors approved Operational Policy 9.0 that launches a new lending instrument, Program for Results Lending (P4R). 2 As the cornerstone of the Bank s ongoing reforms to investment lending, P4R signals a watershed shift in the Bank s steady march away from the prescriptive lending model on which the existing safeguard policies have been premised for over two decades. P4R moves the Bank toward increased reliance on borrower safeguard and oversight systems. Program for Results Lending proposes to tie World Bank payments to the client s delivery of results, rather than to the strict adherence to pre-approval measures long employed as a condition for managing risk by borrowers of concessional resources from the Bank. Breaking with the project mold, the Bank argues that P4R will enable the Bank to extend the reach of its advice and financial support to entire national programs despite providing a relatively small share of the operating budget. Greater purchase on results, expanded reach, reduced transaction costs through the greater use of country systems and a clearer, less duplicative distinction of borrower/bank roles are only some of the touted benefits from P4R that the Bank has contrasted with limitations and the perceived costs of conventional investment lending. With only one Bank Board member abstaining (Italian Executive Director Piero Cipollone), the Bank overwhelmingly approved the new P4R policy. Despite the wide support at the Board, the P4R policy proposal was the target of broad criticism outside the Bank and guarded reservations among certain managers within. For many critics, P4R signals an expansion of risk that is not necessarily compensated by the tools to manage it. Key concerns were associated with the lack of adequate social and environmental safeguards, unclear or weak transparency and accountability commitments, and a mismanagement of the consultation process. 3 Several key concerns were addressed by the Bank during an abbreviated consultation period since August 2011, but a number of important concerns remain (see below). In part due to these concerns, the Bank agreed to pilot the P4R instrument for a two year pilot period, exclude category A operations (highest environmental and social risk operations) and limit eligibility for new operations to a cap of 5% of annual IBRD and IDA lending (or the equivalent of approximately $ billion per year). The Bank committed that its Integrity Vice Presidency 1 Anne Perrault, CIEL and Francesco de Simone, Transparency International U.S. provided comments on earlier drafts of this note. 2 See OP 9.0 Program for Results (Feb 2012) ; World Bank, A new instrument to advance development effectiveness: program-for-results financing (Dec. 29, 2011) 3 See Civil Society Comments and Concerns about the World Bank's Proposed "Program for Results" (P4R) 1

2 (INT), the institution s primary anti-corruption arm, will have the necessary scope to investigate both Bank and borrower government funds. 4 The Bank did not agree to further limit the P4R procurement thresholds from proposed levels. 5 Finally, the Bank s management (Operations and Country Services OPCS) and independent evaluation unit (IEG) will conduct parallel evaluations of the first cohort of P4R operations after no less than two years with civil society and private sector input to provide guidance concerning next steps for the pilot. 6 Despite the obvious duplication of efforts, should management and IEG prepare their own evaluations there would be some evident competition between them. It remains unclear how the results or recommendations of either evaluation would factor into the future of P4R. Management has not indicated that measures responding to an independent review are necessary before P4R moves forward without a cap. 7 Nevertheless, the pending definition of terms of reference for either evaluation constitutes one of the next important decisions. P4R stakeholders should be engaging Bank Governors, management and IEG about the design process. U.S. lawmakers outlined these and other demands on P4R that call on the U.S. Treasury to report to Congressional Appropriations Committees on progress toward meeting them every six months during the coming two years. 8 The first Treasury report would be due before June, A. Scenarios for P4R in World Bank Lending: In the draft operational policy, the Bank identified a list of twelve potentially eligible P4R operations and the first due diligence missions for appraisal of some are underway. Recent Bank missions have begun to scope out a national roads program in Uruguay and a water and sanitation program in Vietnam. 9 Trends in Bank lending suggest a steady decline in operations that carry the full protections of the Bank s safeguard policies, exaggerated in part by the deepened dependence on development policy lending (budget support) in response to the financial crisis. 10 Three possible scenarios beyond the two year pilot period ( ) are suggested in Figure 1 (based on own estimates of World Bank lending data). 4 The scope for INT Anti-Corruption mandate is explained in Guidelines On Preventing and Combating Fraud and Corruption in Program-for-Results Financing, February 1, P4R procurement will be limited to contracts below $50 million for Works, $30 million for Goods, $20 million for IT and non-consulting Services, and $15 million for Consulting Services. 