Recommendations to Inspection
Policy Review
of the Asian Development Bank |
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FoE Japan
Japan Center for Sustainable Environment and Society
Mekong
Watch Japan
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1. Inspection and Ombudsperson
The Inspection Function's Dual Function: Compliance and
Problem Solving
As pointed out by the fist draft of the working paper, the
ADB's Inspection Function has two functions, namely ensuring
the compliance of the ADB's operations and solving the problems
of the people affected by ADB-supported projects.
Recently, the ADB received several inspection requests from
the people affected by the Samut Prakarn Wastewater Management
Project (SP) in Thailand and the Southern Transport Development
Project (STDP) in Sri Lanka. The Samut Prakarn Project case
demonstrated the Inspection Function's failure to achieve
the first objective of the policy - compliance. The latter
case made it clear that the Inspection Policy was not designed
to solve the problems of those affected by the ADB projects. |
In the case of STDP
Affected communities did not oppose the project itself, but
requested their concerns on environment impacts and public participation
be addressed. They tried many ways to attract the ADB Management's
attention, but received no positive answer from the ADB. Filing
a claim to Inspection was the only remaining way to solve the
problems.
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| A Dual system is needed
The ADB's inspection mechanism needs to be strengthened,
and an Ombusperson mechanism should be established to address
the concerns of project affected people.
2. Strengthening the Inspection
Function
Bodies
◆ Board Inspection Committee
Board Inspection Committee should be abolished.
In the course of current inspection procedure, the Board Inspection
Committee (hereafter BIC) plays an important role, including
recommending whether inspection should be authorized, and
making final recommendations based on the Panel's report and
Management's response. But BIC has been criticized on the
following points;
- BIC prepares the recommendations to the Board based on
the Panel's reports. The importance and independence of
the Inspection Panel as an investigation mechanism of the
Board is diluted when BIC issues recommendations different
from the Panel's.
- The members of BIC have conflicting interests. BIC members
sit on the Board that approves the project for inspection.
Their dual role as a member of BIC which recommends to the
Board and the member of the Board which considers BIC's
recommendation also makes the their position complicated
- BIC members are also working as Board members. They will
not able to deal with the workload if more cases are file
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In the case of Samut Prakarn Wastewater Management Project
The Panel's final report concluded that 7 policies and procedures
were violated and recommended the ADB should acknowledge its
failure to comply with the policies. But BIC could not reach
a conclusion on 2 policy violations out of the 7. It also failed
to mention anything on acknowledgement of violations in its
recommendation to the Board. Thus the impacts and importance
of the Panel's report was diluted. |
◆ Permanent Inspection Panel
An independent and permanent Inspection Panel should be established.
The current Inspection Function system does not have a permanent
panel. Instead, when an inspection is authorized by the Board,
BIC selects three panel members from the Roster of the Experts.
The following concerns have been raised about this system.
- The criteria for selecting the Panel members are unclear.
- Institutional learning of the Panel is impossible.
- Affected communities and civil society cannot build trust
with the Panel.
- The Panel cannot assist local people to file claims.
- The Board does not trust the Panel
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Also, BIC has practical difficulties in selecting a Panel.
The candidates must be able to stop all other work for two to
three months in order to serve as a Panel member.
◆ Secretariat
Inspection Panel should have its own Secretariat which
is independent from the Management. BIC and the Panel
do not have their own secretariat staff. The staff of the
Office of the Secretary has served as a staff for BIC and
the Panel. This arrangement is not only insufficient but also
raised concerns regarding conflict of interests.
Process of the inspection
◆ Shorten and Simplify the Process
Inspection process should not be lengthy or complicated.
The Complaint to the Management is unnecessary.
The inspection process is lengthy. It takes at least 110
days from the first complaint letter for the Board to approve
an inspection. Requesters have to send the complain letter
to the President before they file a claim to BIC. This process
should be eliminated because in many cases local people have
tried to contact the Management before filing a claim.
◆ Informal Advice on eligibility requirement
The Panel should provide informal advice to requesters
so that requesters can easily fulfill the eligibility requirements.
Currently, no support is provided to the requesters. Requesters
have to obtain, read and understand all relevant policies,
and write a request for inspection in English. This is a huge
burden to the requesters. Also, BIC has not provided any support
for requesters to meet the eligibility requirements. |
In the case of STDP
In Management's response to the first claim, Management claimed
that there was no evidence to show the requesters were affected
people or their representatives. This requirement could have
easily been met if there were support from BIC. |
◆ Initial Investigation
If a request for inspection is not clearly ineligible, the
Panel should conduct an initial investigation including a site
visit.
Under current procedures, the recommendation on whether to authorize
the inspection is based only on the request and Management's
response. If the request is not clearly ineligible, the Panel
should conduct an initial investigation.
◆ Decision
on inspection
When the Panel considers not to authorize the inspection,
the Panel should send the draft report and recommendations to
the requester and the requester will be provided certain number
of days to comment on the draft.
