LONDON (Reuters) - The Inter-American Development Bank's oversight body is scrutinizing whether a record "debt-for-nature" swap struck by Ecuador for its Galapagos Islands last year breached the lender's policies following complaints from local groups.

Filings show the Independent Consultation and Investigation Mechanism (MICI) of the Washington-based lender is examining the groups' concerns over a "lack of accessible and relevant information" and "lack of an engagement strategy with potentially impacted communities".

Last year's Galapagos-focused debt swap attracted global attention for being the first to break the $1 billion barrier, but the 24 groups involved in the complaint are frustrated about their lack of involvement in decisions and that conservation money is yet to arrive.

Debt-for-nature swaps generate that money by buying up existing bonds or loans of a country. They are then replaced with cheaper debt, usually with the help of a development bank like the IDB, with the savings then used for environmental projects.

MICI's investigations are limited to potential breaches of the IDB Group's "environmental and social policies and standards", but concerns about how projects, including disbursements, are managed, and public disclosure, fall under that umbrella.

The Galapagos deal swapped $1.6 billion of Ecuador's bonds, but it was also its focus on preserving the islands that inspired Charles Darwin's Theory of Evolution that saw it heralded as a landmark example of these types of transactions.

Dozens of other countries are now eyeing them and Ecuador is looking to do more, potentially with the help of Hollywood star Leonardo DiCaprio's conservation charity.

One of the organisations involved in the complaint, the Centro de Derechos Eonómicos y Sociales of Ecuador (CDES), said on its website MICI's decision to review "represents an important step towards the protection of Ecuador's sovereign rights and environmental conservation in the Galapagos Islands."CDES added this would also benefit future debt swaps as it would "seek to implement the best international practices."

Ecuador's finance ministry, the IDB's "client" for the debt swap, did not respond to a request for comment.

The Galápagos Life Fund (GLF), which was set up to help oversee the swap and is co-chaired by Ecuador's environment ministry, says there have been a series of recent meetings with locals and it is now preparing to allocate funding.

"We are committed to ensuring these funds are distributed fairly and efficiently, benefiting both the ecosystems and the people who rely on them," it said in a release on its website.

PROCESS

MICI now has until around the end of October to assess the complaint and judge how to proceed. If resolution via dialogue does not look possible, it can then present a case to the IDB's Executive Board of Directors in Washington for a fuller investigation, a MICI spokesperson said.

If the Board approves one, MICI's team then has up to a year to "impartially and objectively investigate allegations of harm and potential non-compliance with the environmental and social policies and standards of the IDB Group".

Once done, it produces a report for the IDB Board which then decides any "corrective action".

That usually comes in the form of an "action plan" which MICI can then monitor for up five years in consultation with the complainants and other stakeholders. The plans do not levee fines, but cases in the past have led to changes to IDB policies.

An investigation process would not prevent funds from the debt swap being disbursed.

(Additional reporting by Alexandra Valencia in Quito; Editing by Alex Richardson)