6 See OP 9.0 Program for Results (Feb 2012) ; World Bank, A new instrument to advance development effectiveness: program-for-results financing (Dec. 29, 2011) 7 The Board document doesn't require an independent evaluation. Management has agreed to consider the IEG evaluation, among other information, as a useful input for its review and ongoing improvements to the P4R instrument. See OP 9.0 Board paper (Dec. 29, 2011) A New Instrument to Advance Development Effectiveness: Program-For-Results Financing, pghs 111 and 116, pgs These recommendations taken on board by the Band were outlined in the U.S. Appropriations Act that financed the U.S. contribution to the 2010 World Bank global capital increase. See FY2012 State, Foreign Operations, and Related Programs Appropriations Bill 9 See World Bank PID for Uruguay Transport Program 10 BICECA Bulletin (Feb. 2011) World Bank and DPLs: What middle income countries want: Analysis of the Sustainable Environmental Management DPL in Brazil Part I. 2

3 Several important caveats are worth remembering when considering these possible lending scenarios. The first caveat is that the World Bank has never provided an official projection of just how much demand exists for P4R operations. Privately, certain high level Bank managers have suggested that as much as 40% of the operations in their region could be converted to P4R. Still, no official estimates exist. The second caveat is that demand for P4R operations will depend significantly on the effective application of the key risk management measures, the persistent concerns around which are outlined below and have resulted in a cautious rollout. The discretion for creativity by the Bank in delivering reasonable compliance with the principled but ambiguous safeguard language in OP 9.0 will certainly have an effect on driving demand. P4R, put in the wrong hands, could find tremendous demand but be entirely counter-productive to sustainable development. Similarly and at least in theory, national programs could be found to have achieved such a high level of effectiveness that pronounced increase in P4R support would be logical. Such a track record for anticipating the rapid expansion of P4R is lacking. 11 The influence of these two caveats could be so significant that the estimates in Figure 1 do not reflect actual future trends. The first column in Figure 1 reflects the current distribution of IBRD and IDA lending in Total lending for IBRD and IDA have averaged about $27 billion since 2000, with $17 billion for IBRD and $10 billion for IDA. With some uncertainty related to the duration of high demand from countries affected by the European financial crisis, IBRD and IDA lending are projected to fall back to pre-crisis levels over time. Development Policy Lending has represented 35% of IBRD and IDA total lending over the past decade, although is currently at about 40%. Demand for DPLs is expected to remain between 35-40% of total lending. If P4R operations during the pilot period equal a maximum of 5% of IBRD and IDA annual lending, investment lending will be about 55% of the total (including a small amount of public financial intermediary, climate and other trust fund resources). New business for P4R is expected to offset investment lending more than DPLs. Currently the Bank approves about $2.5 - $3 billion per year in programmatic investment lending (APLs), which include SWAPs, Community Driven Development, Output Based Aid and some Results-based Financing for Health. 12 The Bank s safeguard, procurement and other operational policies currently apply to these different types of framework lending, although a number of challenges for effective safeguard application have been observed. 13 P4R operations are mostly likely to draw from the $3.5 billion in the APL pool of pipeline projects. The three additional scenarios in Figure 1 reflect possible variation in the level of expected demand for P4R operations if the 5% cap is removed. The estimates for P4R lending as a share of overall IBRD and IDA lending vary between 15% in the minimum scenario to 33% in the 11 The persistent gap that separates many of the Bank s clients from their respective Millennium Development Goals, or alternative and more ambitious development targets, cautions against the expectation of such a dramatic improvement in terms of poverty program effectiveness, and in fact raises questions about the World Bank s own performance metric inflation. 12 The overlap between these categories of investment lending is not clear. 13 IEG (2010) Safeguards and Sustainability Policies in a Changing World, pgs 29-31, finds that safeguard supervision is noticeably weaker policy framework lending. 3