Not to authorize the inspection without requester's opinion
will pose the questions on impartiality of the recommendation.
This process will substitute current consultation process with
the member of the Roaster.
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In the case of STDP
BIC's recommendation not to authorize the inspection was made
without hearing the requester's opinion, thus the legitimacy
of the recommendation was questioned. |
◆ Inspection Panel's Report
A draft of Inspection Panel report should be sent to the
requester and the requester should be provided certain number
of days to comment on the draft. The Inspection Panel report
should contain remedies for the project as well as relevant
facts and the Panel's conclusion on the Management's compliance.
The report should be made public immediately after it is sent
to the Board, Management and requester. ◆ Management's
Response
Management's response to the Inspection Panel report should
be limited to an implementation plan based on the remedies
recommended by the Panel.
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In the case of Samut Prakarn Wastewater Management Project
Management's response denied every policy violation and conclusion
on material harm, and attacked the Panel. It damaged the ADB's
credibility, and undermined the Panel's importance as a investigation
mechanism of the Board.
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◆ Requester's Participation in the Process
In the inspection process, requesters should be provided
with sufficient information and opportunities to express their
opinions.
- When the Panel is considering not to authorize the
inspection , requesters should be informed before the decision
and given ^opportunities for comment.
- During the inspection process, requesters should be
given monthly updates on the progress of the inspection.
- The Inspection Panel will send the draft final report
to requesters and requesters will have opportunities for
comment.
- The Panel's report will be sent to requesters at the
same time as to the Board and the Management.
- Management's response will be sent to requesters at
the same time as to the Board.
- The Board decision will be sent to the requesters
with information on a monitoring mechanism.
Once the inspection process begins, requesters have difficulties
participating in the process. The only opportunity where requesters
can express their opinions is during the Panel's site visit.
After that, requesters have to wait for the final decision
of the Board.
Management has an access to the Board members while requesters
do not have a chance to contact them. This imbalanced access
to the Board also should be addressed.
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In the case of Samut Prakarn Wastewater Management Project
Because of the conditions imposed by the Thai Government, the
Panel could not visit the site and interview the requesters.
The Panel produced the interim report and asked BIC to send
the report to requesters for comments, but this proposal was
ignored by BIC. After that, there was no opportunity for requesters
to express their opinions. On the other hand, the Management
was provided 60 days to respond to the Panel's report.
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3. Establishment of Ombudsperson
mechanism
An Ombusperson mechanism should be established.
The mechanism will address the concerns of project-affected
people. The process should be flexible and easy-to-use. Due
consideration should be paid to the accountability of the
Ombudsperson mechanism.
4. Relation between Inspection
Function and Ombudsperson Mechanism
The Inspection Panel and Ombudsperson mechanism will work
independently, and requesters should be able to choose which
mechanism they want to file their claim. Requesters in the
ombudsperson process may file a claim to Inspection Panel
if their concerns cannot be adequately addressed by the Ombudsperson
mechanism. Requesters whose claim is under inspection review,
however, cannot file a claim to the Ombudsperson mechanism.
This will ensure that requesters will not be pressured by
the ADB to transfer their request to be more compromising
ombudsperson mechanism.
5. Scope of the mechanism
95% Rule
The 95% rule should be abolished.
The Inspection Policy exclude from the scope of inspection
policy projects for which 95% or more of ADB's financing has
been disbursed. But the ADB still has certain (but smaller)
leverage on the project, so there is no need to exclude these
projects from the inspection. Also, this rule may be an incentive
for the ADB staff to rush disbursement to avoid the inspection
when local people raise concerns.
6. Assistance to the requesters
Providing Information on Inspection and Ombudsperson Mechanisms
Project affected communities should be informed of the
inspection and ombudsperson policies in local languages. They
also should be provided important policies and procedures
in local languages.
Currently, inspection policy or other relevant policies
and project-related documents are only provided in English.
Local people should have access to these documents in local
languages.
Language
Requests for inspection/ombudsperson in local languages
should be allowed. Necessary translation support should be
provided.
Current policy requires the claim to be filed in English.
The World Bank allows the request in local languages.
Protecting the requesters
The Loan Agreement and other policies should include clauses
to avoid backlashes against requesters. Requesters should
be able to file a request anonymously.
There are some cases where World Bank Inspection Panel requesters
in India or Bangladesh have faced severe reprisals.
7. Independence of Investigations
Indepedence of the Panel and Ombudsperson
The Panel and Ombudsperson should be independent from the
Management. Requirements for the members of the Panel and
Ombudsperson mechanism should be similar to current requirements
to be a member of the Roster.
Ensuring Field Visit
Policies should be revised to ensure the Panel and
the Ombudsperson can visit the project site.
Current policy require BIC to obtain 'no objection' from
the Director representing the relevant country to the Panel's
field visit. This requirement makes it difficult for the Panel
to collect important information.
