December 25, 2002

Mr. Kunio Senga
Director General
Strategy and Policy Department
Asian Development Bank

Ms. Yukiko Kojima
Strategy and Policy Department
Asian Development Bank

Dear Mr. Senga and Ms Kojima,

Thank you for the opportunity to comment on the Draft Compendium of Policies and Procedures Subject to Inspection. As we have communicated to you in previous meetings, however, we cannot accept the legitimacy of the Compendium itself. We would like to address this concern and refrain from comment on the contents of the Compendium.

We agree with the statement in the Operations Manual Updating in the Context of the Inspection Policy, which says: "all ADB policies approved by the Board are to be implemented by ADB Management and staff irrespective of whether they are included in the OM or not." As a logical extension of this statement, all ADB polices should be subject to the Inspection Function, as it is a tool for the Board to check the Management's compliance to the Board-approved polices.

Under the current Inspection Function established in 1995, the scope of the Inspection is defined as "operational policies and procedures set forth in the Bank's Operations Manual," which serves to translate the language of the policies into a format that can be implemented. However, during the Samut Prakarn inspection, the Board Inspection Committee (BIC) revealed that some policies had not been translated into the OM and that some sections of OM were inconsistent with their underlying Board-approved policies. Upon conclusion of the inspection, the BIC recommended Management to address these problems in order to lift the limitation on the scope of inspection created by such incomplete translation of policies into the OM.

Contrary to the recommendation of the BIC, however, the Operation Manual Updating and the Compendium work to further limit the scope of the inspection. The Compendium excludes the majority of policies and OM sections, which were determined as "non-mandatory" by the discretion of Management and staff. It is especially troubling that the compendium excludes all or parts of OM that were found to have been violated by the Panel during the Samut Prakarn Investigation. We were greatly surprised that the Management would attempt to fundamentally undermine the Inspection Function, compromise its commitment to policies approved by Board, and reject the recommendation of the BIC.

We cannot accept this approach to the OM revision. Management should not have the authority to decide which parts of Board-approved polices and procedures are mandatory. Furthermore, this approach will substantially undermine the effectiveness of the Inspection Function, and will cast serious doubts over the Bank's commitment to accountability.

We believe that all Board-approved polices and all sections of the OM should be subject to Inspection, and that it should be the role of the Inspection body to determine which polices and procedures are applicable and thereby inspectable for each project concerned.

Therefore, we would like to reiterate our demand to withdraw the Compendium. We also suggest that the OM revision process be conducted in a transparent and participatory manner separately from the Inspection Function review.

Finally, we are deeply concerned that the transparent and participatory process, which we have seen in the Inspection Function review so far, has not been ensured in this OM review process. According to the Operations Manual Updating, Management has already "approved" the definition of operational policies and procedures to be those contained in the Compendium.

We would like to seek your confirmation that the issue of the scope of the Inspection Function is still open for further input and discussion, and will not be restricted by the current OM review process..

We look forward to hearing from you.

Sincerely,

FUKUDA Kenji
Advocacy Coordinator
Mekong Watch Japan
2F Maruko-bldg., 1-20-6 Higashi-Ueno, Taito-ku, Tokyo 110-0015, Japan
Tel +81-3-3832-5034, Fax +81-3-3832-5039

Jane Garrido
Program Associate
Bank Information Center, USA

ISHIDA Kyoko
Program Coordinator, Sustainable Development and Aid Program
Japan Center for a Sustainable Environment and Society (JACSES), Japan

Jessica Rosien
Policy Analyst
NGO Forum on the ADB

Endorsed by:

Dr. D. R. Laifungbam, Director, Centre for Organisation Research & Education (CORE), India
Aviva Imhof, Director, Southeast Asia Program, International Rivers Network, USA
Sonali de Silva, Public Interest Law Foundation, Sri Lanka.
Muhammad Nauman, Creed Alliance, Pakistan
Michael Simon, Advocacy Coordinator, Oxfam Community Aid Abroad, Australia
Heather Mundy, Representative at Inspection Workshop, Gama Surakeema Sanvidhaniya, Sri Lanka
Sarath Athukorale, Presedent and Representative at Inspection Workshop, United Society for the Protection of Akmeemana, Sri Lanka
Kelly Brooks, Policy and Outreach Officer, Oxfam Mekong Initiative, Cambodia
Kevin Li, Globalisation Monitor, Hong Kong, China
Lee Tan, Co-ordinator, Asia-Pacific Unit, Australian Conservation Foundation, Australia

CC:

Executive Directors
Mr. B. Lohani, The Secretary
Mr. G.A. Sumida, The General Counsel
Mr. V. Bohun, Director General, Operations Evaluation Department
Mr. J. van Heeswijk, Director General, Regional and Sustainable Development Department
Mr. R. Nag, Director General, Mekong Department
Mr. J. Hovland, Director General, Pacific Department
Mr. K. Moinuddin, Southeast Asia Department
Mr. J. Rockett, Principal Director, Central Operations Services Office