4 maximum scenario. 14 The three factors that will likely determine borrower demand for P4R operations include the requirements in P4R operation policy, preferences or suitability for other Bank instruments (IL or DPL) and overall level of demand for Bank lending. Category A lending has ranged from 5% to 11% of all Bank operations between 1991 and 2010 (with a 9% average over the 12 year period). However, the investment commitment (lending volume) of these category A projects ranges from 12% to 40% of annual Bank lending (averaging 25% over the 12 year period). For P4R to exclude category A operations, we might assume that this translates into 25% of annual lending. 15 If we add to 25% A Investment Loans an average of 35% in annual development policy lending, the remaining lending envelope for P4R is about 40% of annual banking lending volume (or approximately $11 Billion). 16 Of this maximum 40% of World Bank lending that would be theoretically eligible for P4R operations, we can only speculate regarding the percentages of category B and C risk projects that would actually meet the qualifications for P4R. If we assume that no more than 75% of B operations but as much as 100% of C operations and as little as one half of C operations and a third of B operations could qualify for P4R, we estimate a total of between 15% and 33% of all B and C operations might be eligible for P4R. 17 The three scenarios suggest that demand for P4R could range between 15% and 33% of all IBRD and IDA lending in an unconstrained context. A minimum scenario reflects more a decline in Bank lending overall due to global demand factors, while a maximum scenario suggests a higher than expected lending level. 14 These estimates are based on statements by different officials within the Bank, Directors, and a review of the Bank project portfolio. Category A risk IL operations, which are excluded from P4R, have ranged between 5-11% of all operations, which would suggest these would remain IL operations. 15 Miscategorization of B operations, as observed by IEG, suggests that an estimate of 25% total investment commitment might be conservative. 16 An implicit assumption is that new P4R lending does not reduce demand for DPLs. 17 I assume that some B operations are in countries or sectors that may simply not meet the safeguard, fiduciary or results systems criteria to be eligible. I also assume that some investments (B 4

5 100% 80% 40% 35% 40% 37% 60% 5% 15% 40% 25% 33% 20% 55% 50% 35% 30% 0% Actual Min Middle Max Scenarios Reflect Variation in P4R Demand Investment Lending Program for Results Lending Development Policy Lending Figure 1. Possible Scenarios for World Bank Lending with Program for Results (P4R) The growth in P4R lending will likely reduce the overall share of investment lending below half of the World Bank s overall public lending volume which would signify an unprecedented shift in terms of the applicability of the Bank s safeguard operational policies. In other words, the current protection of the Bank s safeguard policies could apply to as little as 30% of annual lending. However, these estimates are indicative and may vary by region. B. Persistent concerns with P4R: 1. Questionable justification of P4R: The primary arguments for P4R imply a lower effectiveness of other World Bank instruments in delivering results. In the final draft of the P4R Operation Policy, the Bank still fails to explain why the alleged benefits of a new programmatic lending instrument can not be achieved by strengthening the results focus of existing IL instruments. 18 Few of the questions were adequately answered regarding how the Bank justifies the trade-off of diluting Bank controlled social, environmental, and fiduciary safeguards in return for greater reliance and potential strengthening of sovereign systems to deliver of results. Despite the desirability of World Bank leadership in promoting the use of national systems for risk management, P4R failed to sponsor a full assessment of the Bank s track record in this area 18 See BIC Comment on P4R OP draft, Program-For-Results System Assessment Criteria: Key Areas Requiring Clarification and Disclosure Prior to World Bank Board Consideration, Oct. 10, 2011, 5

6 or competing options for enhancing accountability for results. For example, recently approved national and subnational level DPL and SWAP for program support in Mexico and Brazil suggests that P4R was not necessarily needed to provide program capacity strengthening resources with clear and presumably country defined results frameworks. 19 Beginning with an accurate overview of current World Bank reliance on programmatic investment lending instruments and the findings of past IEG evaluations of these instruments, any IEG evaluation of P4R should squarely assess the hypothesis that greater accountability for results can be achieved only through P4R Lacking a more coherent and complete argument, P4R forces us to make what appears to be a false choice between maintaining the high standards and country ownership. 20 Unless this move toward reliance on borrowing country systems is managed with firm process guarantees and measurable benchmarks of substantial and acceptable equivalence between international and national or sub-national standards and systems, the effect of P4R could be counterproductive. Currently, those guarantees and benchmarks that are indispensible for any robust program effectiveness are either absent or not adequately specified in the draft Operational Policy OP/BP 9.0. Excessive discretion in guidance on assessing program systems will undermine the ability to target gaps and provide assistance through P4R. It is disappointing that the World Bank will now pursue a Program for Results approach that abandons the current safeguard policies that currently go farther than most other institutional commitments to ensure development value for investment lending. 