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In the case of Samut Prakarn Wastewater Management Project
Originally the Panel scheduled a visit to Thailand in September
2001, but the Thai government imposed many conditions for the
site visit. The BIC chairman visited Thailand to persuade the
Thai government but the Thai government still maintained its
position. The Panel finally gave up visiting Thailand and suspended
activities. As a result, the Panel had to write its final report
without enough information.
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Communication
The Panel and Ombudsperson should have ways to communicate
with stakeholders inside and outside the ADB independently.
It should have its own budget, website, and issue its own news
releases.
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In the case of Samut Prakarn Wastewater Management Project
The Panel was forced to communicate with stakeholders through
BIC. It restricted the Panel's independence, and disrupted the
Panel's ability to get adequate information from local people
and international civil society.
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8. Accountability of Inspection Panel
and Ombudsperson
Disclosure of the Reasons to be ineligible
If the Panel or the Ombudsperson decides the request to be
ineligible, the conclusion and the reasons should be sent to
the requester and be made public immediately after the decision.
Under current procedures, when BIC finds the request
ineligible, no reason is made public. It is not clear why
BIC finds the requests to be ineligible. To ensure the transparency
of the process, the decision and the reasons should be disclosed.
Accountability of the Inspection
Every Panel's decision should be disclosed, including notification
of the receipt, initial investigation, final report and monitoring
report.
9. Monitoring of the Board Decision
Need for Monitoring Mechanism
It is necessary to monitor the implementation of the Board
approved remedies. Management should report periodically to
the Board and the Inspection Panel/Ombudsperson regarding
the progress of implementation of the Board approved remedies.
Claim on Implementation of the Remedies
When requesters find Management failed to implement the
Board approved remedies, requesters can file a claim to the
Panel or Ombudsperson. The Panel or Ombudsperson will conduct
necessary investigation including field visits, and recommend
measures for improvement to the Board.
10. Monitoring Compliance
The Panel and Ombudsperson will have a joint committee
to share experiences and to reflect on the effectiveness of
ADB policies including the inspection/ombudsperson policies.
The joint committee will conduct necessary investigation of
ADB policies and make recommendation to the Board. The conclusions
and the recommendations will be disclosed.
11. Private Sector Operations
PSO and compliance
Both Inspection and Ombudsperson policies should be applied
to Private Sector Operations. Under current inspection
policy, private sector operations (PSO) are not within its
scope. PSO should follow ADB policies and procedures, and
should thus be within the scope of the inspection or ombudsperson
mandates.
Claims from Business Competitors
Claims from Business Competitors can be considered in the
eligibility requirement.
Safeguard Policies for Private Sector Operations
The application of the policies including safeguard policies
should be clarified.
In the Operations Manual, it is not clear which part of the
policies and procedures are applied to PSO. It should be clarified.
Information Disclosure of Private Sector Operations
Policies on Information Disclosure of Private Sector Operations
should be revised.
In private sector operations, detailed information on projects
should be disclosed. Project Profiles (PP) and Report and
Recommendation of the President (RRP) of PSO must be disclosed
to facilitate problem solving at earlier stages of project
cycles. Otherwise, potentially affected people have no way
of collecting information needed to file inspection claims.
If any information must be withheld, the PP and RRP should
provide all other information, together with the reasons for
withholding the undisclosed information.
12. Suspension of Disbursement
The Inspection Panel and Ombudsperson should be able to
recommend that the Board suspend the disbursement, cancel
loans, or suggest borrowers to suspend implementation of projects
after the Panel decides to authorize an inspection.
Current policies do not specify any action to be taken before
the Board's consideration of BIC's reports. As a result, the
project continues while inspections are on-going. In several
cases, some actions are needed.
Suspension of the loan disbursement or cancellation of the
loan is important leverage the ADB has on each project. The
continuation of the loan disbursement may lead to extra cost
for the borrower and the ADB.
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In the case of Samut Prakarn Wastewater Management Project
Local people continuously requested that the loan disbursement
be suspended, but the ADB continued the disbursement. As a result,
90% of the project was completed when the Board approved BIC's
recommendation, and thus undermined the importance of the recommendation.
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13. Inspection and Loan Agreement
Standard loan agreements should be revised in relation with
the inspection policy. The following points should be considered. |
- Compliance with loan covenants
- Ensuring the Inspection Panel and Ombudsperson's right
to visit project sites.
- Suspension of loan disbursements and cancellation
of loans as a result of the ADB's violation of its policies.
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Loan agreements are critical documents defining ADB's rights
and obligations in project implementation. But standard loan
agreements do not have clauses to ensure the implementation
of the inspection policy. The Inspection Panel's right to investigation,
ADB's rights to suspend disbursements and cancel loans should
be included in the loan agreements.
Also, loan agreements should be made public for public scrutiny.
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| This paper was jointly prepared for
submission at the ADB's Tokyo Consultations to Review the Inspection
Function, June 11, 2002. For questions or comments, please contact
FUKUDA Kenji of Mekong Watch Japan (03-3832-5034 or fukudan@sol.dti.ne.jp). |
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