2. Safeguards and Risk: P4R effectively abandons the conventional, prescriptive safeguard policies without identifying clearly enough the criteria for how alternative national systems would be assessed and enhanced where appropriate. The new OP 9.0 replaces the Bank s operational policy for environmental assessment (OP 4.01) and related safeguard policies. A much greater significance is invested in appraisal stage program assessments and action plans, the procedures for which have not been fully explained. Risk management under P4R clearly involves a trade-off. While much investment lending at the Bank is not considered the optimal instrument to promote regional or systemic risk assessment, P4R might provide stronger incentives for this type of frequently needed, but weak upstream planning. No specific requirements for strategic environmental assessments are provided in OP 9.0. The general risk is that there will now be fewer procedural milestones to leverage Bank influence prior to disbursement under P4R, including the possible decline in the level and quality of information disclosed. While few argue against moving risk management further upstream in the decision making process, it remains an open question whether relaxing operational Bank safeguards will provide the right incentive to fulfill this goal. Some Bank regional operations departments are piloting their own risk criteria to screen early P4R operations. Five distinct social and environmental risk criteria have been identified: 1. Assess the likely environmental and social impacts 19 See Piaui Green Growth and Inclusion DPL & SWAP. and Mexico Forests and Climate Change SIL, and Strengthening Social Resistance to Climate Change DPL 20 See Nancy Alexander, What is Country Ownership"? Do Social and Environmental Safeguards Destroy It? The Case of the World Bank s Program-for-Results, Policy Paper (Jan. 26, 2012) Heinrich Boll Foundation. 6

7 2. Assess possible contextual risks (eg. is the investment in a high biodiversity value area) 3. Assess the strategic context is the investment sustainable? Are there associated facilities? Is a SEA or CIA required? 4. Assess the institutional context (eg. performance - what is the track record, criteria for a social and environmental management system) 5. Assess the reputation risks to the Bank Yet, it remains unclear how these risks will be defined, compiled and compared to the management systems in place. In practice, just as SWAPs or APLs are commonly paired with DPLs in certain Bank sector interventions, Program for Results lending will likely be backed up with investment lending. In theory, P4R operational policy might provide clearer guidance in areas where policies on investment lending are now weak and vice-versa. Unfortunately, the Bank treated IL and P4R largely as competing alternatives, rather than complementary elements of a common approach. The emerging challenge for the Bank will be one of harmonizing its social, environmental and fiduciary policies and guidance for risk assessment and impact mitigation across all of its instruments. 3. Results Commitments: The revised draft does not adequately address most of the recommendations in BIC s original comment that highlights the inadequacy of OP 9.00 to ensure due diligence of results systems what WB calls technical assessment. The core components of a result system are not adequately spelled out. OP 9.0 contains no commitment to explain details of how a technical assessment would be conducted, if such an assessment would be disclosed prior to Board approval of P4R program, beyond the unclear provisions for what will be included in the PAD. The PAD is not always simultaneously disclosed prior to board approval. The definition of development linked indicators implies a negotiation, but there are no procedural guarantees to ensure that all stakeholders to be part of this negotiation. There is no commitment to producing a stakeholder participation plan in the results definition and verification process. There are not enough process guarantees in place for participation in the definition of meaningful DLIs or third party monitoring of the results, which in turn presents significant risks for delivering results. Similar to Bank policy on DPLs, we must accept less accountability in the appraisal and supervision of results systems, Our expectation remains that lack of transparency on how results systems are assessed, how capacity building action plans are designed and DLIs are chosen, similar to many cases of DPLs, will encourage the Bank to settle for weak, negligible indicators and guarantees for reporting. This governance problem will place at risk the central premise of P4R to deliver more robust results commitment than current instruments. This negotiation between Bank and government should not be insulated from public oversight. This negotiation between Bank, government and third parties should be a focus of any IEG evaluation. 4. Transparency: Despite the blanket proviso of ensuring consistency with the Bank s Access to Information Policy and references to disclosure commitments in the context of social and environmental program assessments, OP 9.0 provides weak commitments in general on disclosure, particularly for program subprojects and program assessments. 21 There is no clear 21 See comments by Anne Perrault (CIEL) on P4R transparency shortcomings, weakened safeguard standards and other P4R limitations at a roundtable discussion hosted by the Center for Global Development, Jan. 19, 2012, 7

8 requirement that either local communities or the public have access to similar levels of information about subproject activities as under IL financing that might impact the environment and local communities. There is a justification to prioritize the type of programs with likelihood of high risk subprojects for special attention and to recognize that other IL instruments face this same problem (ie. SWAPS, APL, CDD and other framework lending). 5. Procurement and Anti-Corruption Measures: As with safeguards, Bank procurement policies will not apply to P4R. 22 Similar discretion is provided to assess program procurement and financial management capacity, employing reasonable qualitative thresholds that appear difficult to measure reliably. The procurement contract thresholds that would affect eligibility under P4R were set too high. 23 P4R ensures that Bank oversight mechanisms will be selfinitiating, when appropriate. Binding guidance for borrowing country responsibilities in actions to prevent fraud and corruption is annexed to the operational policy. In the context of any investigation of corruption (including preventative reviews), P4R promises to ensure collaboration between the Bank s Integrity Vice-Presidency and the relevant borrowing country institutions as well access to program financial information. In practice, many of these commitments, particularly cooperation with national authorities, have proven more difficult to ensure and should be the focus of any pilot evaluation. 6. P4R & IL country systems policy duplication? There are many similarities and risks between P4R and the Bank s policy on country systems (OP 4.0). 24 The Bank s use of country systems pilot was intended to be national in scope, yet most large clients rejected the certification of their systems as criteria for accessing UCS resources. The few (12) borrowers that participated were not certified, but the Bank lacked the necessary incentive program to remediate capacity gaps that were found. P4R runs the risk of repeating the shortcomings of the Bank country system pilot. C. Next Steps: Monitoring Implementation and Designing the P4R evaluation: OPCS proposed in the November CODE Board meeting to conduct its own assessment of P4R over two years. Parallel to that, IEG will conduct a second evaluation. As the first due diligence missions for some of the first P4R projects are getting underway, the evaluation terms of reference will be designed by both Bank Management and IEG, respectively. Definition of the TORs for both evaluations should invite and incorporate input from all P4R stakeholders. During the two year pilot period, there will not likely be any new "results" to assess, but the evaluations should focus rather on the design and approved versions of a first cohort of P4R projects. The documentation should include relevant program assessments and pertinent 22 See Transparency International s Input to the WB Consultation Process on the Draft P4R Operational Policy, Bank Procedures and Anticorruption Guidelines, (Sept. 2011), 23 Non-eligible high value contracts are defined in the following amounts: $50 million for Works, Turnkey and Supply, and Installation contracts: $30 million for Goods; $20 million for IT systems and Non-Consulting Services; and $15 million for Consulting Services. (pg. 13, pgh 22 (d), fn One difference is that OP 4.00 applies to Cat. A projects and P4R will apply only to B and C projects. 8

9 stakeholder perspectives, depending on the level of participation and disclosure that happens in the design process and possibly the early implementation process. These evaluations could take more than two years to deliver useful recommendations. However, any adjustments to OP 9.0, including a decision to lift the 5% cap, should be informed by the evaluation recommendations. No such commitment exists in the Board paper and Operational Policy approved in January. With expectations that further clarity regarding how any evaluation will inform the future of P4R, the following recommendations should guide the evaluation design: 1. P4R Additionality Hypothesis test: Design the evaluation to test the assumption that the Bank can not leverage its good influence on the results of program systems with investment lending, and consequently, only through P4R lending. This would require a comparable control group of IL program level operations in similar sectors from which early p4r operations are identified to help isolate what the relevant additionality is in P4R that cant' be achieved from ILs. Such an evaluation might explore the alleged benefits touted for P4R: Is country program system capacity strengthened where gaps are determined to put results at risk? 25 Is there greater investment in upstream risk management and planning? Are multilateral and/or bilateral finance institution policies harmonized? Is there evidence of increased access or reach and focus on full program system risk assessment? Is there evidence of greater client commitment to results - including the definition of more innovative, rigorous and meaningful disbursement-linked indicators (DLI)? Quality of DLI monitoring systems, including robust baselines and the use of independent monitors? Does any of this show up and matter in the design of operations more than in IL program lending? 2. Safeguard Transaction Costs: Such a comparative assessment of P4R and IL might also explore the reduction of transaction costs for implementing safeguard policies, on which P4R is premised. An assessment of transaction costs might build the analysis of IEG in chapter 4 of 2010 evaluation, Safeguards and Sustainability Policies in a Changing World, which concluded that economic benefits of safeguards far outweighed the costs. 26 One of the arguments in favor of P4R inferred client discontent with the perceived high transaction costs of compliance with the Bank s safeguard operational policies. Any evaluation of P4R should explore this argument by noting where: Actual preparation costs are lower than IL operation averages Robust safeguard action plan approval is expedited; 25 For fiduciary capacity, P4R interaction with the Bank s Governance and Anti-Corruption strategy will be key for effective institutional strengthening in this area. 26 IEG (2010) Safeguards and Sustainability Policies in a Changing World, Chapter 4, pg

10 Perceived positive benefits of greater flexibility in applying safeguard policies (as opposed to problems); Ambiguity in key policy requirements are reduced with clearer distinction and non-duplication of responsibilities between Bank and borrower; Adequate resources for safeguard skill enhancement and expanding project supervision are ensured. 3. Quality of due diligence: The evaluation should explore evidence of the qualitative aspects of P4R due diligence. Were program technical, fiduciary, social/environmental assessments conducted, disclosed and approved in an acceptable, uniform manner that meets IL risk assessment standards? Are all P4R stakeholders able to review and provide input on the program risk assessments, including discussion of specific activities to be financed and any possible mitigation options? Are there minimal standards for scope and timing of action plan gap filling measures? Do sector managers feel comfortable "signing off" on the program equivalence findings or action plans? 4. Program risk classification: IEG observed a high level of misclassification of risk for investment lending, particularly for category B projects. How effectively is program risk classified, particularly for B type programs with likely support for B subprojects? Recognizing this as a challenge for IL, does P4R tackle program risk categorization for moderate risk projects in a more effective way (e.g. one uniform classification for all p4r, or a tiered approach akin to IFC FIs). 5. Transparency: P4R does not require information to local communities or the public about subproject activities, which presents a significant governance risk. The evaluation should determine what level of disclosure is gained or lost by P4R relative to similar IL operations, based on some type of comparative analysis. Assess levels of disclosure (timing, language) during early stages of project cycle. During P4R identification, is documentation properly tracked in WB system? During P4R appraisal, are relevant assessments and gap filling action plans disclosed (social, environmental and fiduciary)? Are mechanisms for affected communities to be adequately informed about high risk program investments (past, present and future) built into the P4R operation? Are these provisions working (e.g. do communities know that World Bank funding is involved?). Are proposed program activities and results, beyond the elements funded by the World Bank, disclosed to the public? 6. Procurement and Accountability: Are program fiduciary assessments consistent with the level of involvement by INT or third party auditors? Is INT self-empowered to initiate investigations? Does INT have the resources and capacity to fulfill this function? Are the criteria clear that could relieve the client of responsibility for compliance with reporting corruption and cooperating with investigation or sanctions? 27 Do the Bank and other P4R stakeholder have access to full program financial information, when appropriate? How do program fiduciary assessments influence procurement thresholds? 27 Operational Policy Statement (OP) 9.00 (December 2011 draft), Program for Results Financing, Annex E: Proposed Anti-Corruption Guidelines, pages 87-88, pgh 6-7 suggests language that could override these Bank and client responsibilities 10

11 How is the World Bank disbarred firm list or borrower s debarment lists be applied to P4R procurement? 7. Supervision: Does program risk assessment quality or action plan ambition explain variance in commitments to monitoring and evaluation, including provisions for third party audits or supervision? How are the first cohort of P4R program subprojects screened and appraised? 8. Accountability - Are P4R operations "inspectable"? Is it even possible for affected populations to know of Bank involvement and secure information related to P4R subprojects? Are there reasonably clear standards by which a vulnerable affected population might claim harm due to policy violation? 11